KONE (KNEBV) Q2 2024 earnings summary

Executive summary

• Service sales grew 9% year-over-year, with record high Modernization orders and strong profitability improvement for the sixth consecutive quarter.

• Orders received increased 3.6% at comparable exchange rates, with double-digit growth in three of four regions; Service and Modernization offset headwinds in China New Building Solutions.

• Employee engagement and customer satisfaction improved, with engagement scores well above global benchmarks.

• Leadership strengthened with the appointment of Kaija Bridger as Executive Vice President, People & Communications, effective July 1, 2024.

• Profitability improved for the sixth consecutive quarter, with adjusted EBIT margin up 20 basis points year-over-year.

Financial highlights

• Q2 2024 orders received: €2,327.6m (+2.3% y/y, +3.6% at comparable FX); order book: €9,326.6m (+3.1% y/y).

• Q2 2024 sales: €2,801.0m (-1.2% y/y, -0.1% at comparable FX); H1 2024 sales: €5,369.3m (-0.4% y/y, +1.2% at comparable FX).

• Q2 2024 adjusted EBIT: €334.7m (margin 11.9%, +20bps y/y); H1 2024 adjusted EBIT: €597.0m (margin 11.1%, +50bps y/y).

• Cash flow from operations in H1 2024: €710.8m (vs. €762.0m H1 2023); net working capital at -€782.8m.

• Basic EPS: Q2 €0.50 (+15.8%), H1 €0.89 (+13.4%).

Outlook and guidance

• 2024 sales expected to grow 0–4% at comparable exchange rates; adjusted EBIT margin expected between 11.5%–12.2%.

• Negative FX impact on adjusted EBIT estimated at €10m if July 2024 rates persist.

• Modernization and services markets expected to remain active; New Building Solutions outlook mixed with China expected to decline over 10% in units.

• North America modernization market outlook upgraded to over 10% growth.

• Key growth drivers: Service and Modernization, strong order book; headwinds from China NBS and inflation.