KONE is the world's third-largest elevator and escalator company — and one of the most globally exposed industrial stocks on Nasdaq Helsinki. Its cycle is driven by the intersection of new construction activity (especially in China and Europe) and a large, recurring maintenance business that provides remarkable earnings stability through downturns.
KONE's revenue splits roughly 35% new equipment and 65% services (maintenance and modernisation). This is the most important fact for cycle investors: the service business generates high-margin, recurring revenue from the installed base of approximately 1.7 million units under maintenance contracts. Even in a severe construction downturn — where new equipment orders fall 30–40% — KONE's total revenue typically falls only 10–15% because the service base is largely unaffected.
This service cushion means KONE's earnings trough is shallower than pure construction-linked stocks like Sandvik or Volvo, but it also means the recovery upside is more moderate. Investors buying KONE at cycle lows are buying a more defensive return profile than a pure capital equipment play.
China accounts for approximately 25–30% of KONE's new equipment revenues — the largest single country exposure. China's property sector crisis from 2021 onward has been the primary drag on KONE's new equipment sales. Evergrande, Country Garden, and dozens of smaller developers defaulted or suspended construction, dramatically reducing elevator demand. KONE's China new equipment revenues fell approximately 30–35% between 2021 and 2024.
The opportunity for cycle investors is that this Chinese property distress is cyclical, not structural. China's urbanisation rate remains below 70% — meaning tens of millions of people will continue moving to cities requiring new residential buildings and their elevator systems. When Chinese developers stabilise and construction activity recovers, KONE's new equipment order intake will benefit disproportionately given its market-leading position.
The global installed base of elevators is ageing. Approximately 50% of the world's elevators are over 20 years old and approaching the end of their safe operating life. Modernisation — replacing old elevator systems with new energy-efficient, digitally connected units — is growing faster than new equipment installation in mature markets like Europe and North America. KONE's modernisation revenues have grown at double-digit rates even during construction downturns, providing a structural growth tailwind independent of the new equipment cycle.
| KONE | Otis (US) | Schindler (CH) | |
|---|---|---|---|
| Market position | 3rd globally | 1st globally | 2nd globally |
| China exposure | ~28% | ~15% | ~18% |
| Service share | ~65% | ~55% | ~50% |
| Typical P/E range | 22–35x | 25–38x | 20–32x |
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