January 28, 2020 / 10:47 AM / 20 days ago

Finland's Kone talks up potential of Thyssenkrupp combination

HELSINKI (Reuters) - Finland’s Kone (KNEBV.HE), one of the contenders to buy the elevator business of its German rival Thyssenkrupp (TKAG.DE), is very interested in the unit and sees significant “scale advantages,” its CEO said on Tuesday.

Chief Executive Henrik Ehrnrooth was speaking after the company revealed quarterly profit that beat expectations, but a weaker sales outlook for 2020 pushed its share price briefly to an eight-week low.

Kone, which is working with private equity firm CVC [CVC.UL] was due to make a bid on Jan. 27 for Thyssenkrupp’s elevator business, valued at around 15 billion euros ($16.64 billion).

Ehrntooth declined to say whether Kone had bid, but said he believed Kone would be “a good owner” and Kone would not be interested in just a minority stake.

“The joined companies would have very significant scale advantages,” he said.

Kone forecast 2020 sales growth of 0–6% at comparable exchange rates, down from 10% growth the firm reached in 2019.

Analysts surveyed by Kone had forecast average sales growth of 5% in 2020 and estimates had ranged from 3% to 7.6% growth.

Ehrnrooth said there were fewer orders for this year compared with 2019 and the outbreak in China of the newly-identified coronavirus added uncertainty.

Ehrnrooth said Kone’s two factories in China would remain closed for at least an additional week because of the virus.

“This will affect our first quarter and we don’t know when our clients’ construction sites will be reopened,” he said.Kone reported a 15% rise in fourth-quarter adjusted operating profit to 367.5 million euros ($407.7 million), above the 363.3 million expected by 21 analysts in a poll provided by the company. The company’s board proposed a dividend of 1.70 euros per class B share for 2019. Shares in Kone dropped almost 4% on the results report but later recovered to close 0.2% lower at 58.02 euros.

Reporting by Anne Kauranen and Tarmo Virki; Editing by Barbara Lewis

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