Company Reports

Kone is one of the four largest global elevator and escalator companies operating in a mature, consolidated, and structurally attractive industry. The company derives approximately 65% of its revenue—and the bulk of its profit—from its service segment, which benefits from a large installed base generating high margins, recurring revenue, and stable cash flows.

Kone delivered a solid set of second-quarter 2026 results. Comparable sales grew 3.4%, adjusted EBIT margin increased 40 basis points to 12.6%, and orders rose 10.9% on a comparable basis. Full-year guidance remains unchanged, and the TK Elevator deal is progressing as expected.

Kone announced the proposed acquisition of TK Elevator for an enterprise value of EUR 29.4 billion, creating the world's largest elevator and escalator company with EUR 20.5 billion in combined sales. First-quarter results were solid, but the deal dominates the April 29 agenda.

Kone is one of the four largest global elevator and escalator companies operating in a mature, consolidated, and structurally attractive industry. The company derives approximately 65% of its revenue—and the bulk of its profit—from its service segment, which benefits from a large installed base generating high margins, recurring revenue, and stable cash flows.

Kone reported a solid close to 2025, delivering 12% organic order growth and 4% comparable sales growth as modernization and service more than offset continued weakness in China new equipment. Adjusted EBIT margin expanded 0.6% to 13.6%, supported by a more favorable mix and cost reductions.

Kone reported a good set of third-quarter 2025 results, with comparable order and sales growth of 7.8% and 3.9%, respectively—an acceleration from second-quarter numbers. EBIT margin expanded by 70 basis points to 12.3%, as the mix continues to shift to service and modernization.

Kone reported a decent, but softening, set of second-quarter 2025 results with 3% and 5% organic order and sales growth, respectively, while EBIT margins expanded slightly to 12.2%. In its 2025 outlook, the company expects top-line growth between 2% and 5% and midpoint EBIT margin of 12.1%.

Kone reported a strong set of first-quarter 2025 results, with 6% and 5% order and sales growth, respectively. EBIT margins expanded by 25 basis points to 10.2%. The full-year 2025 outlook remains robust, with management guiding for 1% to 6% topline growth and expanding margins. Shares are up 6%.

We take a fresh look at Kone as we transfer coverage. Kone is one of the four largest global elevator companies and generates revenue through the sale of new elevators, modernizing old equipment, and servicing its installed base. Its operations span globally, with a strong presence in Asia.

Kone is one of the four largest global elevator and escalator companies operating in a mature, consolidated, and structurally attractive industry. The company derives approximately 60% of its revenue—and the bulk of its profit—from its service segment, which benefits from a large installed base generating high margins, recurring revenue, and stable cash flows.

Wide-moat Kone reported strong fourth-quarter results, with organic revenue growth of 5.1%, ahead of FactSet consensus, and order growth of 3.4% year on year. Weak Chinese demand for new equipment continued to weigh on group-level metrics, as orders in the period declined roughly 10%. Service and modernization sales remained the bright spot for Kone, growing 11.2% and 13.6%, respectively. Kone’s initial outlook for 2025 broadly indicates a continuation of trends seen in 2024, albeit with no imminent recovery in Chinese new equipment orders. With no material changes expected to our forecasts, we maintain our EUR 50 fair value estimate.

Wide-moat Kone delivered a resilient third-quarter result, which once again featured strong growth in modernization orders and in elevator servicing. Notwithstanding, Chinese demand for new equipment continued to decline in the quarter, dragging new order intake down some 11% lower, quarter on quarter. While demand in China remains a pain point, the ongoing strength in modernization orders highlights the significant secular growth opportunity in elevator modernizations for Kone and its major elevator original equipment manufacturer peers. Kone continues to grow its high-profit margin service business, with service sales climbing about 10% on a constant-currency basis. We make no change to our EUR 50 fair value estimate, which includes the impact of cost-out initiatives recently unveiled by Kone, which is expected to drive modest profit margin expansion over the 2025-27 period. Kone shares screen as approximately fairly valued.

Kone outlined its newly minted group strategy—for the approaching six-year period of 2025-30—at its 2024 capital markets day. Kone’s refreshed strategy strikes us as sensible in light of key changes afoot within the global elevator and escalator market, which include structural headwinds in China’s new elevator equipment market, and aims to best position the wide-moat elevator original equipment manufacturer to benefit from opportunities further afield, which include Southeast Asia. The strategy also seeks to accelerate growth of Kone’s service business, with further increases in the rate of digital enablement of its service portfolio key to driving service portfolio growth. Importantly, Kone also continues to pursue the sizable elevator modernization opportunity that exists given the aging installed base of elevators globally.

Kone is a global top-four elevator and escalator original equipment manufacturer. Its operations are integrated across manufacturing and installation activities, while also spanning E&E servicing for existing installations. Kone also performs elevator modernization services for elevator systems that have come to the end of their useful lives, which is typically 15-20 years. Active in all major geographies, Kone has an approximate 15% share of the estimated $80 billion global E&E market.

Kone delivered a solid second-quarter result with order intake flat sequentially and strengthening 3.6% year on year, on a constant-currency basis. Growth in new orders was geographically broad-based, with orders rising in all regions aside from Asia--where conditions in the Chinese new elevator installation market remain particularly challenging. While new equipment orders were weak, modernization orders once again grew significantly, rising in all of Kone‘s geographies. Kone‘s EBIT margin strengthened sequentially, up 1.7 percentage points quarter on quarter to 11.9% as profit margins strengthened on new equipment installation deliveries (outside of China), according broadly with our full-year expectations. We make no change to our EUR 48 fair value estimate with our long-term view on the wide-moat elevator original equipment manufacturer unchanged. Kone shares trade at a slim 3% discount to our unchanged valuation.

Kone is a global top-four elevator and escalator original equipment manufacturer. Its operations are integrated across manufacturing and installation activities, while also spanning E&E servicing for existing installations. Kone also performs elevator modernization services for elevator systems that have come to the end of their useful lives, which is typically 15-20 years. Active in all major geographies, Kone has an approximate 15% share of the estimated $80 billion global E&E market.

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.

Wide-moat Kone delivered a resilient fourth-quarter result amid a still challenging environment for new elevator equipment demand. Indeed, fourth-quarter new orders proved stronger than we’d anticipated, rising 5% year on year to SEK 2.0 billion, marking a second quarter of sequential improvement in demand after an appreciably weakened first half of 2023. Order intake benefited from strong growth in service and modernization and buoyant new equipment orders in India and Southeast Asia that helped to partly offset weak new equipment demand in China and developed markets. Consequently, Kone’s full-year 2023 full-year 2023 order intake of SEK 8.6 billion tracked about 3% ahead of our forecast—a pleasing outcome amid macroeconomic conditions that remain unconducive to Kone’s new equipment business. Kone delivered full-year 2023 adjusted EBIT of SEK 1.25 billion, with adjusted EBIT margin firming by 1.5 percentage points to 11.4%. As anticipated, the group’s EBIT margin responded positively in 2023 to continuing sales mix shift toward high-profit margin services and modernization sales and the easing of raw materials prices.

Our estimates for Kone remain largely unchanged following delivery of its third-quarter result, which tracked our full-year expectations. Third-quarter sales growth decelerated meaningfully to negative 1.4% year on year, which was unsurprising given the weak new-equipment orders in early 2023, particularly in China and the Americas. However, third-quarter new order intake rose 0.3% year on year on a constant currency basis, breaking with the year-to-date declining trend in new equipment orders. Investors sent Kone shares higher—up around 4% at the time of writing—with the approximately flat new-order intake offering investors hope that the worst of the cyclical weakness in new equipment markets may have already come to pass. Kone shares screen attractively, trading at a 18% discount to our unchanged EUR 48 fair value estimate.

Sales growth further accelerated for wide-moat Kone in the second quarter of 2023, rising 16% year on year organically. Growth was spurred on by a combination of strong new equipment and modernization project deliveries—given a very healthy order book, which stood at a near-record high of about EUR 9.2 billion at the beginning of the quarter—and buoyant maintenance business revenue. We’ve bumped our full-year 2023 EBIT forecast by 4% to EUR 1.31 billion to account for organic growth of the maintenance business that has tracked year-to-date ahead of our prior expectations. Still, Kone’s 2023 is shaping up as a tale of two halves with challenging new equipment market conditions set to weigh appreciably on top-line growth in late 2023. New equipment demand remains significantly challenged, with new orders falling 8% organically in the second quarter, worsening from a 5% rate of decline in the prior quarter.