Finnish elevator maker Kone sets 2027 margin goal below long-term target
New operating profit margin target 13-14% by end-2027
New margin target below long-term target of 16%
Company targets around 5% sales growth
Recasts with context, analyst comment, share move
By Elviira Luoma and Essi Lehto
HELSINKI, Sept 19 (Reuters) -Elevator maker Kone KNEBV.HE on Thursday announced a margin target for 2027 below its long-term goal, sending its share price lower, as it deals with the effects of weakness in China's construction sector.
The Finnish group, which already had a long-term margin target of 16%, said it aimed to reach an adjusted operating profit margin of between 13% and 14% by the end of 2027.
Shares in the company fell on the news to trade around 2% lower by 1115 GMT.
The group has been pushing to grow its elevator and escalator modernisation business to compensate for shrinking sales at its main business that equips new buildings, and to offset falling demand in China.
Inderes analyst Erkki Vesola said setting a mid-term margin goal below the long-term one makes sense because building growth in markets outside previously lucrative China takes time.
Kone in July forecast a 2024 adjusted operating profit margin of between 11.5% and 12.2%, against 11.4% in 2023.
The company said it aims for sales growth of around 5% by the end of 2027, while still expanding its modernisation business.
In the first half of 2024, however, sales growth at the modernisation business was 7.5%, roughly a third of the pace in the first half of 2023.
Kone's long-term sales target is to outgrow the market.
Reporting by Elviira Luoma and Essi Lehto, editing by Terje Solsvik, Anna Ringstrom and Barbara Lewis
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