Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
KONE CMD 2015 Building on our strengths in the world’s largest E&E market William B. Johnson, EVP, Greater China September 25, 2015
Welcome to the world’s largest E&E market
Our competitive strengths today
The market in the near term and long term
Our way forward in China
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 2
China accounts for 2/3 of the global new equipment market volumes
0
400
800
600
1,000
200
2012
31%
2013 2014
815
69%
2010 2011 2009 2008 2007 2006 2005 2004 2003 2002 2001
288
12%
88%
Rest of the world China
New equipment orders, thousand units
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 3
24%
CAGR
8%
CHINA’S SHARE OF THE WORLD NEW EQUIPMENT MARKET 2005-2014
Based on KONE estimates
China is also seeing the largest absolute maintenance market growth
6.0
5.0
4.0
3.0
2.0
1.0
0.0
+0.2
+1.0
+2.6
Americas
1.2 1.0
EMEA
5.7
4.7
China
3.3
0.7
2014 2005
Units in operation, millions
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 4
GROWTH OF UNITS IN OPERATION IN SELECTED MARKETS
Based on KONE estimates
To succeed in the E&E industry, one needs to succeed in China. We continue to strengthen our presence and build our competitiveness in the China market.
Welcome to the world’s largest E&E market
Our competitive strengths today
The market in the near term and long term
Our way forward in China
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 6
Soft manufacturing Weaker real estate Moderate inflation
0
5
10
15
20
25
Q1/15 Q1/14 Q1/13 Q1/12 Q1/11 Q1/10 -6
-4
-2
0
2
4
6
8
Q1/15 Q1/14 Q1/13
Q1/10 Q1/11 Q1/12 -10
0
10
20
30
40
50
Q1/15 Q1/14 Q1/13 Q1/12 Q1/11 Q1/10
PPI CPI
The Chinese economy has showed softness since early 2014
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 7
The slowdown has been visible in the moderating new equipment market in H1 2015
CPI and PPI growth (%) Real-estate investment growth (%)
Industrial production growth (%)
Source: National Bureau of Statistics of China
Starts are down; developers have a large work-in-progress stock and land banks to draw from
New construction starts have declined since 2014
However, there is a large WIP under development
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 8
With the large WIP under development, developers can easily ramp up construction in response to a pick-up in the market
-20-15-10
-505
101520
1-8/ 2015
-16.8
2014
-10.7
2013
13.5
2012
-6.7
2011
16.1 Growth y-o-y %
Source: National Bureau of Statistics of China, KONE estimates
0
1
2
3
4
5
6
70.7
6.4
02/15
5.7
02/14 02/13 02/11 02/11
Years
The Chinese government has a versatile set of tools at its disposal and the pace of actions has been increased
Monetary stimulus
Monetary stimulus
Fiscal stimulus
Fiscal stimulus
Property market
Interest rate cuts
Reserve requirement ratio cuts
Infrastructure and govt funded development
Supporting local govts’ ability to invest
Changes in mortgage policies and property
taxes
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2014 2015
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 9
Some early positive signs in the property market indicators
Price/sqm growth y-o-y Sales area growth y-o-y
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 10
Trends are not uniform across the country. We continue to focus on understanding the market granularly
% %
-60-40-20
020406080
100120
01/15 01/14 01/13 01/12 -6-4-202468
1012
0.2
-4.4
01/15 01/14 01/13 01/12
Sources: National Bureau of Statistics of China, CREIS. Sales area growth based on nation-wide statistics; housing price development includes top 100 cities.
There is clear variation between segments and geographical regions
Real estate investment growth Jan-Aug 2015
Real estate investment growth Jan-Aug 2015
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 11
3.5% total
>20% 10%-20%
-10%-0% <-10%
0%-10%
Growth y-o-y %
With the varied market environment, a granular understanding of the market opportunities is required
Source: National Bureau of Statistics of China.
8%
2%
Commercial Residential
We expect the Chinese new equipment market to decline slightly in 2015
2015E 2014
~560,000 units
Slight decline from 2014
Affordable housing Other residential Commercial and infrastructure
E&E indicative market growth, 2015e
Residential segment (excluding affordable housing) developing in line with the market, in slight decline
Segment-specific development
Commercial and infra segments seeing some growth Retail segment flat or declining slightly Office segment stable or growing slightly Strong growth in infrastructure thanks to stimulus
Affordable housing activity is relatively stable 7.4 million planned starts for 2015 Focus on urban renewal and shanty town
reconstruction
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 12
Based on KONE estimates
There are both headwinds and tailwinds in the market environment
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 13
- + Larger developers
gaining share Increased focus on
quality and safety Favorable raw
materials
Slower growth
environment Price competition Labor cost
inflation
Trends in the market environment are in favor of the larger OEMs
Replacement building in
total floor space increase, bn sqm
Expected growth in
middle income consumers, millions
We are confident on the long-term demand drivers in the Chinese market
Urbanization
Growth of middle income
consumers
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 14
Urban renewal
Sources: U.N. World Urbanization Prospects 2014 revision; UNDP Human Development Report, data from Brookings Institution. Middle income consumer group earning or spending $10–$100 a day (2005 PPP). KONE data; expert interview
948779
2025E 2015
55.6%
652268
2025E
1,449
2015
1,402
Total population Middle income consumers
+10 ppts
2025 2015 2000
11
27 6
42
3
19 21
+168M
65.4%
+384M
+47M
Replacement building Total new floor space
Total floor space stock
Expected growth in urban population,
millions, and increase in urbanization rate
Even the largest cities will continue to see changes in the urban landscape.
Competitive landscape still very fragmented today: OEM share ~25%
Landscape will consolidate in response to regulation and technological change
OEMs are in better position to − respond to new regulation that
aims to improve safety and reliability
− develop and adapt new technologies
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 16
The service opportunity will continue to increase in significance
2025E 2014
3.3
...and the market will continue to mature The installed base will grow...
In millions of units
Market size and future scenario based on KONE estimates
Welcome to the world’s largest E&E market
Our competitive strengths today
The market in the near term and long term
Our way forward in China
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 17
We have continued to outgrow the market
40
30
20
10
0
-5 2013
~10%
~44%
2014
>15%
~23% ~20%
2006-2012 CAGR
>15%
H1 2015
~5%
KONE Market
New equipment orders received (units) vs. market growth
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 18
KONE’s maintenance base vs. total installed base growth
We have sustained our momentum in the China market
26%
2014
18%
2006-2013 CAGR
21%
37%
Note: KONE figures 2006-2014 include GiantKONE from December 2011 onwards. Market growth based on KONE’s estimate.
This has brought us to a leading position in the world’s largest E&E market
# 1
# 1
Largest OEM in new equipment
Joint leader in maintenance
Our competitive strengths
Best-in-class solutions
Strong dual brand strategy: KONE and GiantKONE
Wide geographical coverage
World-class field force
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 19
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 20
We have a comprehensive offering and we are constantly developing our service capabilities
Entry level
Mid-range
High end KONE
GiantKONE
...and we differentiate with our delivery We have a broad offering …
Easy to do business with
Delivering on our promises
High-quality service capabilities
We have continued to expand our geographic presence in China, particularly in service
Note: Status at the end of June 2015
KONE Branch: 50
KONE Sales Office: 55
Footprint in China KONE Shanghai HQ
KONE Kunshan factory
KONE Service Station: 434
Giant KONE Branch: 37
Giant KONE Sales Office: 40
Giant KONE HQ
Giant KONE factory
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 21
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 22
We are leaders in maintenance and continue to ramp up our coverage
Widest coverage in maintenance across China
Large number of units under
first service period provides a pipeline for growth through conversions
Industry leading conversion rate
CAGR
0
200
100
2011 2012 2014
+37%
2013 2010 2009 2008 2006 2007
Units in maintenance base Units under first service period
Based on KONE estimates. Figure includes GiantKONE from December 2011 onwards.
UNITS MAINTAINED BY KONE IN CHINA 2006-2014
thousand units
We are building our capabilities in modernization rapidly to address the growing opportunity
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 23
13%
22%
2020 2019 2018 2017 2016 2015 2014
There are modernization opportunities already in the largest cities
Locally many cities are taking action to inspect the safety and condition of existing equipment
Lifetime of elevators will be shorter in China compared to Western markets due to higher usage rates of equipment
~500K
Based on KONE estimates
ELEVATORS IN CHINA OVER 15 YEARS OLD
KONE will modernize Plaza 66 business center in Shanghai, which includes 18 elevators in office towers 288m tall. The new elevators will reduce waiting times, improving the efficiency of People Flow with the latest technology.
We have made significant progress in our field productivity
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 25
Improvements in installation cost achieved with the roll-out of advanced site
installation methods
New installation field management and competence development tool
Structured training and skill assessment program for new maintenance
technicians
400-600 Orders received booked
4,000 Installation sites with our equipment
9,000 Elevator packages going through our distribution centers
22,000
Service visits made by our 5,000 service technicians
Our scale in the market is an asset. A normal Friday for us in China means today…
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 26
Welcome to the world’s largest E&E market
Our competitive strengths today
The market in the near term and long term
Our way forward in China
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 27
Focus areas in developing our business 2005
Segment coverage Development of competitive offering to cover all segments
Two-brand strategy Second brand GiantKONE broadening offering coverage
Geographical coverage Presence across the country
Building a leading service business 2005-2014 maintenance base CAGR over 35%
Talent management KONE seen as a desirable employer with high empoyee satisfaction
We have been able to grow faster than the market and our growth has been profitable
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 28
Segment coverage
Two-brand strategy
Geographical coverage
Building a leading service business
Talent management
We will continue to target profitable growth, while retaining a challenger mindset
September 25, 2015 William B. Johnson | KONE Capital Markets Day 2015 | © KONE Corporation 29
Leverage our scale and delivery capabilities
Increase field productivity with new technology and
processes
With our competitive assets in China, we will...
Accelerate the growth of the service business
30
We are excited about our future in China No. 1 position Best team Great offering Fast-growing service
business