KONE Corporation, Stock Exchange Release, 24 April, 2007 at 12:30
Finnish time
KONE's Orders Received Record High
- Orders received growth was 7 percent, or 10 percent at comparable
exchange rates. Orders received totaled EUR 902.1 (840.3) million.
- Net sales grew by 10 percent to EUR 811.2 (735.0) million; at
comparable exchange rates growth was 13 percent.
- Operating income was EUR -72.7 (51.7) million. Excluding the
provision of EUR 142.0 million for the European Commission's decision
to impose a fine to KONE for anticompetitive practices operating
income was EUR 69.3 million or 8.5 (7.0) percent of net sales.
- KONE reiterates its outlook for 2007 and 2008 excluding the
provision of EUR 142.0 million.
Key Figures
1-3/2007 1-3/2006 1-12/2006
Orders received MEUR 902.1 840.3 3,116.3
Order book MEUR 3,105.7 2,654.0 2,762.1
Sales MEUR 811.2 735.0 3,600.8
Operating income MEUR 69.3, 1) 51.7 360.1
Cash flow from operations (before
financing items and taxes) MEUR 142.7 117.3 371.7
Net income MEUR -95.0 31.8 234.4
Net debt MEUR 142.3 129.7 124.9
Total equity/total assets % 20.8 26.8 30.5
Gearing % 29.7 22.6 17.9
1) Excluding the provision of EUR 142.0 million for the European
Commission's fine decision.
KONE President & CEO, Matti Alahuhta, in conjunction with the review:"I am very pleased with KONE's progress during the first quarter of
2007. The highest ever quarterly order intake and continued
improvement in operational profitability are clear proof of the
ongoing progress in our development programs. We still have
significant potential to improve our customer satisfaction and
productivity by harmonizing our processes. Bringing more flexibility
to our globally standardized products has expanded our accessible
markets and increased our competitiveness, hence supporting the order
intake growth. We have a good base from which to continue. I thank
all the personnel for their dedication and a job well done."
Analyst and Media Conference and Conference Call
A meeting for the press, conducted in Finnish, will be held on April
24, 2007 at 2:00 PM at KONE Building, Keilasatama 3, Espoo.
A joined analyst meeting and conference call, conducted in English,
will be held on April 24, 2007 at 3:30 PM at KONE Building,
Keilasatama 3, Espoo. Conference call participants may access the
conference directly at the following telephone numbers:
US callers: +1 334 323 6201
Non-US callers: +44 (0)20 7162 0025
Participant code: KONE
The conference call will be available also as a web cast on the
company website. An on demand version of the conference will be
available at www.kone.com later the same day.
Sender:
KONE Corporation
Aimo Rajahalme
Executive Vice President,
Finance
Minna Mars
Senior Vice President,
Corporate Communications & IR
For further information please contact:
Aimo Rajahalme, Executive Vice President, Finance, tel. +358 (0) 204
75 4484
KONE is one of the world's leading elevator and escalator companies.
It provides its customers with industry-leading elevators and
escalators, with innovative solutions for their maintenance and
modernization. KONE also provides maintenance of automatic building
doors. In 2006, KONE had annual net sales of EUR 3.6 billion and
approximately 29,000 employees. Its class B shares are listed on the
Helsinki Stock Exchange in Finland.
www.kone.com
Review for January-March 2007
Accounting Principles
KONE Corporation's interim report for January 1 - March 31, 2007 has
been prepared in line with IAS 34, Interim Financial Reporting. KONE
has applied the same accounting principles in the preparation of the
interim report as in its annual financial statements for 2006. The
information presented in the interim report has not been audited.
KONE's Operating Environment during January-March
Overall demand was strong in new equipment, maintenance and
modernization and hence created favorable conditions for KONE's
growth. The price environment was competitive in all geographical
areas.
The European, Middle East and African (EMEA) markets were stable,
with several high-rise projects being launched and good demand in the
Northern and Central European residential segments.
The North and Central European market continued to be stable and at a
good level. The East European and Russian markets continued to grow.
In Southern Europe the residential sector continued to slow down, but
the office segment continued to be at a good level.
The Middle East grew strongly, mainly driven by the high oil price.
The biggest growth was experienced in the United Arab Emirates and
Saudi Arabia; however, all other markets were also very active or at
a stable high level.
In North America, the new equipment market remained stable, althoughthe U.S. residential segment continued to decline. On the other hand,
the commercial, office and public transportation segments were solid.
In Asia-Pacific, demand remained strong with the exception of
Thailand and Korea. China continues to have very high volumes. The
market in India also grew rapidly. Strong Australian activity
continued, particularly in the commercial segment and especially in
the major projects business.
The pricing environment for new elevators and escalators continued to
be competitive in all areas.
The maintenance market progressed well in all geographical areas,
even though tough price competition continued.
The Modernization market remained on a good level in Europe and
continued to grow in North America, and the development in Hong Kong
and Australia was also good. In Asia, modernization is still small
although increasing. The growing modernization demand continued to
attract the attention of both global and local players.
Orders Received and Order Book
KONE's market position continued to grow stronger in the first
quarter of 2007. The value of orders received during January-March
increased by approximately 7 percent and totaled EUR 902.1 (1-3/2006:
840.3) million. At comparable exchange rates, the growth was
approximately 10 percent. KONE Corporation only includes new
equipment orders and modernization orders in orders received.
The order book increased from the end of 2006 by 12 percent and stood
at EUR 3,106 (December 31, 2006: 2,762) million at the end of March.
Compared with the order book on March 31, 2006 there was an increase
of approximately 17 percent. At comparable exchange rates, the growth
was about 21 percent. The margin of the order book continued to be at
the earlier good level.
In the EMEA region, KONE's largest orders during the first quarter
were an order to deliver all elevators and escalators for the
twin-tower project named Capital City in Moscow. The project will
start in the middle of 2007 and continue through 2008. KONE also
gained a major order for the Capital Plaza in Abu Dhabi. The order
includes all elevators and escalators of which installation will
start at the end of 2007 and is scheduled for completion during the
second half of 2009. In addition, KONE signed its largest ever
single contract for cruise ships. The contract signed with Aker Yards
is for the supply of all elevators and escalators in two luxury
passenger cruise ships.
KONE experienced strong order intake in the North American new
equipment and modernization business. The largest order in the North
America was an order to modernize elevators and autowalks at the
McCarran International Airport in Las Vegas.
In the Asia-Pacific region, KONE's order intake in new equipment was
very strong and progressed especially well in China, India and
Australia.
Sales by geographical areas MEUR
1-3/2007 % 1-3/2006 % 1-12/2006 %
EMEA 1) 535.5 66 464.4 63 2,319.4 65
Americas 177.6 22 178.7 24 805.1 22
Asia-Pacific 98.1 12 91.9 13 476.3 13
Total 811.2 735.0 3,600.8
1) EMEA = Europe, Middle East, Africa
Net Sales
In comparison to the corresponding reporting period a year earlier,
KONE's net sales increased by approximately 10 percent and totaled
EUR 811.2 (735.0) million. Growth at comparable currency rates was
approximately 13 percent. New equipment sales in January-March
accounted for EUR 307.0 (254.3) million of the total and represented
an approximate 21 percent growth over the comparison period. At
comparable currency rates the growth was approximately 24 percent.
KONE's business logic spans the entire lifecycle of customer
investments, and KONE's customer focus and lifetime strategy seeks to
provide a better service capability. This also creates growth in
KONE's business operations and a less cyclical stream of profits.
Service sales increased by almost 5 percent and totaled EUR 504.2
(480.7) million, at comparable currency rates the growth was
approximately 8 percent.
Of the sales, 66 (63) percent was generated from EMEA, 22 (24)
percent by the Americas and 12 (13) percent by Asia-Pacific.
Result
The provision of EUR 142.0 million for the European Commission's fine
decision is recognized in the first quarter. KONE's operating income,
excluding the provision, improved 34 percent in comparison to the
first three months of 2006 and was EUR 69.3 (51.7) million or 8.5
(7.0) percent of net sales. A strong profit improvement was achieved
despite the high price of steel in particular.
Net financing items were EUR -1.8 (-0.2) million.
KONE's profit before taxes for the January-March period was EUR -74.7
(51.3) million. Taxes totaled EUR 20.3 (19.5) million, taking into
account taxes proportionate to the amount estimated for the financial
year. Net income for the period was EUR -95.0 (31.8) million.
Earnings per share were EUR -0.76 (0.25). Equity per share was EUR
3.80 (5.55).
Cash Flow and Financing
In the first quarter, KONE's cash flow from operations (before
financing items and taxes) was EUR 142.7 million (117.3). At the end
of March, net working capital was negative at EUR -349.3 (December
31, 2006: -139.5) million, including financing items and taxes. The
net working capital at the end of March 2007 includes the EUR 142.0
million provision for the European Commission's fine decision.
Net debt totaled EUR 142.3 (December 31, 2006: 124.9) million.
Gearing was 29.7 percent compared with 17.9 percent at the end of the
previous accounting period. KONE's total equity/total assets ratio
was 20.8 (December 31, 2006: 30.5) percent at the end of March.
Capital Expenditures
KONE's capital expenditure, including acquisitions, totaled EUR 17.1
(26.7) million. Acquisitions accounted for EUR 9.1 (15.2) million of
this figure. KONE continued to acquire small elevator service
companies.
In January, KONE signed an agreement to acquire MIRO Elevators
Limited, a Canadian service company. It has about 1,200 elevators in
its maintenance base. The share capital of MIRO Elevators Limited was
transferred to KONE at the end of January. MIRO was the most notable
acquisition made during the reporting period. None of the acquired
companies had material effect on the interim period.
Research and Product Development
Product development expenses in the first quarter totaled EUR 13.1
(11.8) million, representing 1.6 (1.6) percent of net sales. R&D
expenses include development of new product concepts and further
developments of existing products and services.
In the first quarter, solutions to improve KONE's accessible markets
were released. In the high rise market, a new flexible line of
signalization was released. For volume elevators in the European
market a new version to achieve better performance was introduced. In
addition, a number of service products were also released; for
example, an updated modernization package offering customers improved
flexibility in electrification and space optimization.
European Commission Investigation
The European Commission started an investigation concerning
anticompetitive practices in the elevator and escalator market in
Europe in 2004. The outcome of the three-year process was announced
on February 21, 2007. The Commission found KONE's subsidiaries in
Belgium, Luxembourg, Germany and the Netherlands to have been
involved in local anticompetitive practices prior to early 2004, and
imposed a EUR 142 million fine on KONE. The fine was imposed for
anticompetitive practices in Germany and the Netherlands. KONE did
not receive a fine in relation to Belgium and Luxembourg, as KONE was
the first company to cooperate with the Commission regarding these
countries.
KONE will appeal the European Commission's decision. A provision of
EUR 142,0 million for the European Commission's decision has been
recognized in the first quarter result.
Other Events during the Reporting Period
In February, KONE's Austrian subsidiary was notified by the Austrian
cartel court of the initiation of proceedings for the imposition of
fines against companies operating in the Austrian elevator and
escalator market including KONE's Austrian subsidiary. The case
relates to alleged anticompetitive practices in the local market
before mid-2004.
KONE immediately initiated a thorough internal investigation.
KONE has not made a provision in this respect.
Personnel
KONE had 29,868 (31 December, 2006: 29,321) employees at the end of
March 2007. The average number of employees during January-March 2007
was 29,622 (27,653).
The geographical distribution of KONE employees was 57 (59) percent
in EMEA, 18 (19) percent in the Americas and 25 (22) percent in
Asia-Pacific.
Operational Risks
KONE's business activities are exposed to risks, of which the most
significant are fluctuations in currency rates and increases in raw
material prices and personnel costs.
A rise in raw material prices is reflected directly in the production
costs of components made by KONE, such as doors and cars, and
indirectly in the prices of purchased components. The price of oil
also affects maintenance costs.
Subsidiary investments are hedged from currency risks in accordance
with the hedging policy to ensure that the total effect of foreign
exchange rates on the Corporation's gearing is neutral. As the
expenses and income of the elevator and escalator business occur
mainly in the same currency, exchange rate movements are reflected
mostly in the translation of the achieved result into euros.
Appointment to the Executive Board
KONE Corporation appointed Vance Tang as the Executive Vice President
and Area Director responsible for the Americas and a member of the
Executive Board as of February 19, 2007.
Annual General Meeting
KONE Corporation's Annual General Meeting in Helsinki on February 26,
2007 confirmed the number of members of the Board of Directors as
seven and it was decided to elect one deputy member. Re-elected as
full members of the Board were Matti Alahuhta, Reino Hanhinen, Antti
Herlin, Sirkka Hämäläinen-Lindfors, Masayuki Shimono, Iiro Viinanen
and Sirpa Pietikäinen. Jussi Herlin was elected as deputy member. The
term of the Board ends at the next Annual General Meeting.
At its meeting held after the Annual General Meeting, the Board of
Directors elected Antti Herlin as its Chairman and Sirkka
Hämäläinen-Lindfors as Vice Chairman of the Board.
In addition, the Board of Directors' proposal that the Annual General
Meeting authorize it to repurchase KONE's own shares with assets
distributable as profit was approved. Altogether, no more than
12,785,000 shares may be repurchased, of which no more than 1,905,000
are to be class A shares and 10,880,000 class B shares, taking into
consideration the provisions of the Companies Act regarding the
maximum amount of treasury shares the Company is allowed to possess.
The proposed amount corresponds to nearly 10 percent of the share
capital of the Company and the total voting rights.
In addition, the Board of Directors was authorized to decide on the
distribution of any shares repurchased by the company. The
authorization is limited to a maximum of 1,905,000 class A shares and
10,880,000 class B shares. The Board of Directors is authorized to
decide to whom and in which order the repurchased shares are
distributed. The Board of Directors may decide on the distribution of
repurchased shares otherwise than in proportion to the existing
pre-emptive right of shareholders to purchase the Company's own
shares.
The repurchased shares may be used as compensation in acquisitions
and in other arrangements as well as to implement the Company's
share-based incentive plans in the manner and to the extent decided
by the Board of Directors. The Board of Directors also has the right
to decide on the distribution of the shares in public trading on the
Helsinki Stock Exchange for the purpose of financing possible
acquisitions. The shares shall be distributed at least at the market
price at the moment of their transfer determined on the basis of the
trading price for class B shares determined in public trading in the
Helsinki Stock Exchange.
These authorizations shall remain in effect for a period of one year
from the date of decision of the Annual General Meeting.
In addition, The Board of Directors was authorized to grant options.
On the basis of this authorization, the Board of Directors may decide
to grant to key personnel of the group or to the company's wholly
owned subsidiary, Kone Capital Oy, options which entitle them to
subscribe for a maximum of 2,000,000 new class B shares. The company
has a valid financial reason to grant options, because the options
are intended to form a part of the group's incentive and commitment
plan for key personnel.
This authorization will remain in force for one year following the
decision of the Annual
General Meeting.
In addition, the Annual General Meeting nominated
PricewaterhouseCoopers Oy, Authorized Public Accountants, as the
Company's auditor, with Heikki Lassila, APA, as the principally
responsible auditor.
Dividend
The Annual General Meeting approved the Board's proposal for a
dividend of EUR 0.99 per class A share and EUR 1.00 per class B share
or in total EUR 125.5 million. The date of the dividend payment was
set for March 8, 2007. The rest of the distributable equity, EUR
1,146 million, was retained and carried forward.
Share Capital and Shares
Option Subscription and Share Capital
The KONE 2005A and 2005B options based on the KONE Corporation option
program 2005 were listed on the main list of the Helsinki Stock
Exchange on June 1, 2005. Each option entitles its holder to
subscribe for six (6) class B shares at a price of EUR 8.04 per
share.
As of March 31, 2007, 609,084 shares have been subscribed for with
the options, raising KONE's share capital to EUR 64,059,297.00,
comprising 109,066,416 listed class B shares and 19,052,178 unlisted
class A shares.
The remaining 2005A options entitle their holders to subscribe for
197,766 class B shares, while the remaining 2005B options entitle
their holders to subscribe for 501,660 class B shares. The share
subscription period for series A options and series B options ends on
March 31, 2008 and March 31, 2009 respectively. The remaining number
of shares that can be subscribed for is 699,426. The subscription
price is EUR 8.04 per share.
In 2005, KONE also granted a conditional option program, 2005C, and a
conditional share-based incentive plan. The share subscription period
of the 2005C option program will begin April 1, 2008, only if the
average net sales growth of the group for the 2006 and 2007 financial
years exceeds market growth, the operating income (EBIT) of the 2006
financial year exceeds EBIT for the 2005 financial year, and EBIT for
the 2007 financial year exceeds EBIT for the 2006 financial year.
Shares and trading volume
The volatility in the stock markets was reflected in KONE's share
price during the reporting period. The period high was EUR 47.73 and
period low EUR 39.52.
KONE's share closed at EUR 42.77. The volume weighted average share
price during the period was EUR 43.80.
Share turnover during the period amounted to EUR 1,242.3 (706.9)
million, with 28,389,501 (20,930,001) shares being traded. This
represents 26 percent of the company's listed class B shares. The
daily average trading volume was 443,586 (327,031) shares,
representing a daily average turnover of approximately EUR 19
million. KONE corporation's market capitalization at the end of the
period was EUR 5,362.2 (4,319.7) million, disregarding the group's
treasury shares.
The number of registered shareholders at the beginning of the review
period was 13,673 and 13,068 at its end. The number of private
households totaled 11,771.
According to the nominee registers, approximately 44.8 percent of the
listed class B shares were owned by foreigners at the beginning of
the period and approximately 45.5 at the end. Other foreign ownership
at the end of the period totaled approximately 5.9 percent; thus a
total of approximately 51.5 percent of the company's listed class B
shares were owned by international investors, corresponding to
approximately 19 percent of the total votes in the company.
Repurchase of KONE Shares
On the basis of the Annual General Meeting's authorization, KONECorporation's Board of Directors decided to commence repurchasing
shares at the earliest on March 8, 2007. The repurchasing of shares
will continue until otherwise announced.
During the first quarter, KONE used its authorization and bought back
6,000 of its own shares. At the end of March, the group had 2,744,753
class B shares in its possession. The shares in the group's
possession represent 0.7 percent of the total number of class B
shares. This corresponds to 0.3 percent of the total voting rights.
At the end of the reporting period March 31, 2007, KONE's Board of
Directors had no current authorization to raise the share capital or
to issue convertible or warrant loans.
Flagging notifications
On March 8, 2007 Morgan Stanley Investment Management Limited
disclosed to KONE Corporation pursuant to the Securities Markets Act,
chapter 2, section 9, that its holding in KONE Corporation had
exceeded five (5) percent of the share capital. The date of change in
the holdings was November 29, 2005.
Outlook
We estimate that market growth will not be as strong in all markets
this year as in 2006. This will be the case especially in North
America and Southern Europe. However, the market development in e.g.
Asia-Pacific will continue to
be strong.
KONE's target for 2007 is to achieve an approximate 10 percent growth
in net sales, calculated at comparable exchange rates, compared to
2006. The operating income (EBIT) target is to achieve growth of
approximately 20 percent from the comparable 2006 figure of EUR
360 million excluding the EUR 142.0 million provision for the
European Commission's fine decision.
In 2008, KONE's objective is to achieve an operating income (EBIT)
margin of about 12 percent.
Helsinki, 24 April, 2007
KONE Corporation
Board of Directors
Enclosures
1 Consolidated Statement of Income
2 Consolidated Balance Sheet and Consolidated Statement of Changes in
Equity
3 Consolidated Statement of Cash Flow
4 Notes for the Interim Report
This Interim report and the presentation used in the Analyst andMedia Conference will be available on the company web site at
www.kone.com.
KONE Corporation will release its Interim Result for
January 1-June 30 on July 20, 2007.
This Interim Report contains forward-looking statements that are
based on the current expectations, known factors, decisions and plans
of the management of KONE. Although management believes that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct. Accordingly, results could differ materially
from those implied in the forward-looking statements as a result of,
among other factors, changes in economic, market and competitive
conditions, changes in the regulatory environment and other
government actions and fluctuations in exchange rates.
Consolidated statement of income
MEUR 1-3/2007 % 1-3/2006 % 1-12/2006 %
Sales 811.2 735.0 3,600.8
Costs and expenses -727.7 -668.6 -3,182.4
Depreciation -14.2 -14.7 -58.3
Provision for the
European Commission's
fine decision -142.0
Operating income -72.7 -9.0 51.7 7.0 360.1 10.0
Share of associated
companies' net income -0.2 -0.2 -0.3
Financing income 3.4 3.9 16.1
Financing expenses -5.2 -4.1 -19.6
Income before taxes -74.7 -9.2 51.3 7.0 356.3 9.9
Taxes -20.3 -19.5 -121.9
Net income -95.0 -11.7 31.8 4.3 234.4 6.5
Net income
attributable to:
Shareholders of the
parent company -94.9 32.1 234.8
Minority interests -0.1 -0.3 -0.4
Total -95.0 31.8 234.4
Earnings per share for
profit attributable to
the
shareholders of the
parent company EUR
Basic earnings per
share -0.76 0.25 1.86
Diluted earnings per
share -0.75 0,25 1.85
Consolidated balance sheet
Assets
MEUR 31.3.2007 31.3.2006 31.12.2006
Non-current assets
Intangible assets 624.2 574.0 615.7
Tangible assets 217.2 217.2 217.7
Loans receivable and other
interest-bearing assets 3.0 55.6 5.1
Deferred tax assets 135.0 130.5 134.1
Investments 130.1 137.7 129.6
Total 1,109.5 1,115.0 1,102.2
Current assets
Inventories 774.8 654.8 668.8
Advance payments received -665.8 -528.3 -552.1
Loans receivable and other non
interest-bearing assets 1.4 0.6 44.6
Accounts receivable and other
non interest-bearing assets 833.3 710.1 805.1
Cash, cash equivalents and
financial assets 252.3 193.3 223.8
Total 1,196.0 1,030.5 1,190.2
Total assets 2,305.5 2,145.5 2,292.4
Equity and liabilities
MEUR 31.3.2007 31.3.2006 31.12.2006
Equity 479.9 574.9 698.6
Non-current liabilities
Loans 76.8 140.0 100.2
Deferred tax liabilities 30.5 27.6 30.3
Employee benefits 144.6 151.9 145.0
Total 251.9 319.5 275.5
Provisions 210.0 100.8 71.8
Current liabilities
Loans 322.2 239.2 298.2
Accounts payable and other
liabilities 1,041.5 911.1 948.3
Total 1,363.7 1,150.3 1,246.5
Total equity and liabilities 2,305.5 2,145.5 2,292.4
Consolidated Statement of Changes in Equity
1)Share capital
2)Share premium account
3)Fair value and other reserves
4)Translation differences
5)Own shares
6)Retained earnings
7)Minority earnings
8)Total equity
MEUR 1) 2) 3) 4) 5) 6) 7) 8)
1 Jan, 2007 64.0 98.0 -0.5 -14.0 -91.2 638.8 3.5 698.6
Net income for the
period -94.9 -0.1 -95.0
Items booked directly
into equity:
Transactions with
shareholders
and minority
shareholders:
Dividends paid -125.1 -125.1
Issue of shares (option
rights) 0.0 0.4 0.4
Purchase of own shares -0.3 -0.3
Sales of own shares -
Change in minority
interests -0.4 -0.4
Cash flow hedge 0.9 0.9
Translation differences 0.8 0.8
Hedging of foreign
subsidiaries -2.8 -2.8
Tax impact of hedging 0.7 0.7
Option and share based
compensation 2.1 2.1
31 Mar, 2007 64.0 98.4 0.4 -15.3 -91.5 420.9 3.0 479.9
MEUR 1) 2) 3) 4) 5) 6) 7) 8)
1 Jan, 2006 63.9 96.4 -5.1 9.9 -21.9 523.2 2.8 669.2
Net income for the
period 32.1 -0.3 31.8
Items booked directly
into equity:
Transactions with
shareholders
and minority
shareholders:
Dividends paid -126.9 -126.9
Issue of shares (option
rights) 0.1 0.6 0.7
Purchase of own shares -
Sales of own shares -
Change in minority
interests 0.0 0.0
Cash flow hedge 1.6 1.6
Translation differences -3.2 -3.2
Hedging of foreign
subsidiaries -0.4 -0.4
Tax impact of hedging 0.1 0.1
Option and share based
compensation 2.0 2.0
31 Mar, 2006 64.0 97.0 -3.5 6.4 -21.9 430.4 2.5 574.9
MEUR 1) 2) 3) 4) 5) 6) 7) 8)
1 Jan, 2006 63.9 96.4 -5.1 9.9 -21.9 523.2 2.8 669.2
Net income for the
period 234.8 -0.4 234.4
Items booked directly
into equity:
Transactions with
shareholders
and minority
shareholders:
Dividends paid -126.9 -129.6
Issue of shares (option
rights) 0.1 1.6 1.7
Purchase of own shares -69.3 -69.3
Sales of own shares -
Change in minority
interests 1.1 1.1
Cash flow hedge 4.6 4.6
Translation differences -30.4 -30.4
Hedging of foreign
subsidiaries 8.8 8.8
Tax impact of hedging -2.3 -2.3
Option and share based
compensation 7.7 7.7
31 Dec, 2006 64.0 98.0 -0.5 -14.0 -91.2 638.8 3.5 698.6
Consolidated cash flow
MEUR 1-3/2007 1-3/2006 1-12/2006
Operating income -72.7 51.7 360.1
Change in working capital 201.2 50.9 -46.7
Depreciation 14.2 14.7 58.3
Cash flow from operations 142.7 117.3 371.7
Cash flow from financing items
and taxes -2.4 -11.1 -105.9
Cash flow from operating
activities 140.3 106.2 265.8
Cash flow from investing
activities -43.9 -22.7 -96.4
Cash flow after investing
activities 96.4 83.5 169.4
Purchases and sales of own
shares -0.3 - -69.3
Share issue 0.4 0.7 1.7
Dividends paid -116.0 -114.6 -126.8
Change in loans receivable 13.4 -2.9 -14.3
Change in loans payable 2.7 21.4 38.2
Cash flow from financing
activities -99.8 -95.4 -170.5
Change in cash and cash
equivalents -3.4 -11.9 -1.1
Cash and cash equivalents at the
beginning of the period 109.5 113.5 113.5
Translation difference -0.1 -0.8 -2.9
Cash and cash equivalents at the
end of the period 106.0 100.8 109.5
Change in cash and cash
equivalents -3.4 -11.9 -1.1
Net debt at the beginning of the
period 124.9 99.3 99.3
Net debt at the end of the
period 142.3 129.7 124.9
Change in net debt -17.4 -30.4 -25.6
Key figures 1-3/2007 1-3/2006 1-12/2006
Basic earnings per share -0.76 0.25 1.86
Diluted earnings per share -0.75 0.25 1.85
Equity per share 3.80 4.50 5.55
Interest bearing net debt 142.3 129.7 124.9
Total equity/total assets 20.8 26.8 30.5
Gearing 29.7 22.6 17.9
Return on equity neg. 20.4 34.3
Return on capital employed neg. 21.2 35.4
Total assets 2,305.5 2,145.5 2,292.4
Assets employed 622.2 704.6 823.5
Working capital (including
financing and tax items) -349.3 -224.3 -139.5
Sales by geographical areas MEUR 1-3/2007 % 1-3/2006 % 1-12/2006 %
EMEA* 535.5 66 464.4 63 2,319.4 65
Americas 177.6 22 178.7 24 805.1 22
Asia-Pacific 98.1 12 91.9 13 476.3 13
Total 811.2 735.0 3,600.8
* EMEA = Europe, Middle East,
Africa
Quarterly figures
pro pro
forma forma
Q1/2007 Q4/2006 Q3/2006 Q2/2006 Q1/2006 Q4/2005 Q3/2005 Q2/2005 Q1/2005
Orders
received,MEUR 902.1 712.1 742.0 821.9 840.3 702.5 649.4 688.3 604.1
Order book,
MEUR 3,105.7 2,762.1 2,951.0 2,818.0 2,654.0 2,326.8 2,371.7 2,264.7 2,023.1
Sales, MEUR 811.2 1,145.6 879.8 840.4 735.0 1,013.4 804.7 783.1 649.3
Operating
income, MEUR 69.3* 123.4 101.1 83.9 51.7 93.6 79.1 60.8 39.0**
Operating
income, % 8.5* 10.8 11.5 10.0 7.0 9.2 9.8 7.8 6.0**
*) Excluding the MEUR 142.0 provision for the European Commission's
fine decision.
**) Excluding MEUR 89.2 provision for the development and
restructuring program.
Orders received MEUR 1-3/2007 1-3/2006 1-12/2006
902.1 840.3 3,116.3
Order book MEUR 31.3.2007 31.3.2006 31.12.2006
3,105.7 2,654.0 2,762.1
Capital expenditure MEUR 1-3/2007 1-3/2006 1-12/2006
In fixed assets 6.6 10.2 51.3
In leasing agreements 1.4 1.3 9.1
In acquisitions 9.1 15.2 90.1
Total 17.1 26.7 150.5
R&D Expenditure MEUR 1-3/2007 1-3/2006 1-12/2006
13.1 11.8 50.3
R&D Expenditure as percentage of
sales 1.6 1.6 1.4
Number of employees 1-3/2007 1-3/2006 1-12/2006
Average 29,622 27,653 28,366
At the end of the period 29,868 27,783 29,321
Provisions
1-3/2007 1-3/2006 1-12/2006
Total provisions at the beginning of
period 71.8 112.0 112.0
Translation difference -0.1 -1.3 -5.8
Changes during the period
The provision for the European
Commission's fine decision 1) 142.0 - -
The provision for development and
restructuring program 2) -0.4 -4.1 -23.9
Other changes -3.3 -5.8 -10.5
Total provisions at the end of period 210.0 100.8 71.8
1) The provision of EUR 142.0 million recognized in the first quarter
of 2007 related to the European Commission's decision to impose a
fine to KONE for anticompetitive practices in Germany and
Netherlands. KONE will appeal the decision.
2) The provision of EUR 89.2 million recognized in the first quarter
of 2005 related to the development and restructuring program.
Commitments
MEUR 31.3.2007 31.3.2006 31.12.2006
Mortgages
Group and parent company 30.7 30.7 30.7
Pledged assets
Group and parent company 5.4 5.7 5.4
Guarantees
Associated companies 1.8 2.0 1.8
Others 3.6 9.4 3.4
Operating leases 116.8 113.8 115.8
Total 158.3 161.6 157.1
The future minimum lease
payments under non-cancellable
operating leases 31.3.2007 31.3.2006 31.12.2006
Less than 1 year 34.0 30.5 34.6
1-5 years 72.5 70.2 72.5
Over 5 years 10.3 13.1 8.7
Total 116.8 113.8 115.8
In February 2007, KONE's Austrian subsidiary was notified by the
Austrian cartel court of the initiation of proceedings for the
imposition of fines against companies operating in the Austrian
elevator and escalator market including KONE's Austrian subsidiary.
The case relates to alleged anticompetitive practices in the local
market before mid-2004. KONE immediately initiated a thorough
internal investigation. KONE has not made a provision in this
respect.
Derivatives
positive negative net fair net fair net fair
fair value fair value value value value
Fair values of
derivative
financial
instruments
MEUR 31.3.2007 31.3.2007 31.3.2007 31.3.2006 31.12.2006
FX Forward
contracts 3.5 3.7 -0.2 -1.0 1.2
Currency options 0.0 0.0 0.0 0.1 0.0
Cross-currency
swaps, due under
one year - - - - 43.2
Cross-currency
swaps, due in
1-3 years 5.4 - 5.4 35.1 2.8
Electricity
derivatives 0.4 0.3 0.1 1.3 0.3
Total 9.3 4.0 5.3 35.5 47.5
Nominal values of derivative financial
instruments MEUR 31.3.2007 31.3.2006 31.12.2006
FX Forward contracts 478.5 596.7 392.8
Currency options 11.4 48.5 32.3
Cross-currency swaps, due under one
year - - 153.8
Cross-currency swaps, due in 1-3 years 156.7 173.8 43.6
Electricity derivatives 3.3 2.0 2.9
Total 649.9 821.0 625.4
Shares and Shareholders Class A shares Class B shares Total
31 March 2007
Number of shares 19,052,178 109,066,416 128,118,594
Own shares in possession 1) 2,744,753
Share capital, EUR 64,059,297
Market capitalization, MEUR 5,480
Number of shares traded,
million, 1-3/2007 28.2
Value of shares traded,
MEUR, 1-3/2007 1,242
Number of shareholders 3 13,068 13,068
Close High Low
Class B share price, EUR,
1-3/2007 42.77 47.73 39.52
1) During the first quarter 2007, KONE Corporation repurchased 6,000
own class B shares. During the accounting period 1 January-31
December, 2006, KONE Corporation repurchased a total of 1,963,913 own
class B shares. During the accounting period 1 June-31 December,
2005, KONE Corporation repurchased a total of 374,840 own class B
shares. In addition, relating to the share-based incentive plan, a
company included in the consolidated financial statements acquired
400,000 KONE class B shares in December 2005.
