The machine’s result fell short of forecasts, orders accumulated more than expected – “harsh market conditions” in China

Elevator and escalator company Kone improved its results in July–September, but fell short of analysts’ expectations. The company’s adjusted operating profit grew to 319.4 million euros, when by Vara Research The average of 19 analysts’ forecasts suggested an adjusted operating profit of 340 million euros. Last year’s adjusted operating profit for July–September was 315.9 million euros.

Kone reports received orders for the third quarter of 2,076.6 million euros. Analysts’ forecast was 1,991.6 million euros, and the reading for the comparison period from the same period last year was 1,989.9 million euros.

Kone’s turnover in the third quarter was 2,753.6 million euros. Analysts forecast an average turnover of 2,791.2 million euros. The turnover for the comparison period was recorded at 2,749.9 million euros.

The machine specifies its instructions throughout the year. The company now expects net sales to grow this year by 0-3 percent at comparable exchange rates, while the previous estimate was 0-4 percent at comparable exchange rates. The company’s guideline for the adjusted operating profit margin for the whole year is specified to 11.5–11.9 percent, while the previous guideline was 11.5–12.2 percent.

“harsh market conditions” in China

Managing director Philippe Delorme commented in the results release that the highlights of the third quarter were the new strategy announced by Kone and the double-digit growth of received orders in three of the company’s four market areas.

“Our growth was fastest in the Middle East, Southeast Asia, India and North America, but orders received in Europe also grew by more than 10 percent at comparable exchange rates. In China, the challenges of the real estate market intensified, and we continue to adapt to the harsh market conditions by focusing on cash flow and moving the business mix in a more balanced direction in the region,” commented Delorme.

According to Kone, the market for new devices worldwide decreased slightly during the third quarter. There were regional differences in demand. In North America, the market grew clearly. In Europe, the market was stable. Activity increased in the southern and eastern parts of Europe, while activity was weaker in the western and Nordic countries. In the Asia-Pacific, Middle East and Africa region, the market grew considerably. Market activity continued to be weak in China, the company says.

The maintenance and modernization market still offered the best growth opportunities. According to Kone, both markets developed positively and grew in all areas.

Fierce competition affected the pricing environment in the new device market in China, while pricing was more stable elsewhere in the world. In the maintenance and modernization market, the pricing environment was more favorable, Kone says.

Kone keeps its verbal market outlook unchanged. According to them, activity in the new equipment market is expected to be stable in North America and Europe. In the Asia-Pacific, Middle East and Africa region, the market is expected to grow clearly. In China, activity is expected to decrease by more than 10 percent measured in units, and price pressures will continue.

The modernization market is expected to grow in all regions. Maintenance activity is expected to grow slightly in more developed markets and to grow clearly in the Asia-Pacific region, the Middle East and Africa, and China.