KONE 2013 | CORPOR ATE RESPONSIBILIT Y REPORT
ECONOMIC RESPONSIBILIT Y
17
KONE’s foremost economic responsibility is to
its shareholders. With our solutions, we bring
significant added value to our customers and
end users. Sustainable economic performance
also brings valuable and lasting benefits
to other stakeholders, such as employees,
suppliers and communities as a whole.
We strive to generate long-term returns for
shareholders by conducting our business
in a profitable, responsible and transparent
manner. At the end of 2013 KONE had over
45,000 shareholders, ranging from institutional
investors and companies to individuals, public
institutions, and non-profit organizations.
KONE’s shareholder base expanded significantly
during the year, with approximately 14,000
new investors – of which close to 13,000 were
households – holding KONE’s shares at the end
of the year.
A lifecycle business model for the
long term
KONE’s business model is based on a life-cycle
approach. We provide customers with solutions
for the entire lifetime of their elevators and
escalators, starting from new equipment
installation. Regular maintenance is required to
keep equipment running smoothly, and once it
ages, modernization is typically also needed.
Our business model is very capital-light. The
production of new equipment consists mainly
of assembling outsourced components, and
the service business requires very little fixed
investment. This model enables growth with
Generating long-term returns
We strive to generate
long-term returns
for shareholders
by conducting our
business in a profitable,
responsible and
transparent manner.
Customers
6,933
(6,277)
MEUR
Suppliers
3,995
(3,610)
MEUR
Added value
2,938
(2,667)
MEUR
- =
Stakeholders
KONE’s economic impacts in 2013
Employees
1,473
(1,375) MEUR
Creditors
-6
(-8) MEUR
Public sector
758
(693) MEUR
Shareholders
512
(781) MEUR*
Economic value
retained in the company
201
(-174) MEUR
a relatively low level of investment, but with a
high return on invested capital. Our objective
is to maintain a good discipline in our payment
terms in order to manage risk and provide
financing for our growth. KONE has been able
to maintain a strong cash flow and negative
working capital.
Following the financial crisis of 2008–2009,
new equipment markets in Europe and North
America declined significantly and still remain
below peak volumes. In contrast, markets have
been growing rapidly in Asia-Pacific, driven by
China in particular. The impact of the financial
crisis has been seen also in modernization.
The developed European and North American
markets, where the main short-term growth
potential in modernization lies, have seen
clearly weaker market development compared
to the pre-crisis period.
Maintenance is the most stable element of the
business model over economic cycles, because
even in times of recession, maintenance is
required to keep equipment running smoothly.
In virtually all over the globe, equipment
maintenance is also legally required.
Over the long term, our business has very solid
growth drivers. The growth of the elevator
and escalator industry is driven by four
global megatrends: urbanization, changing
demographics, an increased focus on the
environment and the growing importance of
safety.
(2012 figures in brackets)
Long-term financial targets
Growth:
Faster than the market
Profitability:
16% earnings before interest and taxes
Cash flow:
Improved working capital rotation
*Dividends paid for the financial year. The figure for the financial year 2012 includes a special dividend.
