Elevator-maker Kone to axe 1,000 jobs, sees recovery in Asia

Elevator-maker Kone to axe 1,000 jobs, sees recovery in Asia

By Anne Kauranen

HELSINKI (Reuters) – Finnish elevator-maker Kone said on Thursday it would slash up to 1,000 jobs globally to cut costs and it expects demand to pick up in its main market China and elsewhere in Asia this year.

The cuts will be part of an organisational restructuring and will save 100 million euros annually from the beginning of next year, the company said, with 150 of the job losses in Finland.

Chief Executive Henrik Ehrnroot said the rest of the job cuts would take place around the world without providing details. The cuts represent around 1.6% of Kones workforce of 63,277 at the end of 2022.

Kone posted stronger-than-expected fourth-quarter core earnings but its order intake declined more than analysts had expected due to weak demand in China.

Nevertheless, those orders came with improved margins, the company said.

“Our pricing has been quite successful in this world of rising costs,” the companys Chief Financial Officer Ilkka Hara told reporters.

Its October-December adjusted operating profit rose by 1.6% to 365 million euros ($398 million) from 359.4 million euros a year earlier, beating the 333.6 million expected by 21 analysts in a poll provided by the company.

Kone said it expects its main market, China, to start recovering towards the end of the first half of 2023 thanks to the broad stimulus measures that have been announced, while demand is also expected to pick up elsewhere in Asia-Pacific and in the Middle East.

Ehrnroot said Asian demand would be helped by lower inflation and interest rates than in Europe and North America.

Construction recovery in China is held back by very low consumer confidence, Ehrnroot said, adding he believed the situation was slowly changing.

“Savings rate is at a very high level in China at the moment so consumers do have money,” he said.

Shares in the company were up 1.6%.

“On balance positive results, with Q4 adjusted EBIT 9% ahead of consensus thanks to impressive margin development,” RBC analysts wrote in a note.

Kone proposed a dividend of 1.75 euros per share for the year 2022.

($1 = 0.9178 euros)