Financial Statement Bulletin of KONE Corporation for January–December 2023 (2024)

KONE Corporation,stock exchange release, January 26, 2024 at 8.30 a.m.EET

Financial StatementBulletin of KONE Corporation for January-December2023

Strong finish to theyear

October-December2023

• Orders received grewby 5.4% to EUR 2,049.2 (10-12/2022: 1,944.2) million. At comparableexchange rates, orders grew by10.5%.
• Sales declined by3.5% to EUR 2,809.9 (2,911.5) million. At comparable exchangerates, sales grew by0.7%.
• Operating income(EBIT) was EUR 362.1 (367.1) million or 12.9% (12.6%) of sales. Theadjusted EBIT was EUR 358.6 (365.0) million or 12.8% (12.5%) ofsales.*
• Cash flow fromoperations (before financing items and taxes) was EUR 381.1 (33.3)million.

January-December2023

• Orders receiveddeclined by 6.1% to EUR 8,577.7 (1-12/2022: 9,131.3) million. Atcomparable exchange rates, orders declined by1.4%.
• Sales grew by 0.4%to EUR 10,952.3 (10,906.7) million. At comparable exchange rates,sales grew by5.0%.
• Operating income(EBIT) was EUR 1,200.1 (1,031.2) million or 11.0% (9.5%) of sales.The adjusted EBIT was EUR 1,248.4 (1,076.6) million or 11.4% (9.9%)of sales.
• Cash flow fromoperations (before financing items and taxes) was EUR 1,485.2(754.7)million
• The Board proposes adividend of EUR 1.75 per class B share for the year2023.

Business outlook for2024

KONE expects itssales to be stable or to grow slightly at comparable exchange ratesin 2024. The improvement in adjusted EBIT margin is expected tocontinue in 2024, albeit with less tailwinds than in2023.

*KONE presentsadjusted EBIT as an alternative performance measure to enhancecomparability of business performance between reporting periods. InJanuary-December 2023, items affecting comparability amounted toEUR 48.3 million including EUR 57.7 million costs recognized onrestructuring measures and a positive effect of EUR 8.0 millionrecognized on completion of the sale of operations in Russia. Inthe comparison period, items affecting comparability included acharge for the impairment of assets and recognition of provisionsfor commitments in Russia and Ukraine as well as restructuringcosts.

PhilippeDelorme, President andCEO:

"Our fourth quarterresults underlined again the resilience of ourbusiness.Despite the economicand geopolitical uncertainty in the world, nine out of KONE'stwelve end-markets continue to grow. Our orders received grew bydouble-digits at comparable exchange rates with positivedevelopment across Areas and Businesses in the final quarter of2023. Also, KONE's financial results were solid in the finalquarter of 2023. The highlights for me were the continued stronggrowth in Service sales and the 20% sales growth in Modernizationat comparable exchange rates. Importantly, we continued to alsoimprove profitability, and cash generation washealthy.

Overall, many thingsdeveloped favorably in2023.We regained momentumin orders received, our sales grew by 5% atcomparableexchange rates in achallenging market, we improved profitability with good cashconversion, and made great progress in sustainability. All of thisgives us a solid starting point for 2024. In 2024, we expect salesto be stable or to grow slightly at comparable exchange rates. Theimprovement in adjusted EBIT margin is expected to continue, albeitwith less tailwinds than in2023.

For me, 2024 will bea year of learning, and I will be spending most of my timetraveling and meeting customers and KONEteams.I see many uniqueand exciting opportunities for us to lead our industry, and we willraise the bar where we need to. I'm impressed by the strong cultureand teams at KONE. The operating model renewal completed in 2023,will also help us execute our strategy with greater speed andattention to the differences between our geographical areas. Withthat, I'm confident that we will have a successful future and I'mexcited to start our journeytogether."

Operatingenvironment inOctober-December2023

The global NewBuilding Solutions marketdeclinedclearly during the fourth quarter as a result of higher interestrates and slowing economic growth in the more mature marketscombined with continued challenging market dynamics inChina.InAsia-Pacific, weak consumersentiment weighed on demand in China. Elsewhere in the region,activity grew significantly with continued strong demand in Indiaand Southeast Asia. Activity was mixed alsointhe EMEAregion.Weakness in theresidential markets drove a slight decline in Europe, whileactivity was stable in the Middle East andAfrica.In NorthAmerica,the market declinedsignificantly.

BoththeServiceandModernizationmarketsdeveloped positivelywith growth across allregions.

Intense competitioncontinued to impact the New BuildingSolutionspricingenvironmentinChina,while elsewherepricing was more stable. In the Service andModernization markets, the pricing environment remainedfavorable.

Operatingenvironment in January-December2023

Regional differencesin demand trends were apparentinthe global NewBuilding Solutions marketduring 2023. In themore mature markets, sentiment was impacted by rising interestrates and slowing economic growth, while activity in many emergingmarkets was more favorable.InChina, the focus oncompleting unfinished projects was strong throughout the year. Newconstruction related key indicators saw some policy drivenimprovement in the first quarter but weakened thereafter. Propertydevelopers' access to financing remained constrained and consumersentiment was poor.In the rest ofAsia-Pacific,activity grewclearly, supported by strong development in India and recovery inSoutheast Asia.In the EMEAregion,activitydeclined significantly in Europe due to weakness in the residentialsegment and grew slightly in the Middle East andAfrica.In NorthAmerica, the marketdeclined significantly.

BoththeServiceandModernizationmarketsdeveloped positively with growth across allregions.

Competition remainedintense in China, impacting the pricing environment. Outside Chinathepricingenvironmentwas morefavorable.

Market outlook2024

We have a positivemarket outlook for nine of our twelveend-markets.

Activity is expectedto decline slightly both in North America and in Europe. In China,the New Building Solutions market is expected to decline clearly.In Asia-Pacific, Middle East and Africa activity is expected togrow clearly.

Modernizationmarkets are expected to grow in all regions supported by an agingequipment base as well as the focus on sustainability andadaptability of buildings.

Service markets areexpected to grow slightly in the more mature markets and growclearly in Asia-Pacific, Middle East and Africa and inChina.

Business outlook2024

KONE expects itssales to be stable or to grow slightly at comparable exchange ratesin 2024. The improvement in adjusted EBIT margin is expected tocontinue in 2024, albeit with less tailwinds than in2023.

Key drivers forsales growth are positive outlook for Service and Modernization andthe strong order book. Declining New Building Solutions market inChina, and continued uncertainty in Europe and North America areheadwinds.

The keyprofitability drivers are sales growth in Service andModernization, better pricing coming through in deliveries andsavings from the operating model renewal. Persistent cost inflationand decision to slightly increase investments in R&D and IT areexpected to impact profitabilitynegatively.

Press and analystmeetings

A Microsoft Teamscall for the press, conducted in English, will be held on Friday,January 26, 2024 at 9:00 a.m. EET. Journalists are kindly asked tosign up to media@kone.com, and they will receive a link to the callupon registration.

A webcast foranalysts, conducted in English, will begin at 10:30 a.m. EET andwill be available onhttps://cloud.webcast.fi/kone/kone_2024_0126_q4. An on-demandversion of the webcast will be available on www.kone.com later thesame day. The event can also be joined via a telephoneconference.

U.S.: +1 786697 3501
UK: +44 (0) 33 0551 0200
Finland: +358 (0)9 2319 5437
Participant code:260124

For furtherinformation, pleasecontact:

Sanna Kaje, VicePresident, Investor Relations, KONE Corporation, tel. +358 204 750031

Sender:

KONECorporation

PhilippeDelorme
President andCEO

IlkkaHara
CFO

AboutKONE

At KONE, our missionis to improve the flow of urban life. As a global leader in theelevator and escalator industry, KONE provides elevators,escalators and automatic building doors, as well as solutions formaintenance and modernization to add value to buildings throughouttheir life cycle. Through more effective People Flow®, we makepeople's journeys safe, convenient and reliable, in taller, smarterbuildings. In 2023, KONE had annual sales of EUR 11.0 billion, andat the end of the year over 60,000 employees. KONE class B sharesare listed on the Nasdaq Helsinki Ltd. inFinland.

www.kone.com

KONE Financial Statement Bulletin 2023