Henrik Ehrnrooth, President and CEO said :
“We ended the year 2017 with positive development on many fronts. Our orders received grew in all regions during the fourth quarter. I was especially pleased that the margin of orders received stabilized after being under pressure for several consecutive quarters. In Asia-Paci c, our orders received grew with positive contribution from pricing actions in China. We were also able to bene t from the opportunities in the growing markets of EMEA and North America with continued good growth in orders received. The final quarter was strong also in terms of sales. Service sales saw healthy growth of 6.5% at comparable exchange rates, and strong deliveries at the end of the year lifted the new equipment sales growth to 7.1%. However, higher raw material prices, price pressure we have seen earlier in our Chinese new equipment orders and increased R&D and IT spend continued to burden our operating income in the fourth quarter. The full year 2017 operating income declined, and our adjusted EBIT margin was 13.8% against 14.7% in 2016. We are taking determined actions to counter the headwinds and we can already see positive results from these.
The execution of our Winning with Customers strategy has started well during 2017. We have good momentum in rolling out our new services which were launched in 2017. Looking ahead to 2018, we plan to expand these groundbreaking services and speed up their roll-out globally. In new equipment, we have also introduced several new solutions for smart buildings and will continue to develop our offering further. The customer feedback on our latest solutions and services has been encouraging and demonstrates that we are clearly able to add value for our customers in new ways. I am con dent that we are on the right path to further strengthen our competitiveness with improved differentiation. I would like to thank all of our employees for their commitment and actions to bring our new strategy alive.
In 2018, we expect the market to continue to provide growth opportunities for KONE. We expect the new equipment market in China to decline slightly or to be stable in terms of units ordered, with competition remaining intense. The new equipment markets outside China and the service markets are expected to continue to grow. The good momentum we have in services and the solid order book in new equipment are expected to support healthy sales growth in 2018. The margin pressure which we saw in our orders received earlier and the higher raw material prices are expected to continue to burden our pro tability in 2018. However, we expect the margin pressure to start to ease towards the end of the year.
I’m looking ahead with confidence and excitement. The rapidly changing operating environment provides us opportunities to add value to our customers in new ways. I believe we are in a strong position to tap on these opportunities to continue developing towards our targets.”
Source : KONE Q4 2017, Financial Statement Bulletin, 25 January 2018