KONE Outlook Clouded By China, Supply Chain Issues

The troubled Chinese property sector and continuing global supply-chain issues — particularly prices — prompted KONE to give a cautious financial outlook for 2022 as it reported adjusted operating income of EUR1.31 billion (US$1.48 billion) for 2021, Reuters reports. KONE expects adjusted operating income for 2022 to be in the range of EUR1.18-1.33 billion (US$1.33-1.5 billion). CEO Henrik Ehrnrooth observed that land sales and new construction starts are down in China, on which KONE relies for approximately 35% of its sales. Still, the OEM expects China’s new-equipment market to remain on a “solid level,” though it will decline somewhat compared to 2021. “And that’s, of course, because of the liquidity situation in property markets,” Ehrnrooth said. Global supply-chain challenges are expected to persist, he said, noting that sea freight changes are now five to six times higher than they were before the pandemic. That, he said, is expected to squeeze profits.