Kone reports Q3 rebound in modernization orders, maintains outlook

Investing.com -- Kone (HE:KNEBV) on bThursday reported a 3.6% increase in third-quarter orders, primarily driven by a significant rebound in modernization projects following a weak second quarter.

The Finnish elevator and escalator manufacturer saw orders rise 7.8% in local currency to €2.14 billion, exceeding consensus expectations of €2.07 billion. The company experienced approximately 15% growth outside China, while China orders declined by about 10%.

New equipment orders in China showed a slight increase in volume and major projects, while modernization orders grew significantly in both volume and major projects. Order margins remained stable year-over-year.

In China, where the new equipment market declined significantly in ordered units (more than 10%), Kone’s new building solutions orders in Greater China decreased 5-10% in units and more than 10% in monetary value.

Revenue increased 3.9% in local currency to €2.76 billion, broadly in line with consensus estimates. By business segment, modernization revenues outperformed expectations by 70 basis points, while new building solutions revenue came in 1% below forecasts. Service revenues were in line with expectations.

Adjusted operating profit reached €341 million, 1% above consensus estimates of €337 million, representing a margin of 12.3%. Cash flow from operations improved to €444 million compared to €345 million in the same period last year.

Kone slightly narrowed its full-year outlook, now expecting sales growth of 3-5% in local currency compared to the previous guidance of 2-5%. The company forecasts an adjusted operating profit margin between 11.9% and 12.3%, versus the previous range of 11.8-12.4%.

The company also reduced its expected foreign exchange headwind to €30 million from €50 million previously.

In its market outlook, Kone upgraded its forecast for new building solutions in North America, now expecting slight growth versus the previous projection of stable development. All other segment outlooks remained unchanged.

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