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Introduction & Market Context
KONE Oyj (HEL:KNEBV) presented its second quarter and half-year 2025 financial results on July 18, showing continued growth in its service and modernization businesses despite ongoing challenges in the Chinese market. The Finnish elevator and escalator manufacturer reported stable overall orders and improved profitability, with its stock closing at €56.24 on July 17, up 3.04% ahead of the results announcement.
The company’s Q2 performance demonstrates its resilience in navigating regional market variations, with strong momentum outside China helping to counterbalance weakness in the world’s largest elevator market. This follows a similar pattern seen in Q1, when the company reported 8.5% service growth and nearly 20% expansion in modernization sales.
Quarterly Performance Highlights
KONE reported stable orders received at €2.3 billion in Q2 2025, representing 3.0% growth at comparable exchange rates. Sales grew 4.9% at comparable rates to €2.9 billion, driven primarily by strong performance in service and modernization segments.
As shown in the following chart of quarterly financial highlights:
The company’s adjusted EBIT margin improved by 25 basis points to 12.2% compared to Q2 2024, reflecting favorable business mix and operational efficiency. Cash flow from operations showed significant improvement, increasing 16.6% to €364 million.
"Q2 2025 demonstrated that our strategy execution is delivering results," said Philippe Delorme, President & CEO of KONE. "We’ve seen continued strength in our resilient Service and Modernization businesses, consistent profitability improvement, and good progress in key strategic metrics."
The detailed breakdown of orders received shows stability year-over-year despite regional variations:
Sales performance was particularly strong in service and modernization segments, which grew 8.6% and approximately 20% respectively at comparable exchange rates:
Strategic Initiatives
KONE highlighted progress across its five strategic focus areas, emphasizing digital transformation, modernization growth, customer and employee satisfaction, residential market share, and carbon reduction.
The company reported approximately 38% connectivity in its maintenance base and the deployment of field productivity tools in 30 countries as part of its digital acceleration strategy. Modernization sales grew approximately 20% year-to-date, with orders for the KONE MonoSpace Upgrade partial modernization solution increasing by around 30%.
On the sustainability front, KONE reported a 29% reduction in absolute Scope 1 & 2 emissions and a 12.8% reduction in Scope 3 emissions relative to products ordered. Approximately 60% of deliveries are now equipped with regenerative drives, supporting the company’s carbon reduction goals.
"We’re making excellent progress on our sustainability commitments," noted Delorme. "KONE has been recognized as the highest scoring E&E company on Time and Statista’s list and ranked as the 15th most sustainable company in Europe by Corporate Knights."
Regional Market Analysis
KONE’s regional performance showed significant variations, with strong growth outside China contrasting with continued challenges in the Chinese market. The company reported high single-digit growth in orders outside China, while Chinese orders declined by approximately 10%.
The following chart illustrates the market development across different regions in Q2 2025:
The Chinese market continues to face significant headwinds, with real estate investment down 12.1%, residential sales volume declining 5.2%, and new starts falling 16.4% year-over-year in Q2 2025. Despite these challenges, KONE reported positive growth in service and modernization segments in China.
Looking ahead, the company expects stable to positive growth in New Building Solutions across most regions, with continued positive momentum in Service and Modernization businesses globally:
Financial Outlook
KONE maintained its 2025 outlook, projecting sales growth of 2-5% at comparable exchange rates and an adjusted EBIT margin between 11.8-12.4%. The company expects a negative impact of approximately €50 million from foreign exchange rates on adjusted EBIT.
The company’s financial position remains strong, with key figures for Q2 2025 showing solid performance:
For the first half of 2025, KONE reported:
"Our performance is supported by strong growth in Service and Modernization, as well as our solid order book," explained Ilkka Hara, CFO of KONE. "However, we continue to face pressure in China’s New Building Solutions market and expect a slight decline in 2024 order margins to impact our performance."
The company’s adjusted EBIT and profitability show a positive trend, with margin expansion supported by favorable business mix:
KONE’s focus on cash flow generation has also yielded positive results, with improvements in both cash flow from operations and net working capital:
As KONE continues to execute its strategy with "speed and precision," the company appears well-positioned to navigate market challenges while capitalizing on growth opportunities in service, modernization, and sustainability-focused solutions. The company’s ability to maintain profitability improvement despite regional market variations demonstrates the resilience of its business model and the effectiveness of its strategic initiatives.
Full presentation:
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