Kone Earnings: Service and Modernization Order Strength Offsets Ongoing New Equipment Weakness

Investors warmed to Kone’s resilient first-quarter result, with the Kone share price responding positively to constant-currency new order growth of 1.6% in spite of challenging conditions within new elevator equipment markets globally. New equipment orders were down in the range of 0%-5%, with new elevator installation market conditions particularly challenging in North America and China where its property downturn is yet to subside. Still, first-quarter sales grew 3% in constant-currency terms, supported by strong growth in Kone’s service business and robust elevator modernization orders. Growth in elevator service markets was broad-based, but was most pronounced in Asia-Pacific, China, and the Middle East. Demand for elevator modernizations continued to grow at pace in all geographies, underscoring the significant opportunity that the aging global installed base of elevators poses to Kone and its original equipment manufacturing peers.