Kone Earnings: Resilient Order Intake in Late 2023 Amid Tough Demand Environment for New Equipment

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.