This article first appeared on GuruFocus .
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Order Growth:Comparable growth of 12% for the year, with strong performance in Asia Pacific, particularly India and the Middle East.
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Sales Growth:Over 4% growth at comparable currencies, with approximately 10% combined growth in service and modernization.
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Modernization Growth:Around 15% growth in modernization sales.
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Service Growth:6% growth in service sales, moderated by actions in China.
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Adjusted EBIT Margin:Expanded by 60 basis points.
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Cash Flow:Solid cash generation in Q4, though lower than the previous year.
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Dividend Proposal:EUR1.80 per Class B share, representing a dividend yield of nearly 3%.
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Connected Units:Maintenance base connectivity exceeds 40%, up 7 percentage points from the previous year.
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Impact Revenue:Grew over 20%, representing over half of overall sales.
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Cash Flow from Operations:Nearly EUR1.8 billion for the full year.
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2026 Sales Guidance:Expected growth of 2% to 6% at comparable currencies.
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2026 Adjusted EBIT Margin Guidance:Expected to be in the range of 12.3% to 13%.
Release Date: February 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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KONE Oyj ( KNYJF ) reported strong order growth, with a 12% increase in Q4, driven by modernization and residential sector expansion.
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The service business became the largest segment, accounting for over 40% of sales, enhancing the company's resilience.
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Adjusted EBIT margin improved by 60 basis points due to a favorable sales mix and operational efficiencies.
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The company achieved significant progress in digital transformation, with over 40% of its maintenance base now connected.
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KONE Oyj ( KNYJF ) exceeded its sustainability targets, with a notable reduction in scope 3 emissions and recognition in the Corporate Knights ranking of the world's most sustainable companies.
Negative Points
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Challenges in the Chinese construction market led to a decline in elevator and escalator market activity, impacting New Building Solutions.
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Service growth was moderated by strategic actions in China, resulting in a 6% growth rate, which was below expectations.
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The company's cash generation in Q4 was solid but lower compared to the exceptionally strong period in 2024.
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Pricing conditions in China remained challenging, affecting the orders received margin.
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The geopolitical environment continues to pose risks, potentially impacting market activity and financial performance.
Q & A Highlights
Q: Can you help us understand the balance between expected savings and raw material costs in 2026? A: Ilkka Hara, CFO, explained that they expect a slight headwind from raw materials in 2026. However, they are pleased with the ongoing performance initiatives, including purchasing and sales and operational excellence, which are expected to contribute positively to profitability over the next few years.
Q: Why hasn't KONE increased the dividend this year despite earnings growth and a strong balance sheet? A: Ilkka Hara, CFO, stated that the Board decided on a strong dividend proposal of EUR1.80 per Class B share, valuing a strong balance sheet and considering the company's performance.
Q: Can you clarify the guidance for 2026, especially the low end of the growth guidance at 2%? A: Ilkka Hara, CFO, mentioned that geopolitical uncertainties remain high. The growth guidance reflects the uncertainty in customer project timelines and the order book rotation, especially in major projects. The guidance range is considered appropriate given these factors.
Q: What is the impact of the actions taken in China on service growth, and will this continue into 2026? A: Philippe Delorme, CEO, explained that the actions taken in China were targeted at improving profitability and cash flow, which resulted in a temporary slowdown in service growth. They do not expect a similar one-off impact going forward, and the focus will be on strategic pricing and driving repair sales.
Q: How does the modernization business contribute to service growth, and what is the conversion rate from modernization to service contracts? A: Ilkka Hara, CFO, stated that modernization, especially partial modernization, has a high conversion rate to service contracts. This is because the decision-makers for modernization are often the same as those for service contracts, leading to a strong conversion rate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
