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UPDATE 1-Finland's Kone plans to cut 1,000 jobs globally
September 26, 2017 / 8:19 AM / in 2 months

UPDATE 1-Finland's Kone plans to cut 1,000 jobs globally

(Adds detail, background, analyst comment)

HELSINKI, Sept 26 (Reuters) - Finnish elevator maker Kone plans to cut around 1,000 jobs globally to boost profitability in the face of currency fluctuations and weaker demand from China, it said on Tuesday.

Kone has been hit by falling demand and sliding prices in China, the world’s biggest elevator market, where Kone generates third of its sales.

The company said that while its forecast for 2017 performance had improved slightly during the third quarter, the strengthening of the euro against the Chinese renminbi and the U.S. dollar would have an estimated 30 million euro ($35.56 million) negative impact on its 2017 earnings before interest and tax (EBIT).

Kone said it expects its full-year adjusted EBIT to be in range of 1.2-1.25 billion euros, and its net sales to continue to grow by 1-3 percent from last year.

With the announced job cuts, the company plans to save around 100 million euros ($118.5 million) annually by 2020. Kone had a total headcount of over 52,000 in 2016.

The company had until this year managed to protect its profits from a downturn in China, but in April it reported its first year-on-year decline in core operating profit in 48 quarters.

“The currency headwinds as well as the falling profit on new orders in China are set continue also in 2018, so it will be a challenge for Kone to get back on the growth track”, said Pekka Spolander, analyst at OP Equities with a “reduce” rating on the stock.

Kone is the world’s second-largest elevator maker after Otis, owned by U.S. group United Technologies. It also competes with Switzerland’s Schindler and Germany’s ThyssenKrupp. ($1 = 0.8437 euros) (Reporting by Tuomas Forsell, editing by Jussi Rosendahl)

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