KONE Corporation's financial statement bulletin 2008



KONE Corporation, stock exchange release, January 23, 2009 at 12:30
p.m.

KONE 2008: Continued market share gains and growing profitability

October-December 2008

- In October-December 2008, orders received totaled EUR 845.2
(10-12/2007: 901.9) million, a decrease of 6.3%. At comparable
exchange rates, the decrease was 5.5%.

- Net sales was EUR 1,432 (1,294) million and increased by 11%. At
comparable exchange rates, the growth was 13%.

- Operating income was EUR 189.2 (160.8; Excluding the Austrian
Cartel Court's fine and the profit from the sale of the KONE
Building) million or 13.2% (12.4%) of net sales.

January-December 2008

- In January-December 2008, orders received totaled EUR 3,948 (2007:
3,675) million. The growth was 7%, or 12% at comparable exchange
rates. At the end of December 2008, the order book stood at EUR
3,577(Dec 31, 2007: 3,282) million.

-        Net sales was EUR 4,603 (4,079) million or an increase of
13%. At comparable exchange rates, the growth was 17%.

-        Operating income was EUR 558.4 (473.2) million or 12.1%
(11.6%) of net sales (1-12/2007 figures exclude an expense of EUR
152.4 million related to the European Commission's fine and the
Austrian Cartel Court fine decisions and the profit from the sale of
the KONE building). Earnings per share were 1.66 (0.72).

-        In 2009, KONE's objective in net sales is to reach a growth
of 5 percent or at least approximately the net sales level of 2008.
In operating income (EBIT), the objective is to reach a growth of 5
percent or at least approximately the operating income level of
2008.

- The Board proposes a dividend of EUR 0.65 per class B share.



Key Figures


                   10-12/  10-12/    Change   1-12/   1-12/    Change
                     2008    2007         %    2008    2007         %
Orders
Received     MEUR   845.2   901.9      -6.3 3,947.5 3,674.7       7.4
Order
book         MEUR 3,576.7 3,282.3       9.0 3,576.7 3,282.3       9.0
Sales        MEUR 1,431.6 1,294.2      10.6 4,602.8 4,078.9      12.8
Operat-ing
income       MEUR   189.2   160.8 1)   17.7   558.4   473.2 2)   18.0
Operat-ing
income          %    13.2    12.4 1)           12.1    11.6 2)
Cash flow
From
Operat-ions
(before
Finan-cing
items and
taxes)       MEUR    88.5   116.0             527.4   380.0
Net
income       MEUR   147.9   100.6             418.1   180.3
Interest
-bearing
net debt     MEUR   -58.3    91.7             -58.3    91.7
Total
equity/
total assets    %    39.0    31.7              39.0    31.7
Gearing         %    -5.6    12.2              -5.6    12.2
Basic
Ear-nings
per share     EUR    0.59    0.40              1.66    0.72


1) Excluding a EUR 22.5 million provision for the Austrian Cartel
Court's fine decision and a EUR 12.1 million sales profit from the
sale of KONE Building

2) Excluding a EUR 142.0 million fine for the European Commission's
decision, a EUR 22.5 million provision for the Austrian Cartel
Court's fine decision and a EUR 12.1 million sales profit from the
sale of KONE Building

KONE President & CEO, Matti Alahuhta, in conjunction with the review:"I am pleased with our performance development during 2008. It was a
difficult year with higher than expected raw material costs, high
increases in salaries and wages and declining new equipment markets.
However, KONE made good progress on many fronts. I am especially
pleased with good development in maintenance and modernization. We
see good additional potential in these activities during 2009. I am
also very pleased with our overall progress in the United States and
in China. In both of these important markets we were able to increase
our market share.

We are very committed to take the current challenging market
situation as an opportunity. Our objective is to continue to increase
our market share and simultaneously put our company to a great shape
in quality, maintenance and installation productivity as well as in
working capital management."

Analyst and media meeting and telephone conference

A meeting and conference call for the press, conducted in English,
will be held on Friday, January 23, 2009 at 1:45 p.m. Finnish time.

A telephone conference and a meeting for analysts, conducted in
English, will begin at 3:00 p.m. Finnish time. The telephone
conference will also be available as a webcast on www.kone.com.

Both meetings will take place in the KONE Building, located at
Keilasatama 3, in Espoo, Finland.

Telephone conference numbers:

US callers: +1 334 323 6201
Non-US callers: +44 (0)20 7162 0025
Participant code: KONE

An on demand version of the telephone conference will be available on
www.kone.com later the same day.

About KONE

KONE's objective is to offer the best people flow experience by
developing and delivering solutions that enable people to move
smoothly, safely, comfortably and without waiting in buildings in an
increasingly urbanizing environment. KONE provides its customers with
industry-leading elevators, escalators and innovative solutions for
modernization and maintenance, and is one of the global leaders in
its industry. In 2008, KONE had annual net sales of EUR 4.6 billion
and over 34,800 employees. KONE class B shares are listed on the
NASDAQ OMX Helsinki in Finland.

www.kone.com

For further information please contact:
Aimo Rajahalme, Executive Vice President, Finance, tel. +358 (0) 204
75 4484

Sender:

KONE Corporation

Aimo Rajahalme
Executive Vice President,
Finance

Anne Korkiakoski
Executive Vice President,
Marketing and Communications


Financial statement bulletin 2008


Accounting Principles
KONE Corporation's financial statement bulletin has been prepared in
line with IAS 34, `Interim Financial Reporting'. The accounting
principles for the financial statements have been presented in the
Financial Statements 2008 published on January 23, 2009. The
information presented in this report has been audited.


October-December 2008 review

Operating environment in October-December

In the fourth quarter of 2008, the new equipment market continued to
decline because of the slowdown in customer decision making due to
difficulties in financing and overall increasing uncertainty.
However, the situation differed a great deal from market to market.
The modernization demand weakened somewhat towards the end of the
year, while the global maintenance market, where demand is by nature
less cyclical, continued to grow steadily but remained very
competitive.

In the European, Middle East and African region (EMEA), the business
environment continued to develop well in maintenance. The financial
crisis caused some hesitation in the modernization market. The new
equipment market in the United Kingdom and Russia weakened strongly
and the North European market experienced increasing hesitation.
Germany was still resilient. The overall Southern European
residential market continued to decline in Italy, France, Belgium and
particularly in Spain. The office sector slowed down somewhat with
postponements in decisions, while the commercial and hospital sectors
still grew. In the Middle East, the situation continued to be mixed.
Construction markets slowed down towards the end of the year
especially in Dubai.

The economic slowdown in the Americas market still continued to
provide growth opportunities for KONE even though the new equipment
market continued to clearly decrease in the United States. The
modernization market was less impacted and the maintenance market
continued to develop well. In Canada, the construction market was
still rather resilient, while Mexico's construction market followed
market trends in the United States.

In the Asia-Pacific region, growth continued in most markets, even
though investment decisions were becoming slower in most markets
towards the end of the year. In China, the growth in the new
equipment market became slower towards the end of the quarter. In
India, market growth continued, however market activity continued to
suffer from high interest rates and cost inflation. In Australia, the
commercial segment activity cooled down somewhat while the
residential segment continued to slow down. Maintenance and
modernization markets developed well in the Asia-Pacific region.

Financial performance in October-December

KONE's orders received in the fourth quarter of 2008 declined by 6 %
and totaled EUR 845.2 (10-12/2007: 901.9) million. At comparable
exchange rates, the decline was also 6 %. The development was most
negative in the United Kingdom, Russia and the Middle East. The
growth in orders was strongest in Asia-Pacific. In the United States,
KONE gained market share in a further declining market. In the
Asia-Pacific region, orders received growth was best in China and
South Asia.

KONE's net sales grew by 11% compared with October-December  2007 and
totaled EUR 1,432 (1,294) million. At comparable exchange rates, the
growth was 13%. Sales growth was strongest in Asia-Pacific.

New equipment sales accounted for 705.5 (626.7) million of the total
net sales and represented an approximate growth of 13% over the
comparison period. At comparable exchange rates, the growth was
approximately 15%.

Service sales (maintenance and modernization) increased by
approximately 9% and totaled EUR 726.1 (667.5) million. At comparable
exchange rates, the growth was approximately 11%.

Operating income for the October-December  period totaled EUR 189.2
(10-12/ 2007: 160.8 - Excluding the Austrian Cartel Court's fine and
the profit from the sale of the KONE Building) or 13.2% (12.4%) of
net sales. The cost increase in hot rolled steel and cast iron,
earlier in the summer, still had a negative impact on the profit
level. The intensive implementation of KONE's development programs
continued to increase the company's competitiveness.


Sales by geographical areas, MEUR


              10-12/     10-12/      1-12/      1-12/
                2008 %     2007 %     2008 %     2007 %
EMEA 1)        934.1 65   867.1 67 3,001.5 65 2,675.3 65
Americas       278.6 20   245.2 19   888.3 19   840.8 21
Asia-Pacific   218.9 15   181.9 14   713.0 16   562.8 14
Total        1,431.6    1,294.2    4,602.8    4,078.9



1) EMEA = Europe, Middle East, Africa


Review January - December 2008

KONE's operating environment

As the year progressed, the overall market situation became
increasingly difficult in the new equipment markets due to the
financial environment. The new equipment demand declined in most
countries at the end of the year because of financing difficulties
and overall increasing uncertainty. Towards the end of the year, the
negative development in the world economy somewhat delayed decision
making in modernization. Maintenance markets continued to develop
strongly.

In the European, Middle East and African region (EMEA), the business
environment was quite favorable in most markets with the exception of
Southern Europe in the beginning of 2008. The business environment
became more and more demanding also in the North European market
towards the end of the year. In the United Kingdom, which was a very
active market in the beginning of 2008, both the residential and
commercial markets weakened strongly towards the end of the year.
Also in Russia, demand declined sharply during the second half of the
year. The best demand in 2008 was seen in the Middle East, but at the
end of the year, the situation in the United Arab Emirates changed
rapidly. The overall Southern European residential market activity
continued to decline in Italy, France and particularly in Spain. The
commercial and hospital sectors however grew somewhat. Modernization
demand continued to grow, mainly driven by the European Safety Norms
for Existing Lifts (SNEL) and the need for upgrades, due to the aging
of the equipment base. Demand weakened somewhat towards the end of
the year due to the uncertainty in the economy.

While faced with a broad economic slowdown, the Americas market still
provided growth opportunities for KONE. The new equipment market
decreased year on year in the United States, nevertheless, the
deterioration in the market did not prevent KONE to grow in the
market. Modernization activity stayed at a relatively good level and
the maintenance market also continued to develop well. In Canada, the
construction market was rather resilient, while Mexico's construction
market followed market trends in the United States.

In the Asia-Pacific region, good growth driven by urbanization
continued,
even though investment decisions were becoming slower in most
markets. Also in China, the new equipment market growth weakened
towards the end of the year. However, at the end of 2008 the central
and local governments initiated fast supporting actions to revive the
market. In India, the market activity suffered somewhat from high
interest rates and cost inflation during the end of 2008. In
Australia, the market shifted between residential and commercial
demand, ending with some market growth compared to 2007.

Orders received and Order book

KONE's market position continued to strengthen in 2008 and the
company gained market share in many important markets. KONE's orders
received increased by approximately 7 percent compared to 2007 and
totaled EUR 3,948 (2007: 3,675) million. At comparable exchange
rates, the growth was approximately 12 percent. The growth in orders
was strongest in the Asia-Pacific region. At the same time, orders
received growth was good in the Americas, and developed favorably
also in the EMEA region. Only new equipment and modernization orders
are included in orders received.

The order book increased from the end of 2007 by 9 percent and stood
at EUR 3,577 (3,282) million at the end of December 2008. At
comparable exchange rates, the growth was about 13 percent. As
earlier, the margin of the order book continued to be at a good
level.

In the EMEA region, most markets continued to contribute positively
to KONE's orders received growth in 2008. KONE performed particularly
well in the Middle-East, France as well as in Central and Eastern
Europe during 2008. In the second half of the year however, many
markets deteriorated. The biggest negative development was seen in
the United Kingdom during the second half of the year. KONE made good
progress in the modernization market. KONE's orders received in
modernization were particularly good in France.

In the Americas, KONE experienced a very good order intake growth
during
2008. KONE's advanced elevator and escalator modernization solutions
increased customer demand and awareness, which has enabled KONE to
grow in new market segments. In addition, KONE's extended
geographical
network has enabled the company to win projects, especially in the
area of major projects. In the United States, KONE continued to gain
market share, exceeding market growth significantly. Simultaneously,
KONE was able to continuously improve its productivity.

In the Asia-Pacific region, KONE's new equipment order intake
continued to develop well in most markets. The company's success in
further strengthening
its position during 2008 was encouraging. During 2008, KONE was again
one of the fastest growing elevator and escalator companies in orders
received in China. Because of this, KONE was yet again able to
increase its market share in a highly competitive market. In
South-Asia, India and Australia, KONE also continued to perform well.

Net sales

KONE's net sales rose by approximately 13 percent, compared to last
year, and totaled EUR 4,603 (4,079) million. Growth at comparable
currency rates was approximately 17 percent. Net sales growth was
almost entirely organic. The amount of sales consolidated from the
companies acquired in 2008 did not have a material impact on the
Group sales of the financial period.

New equipment sales accounted for EUR 2,190 (1,821) million of the
total and represented an approximate 20 percent growth over the
comparison period. At comparable currency rates, the growth was
approximately 25 percent.
New equipment sales accounted for 48 (45) percent of total sales.

Service sales increased by 7 percent and totaled EUR 2,413 (2,258)
million.
At comparable currency rates the growth was approximately 11 percent.
KONE's maintenance base grew rapidly during 2008 fed by the company's
strong order book and a high conversion rate. Urbanization,
particularly in the emerging countries is also a big driver for this
growth. At the end of 2008, maintenance accounted for 33 (36) percent
and modernization for 19 (19) percent of total sales.

Of the sales, 65 (65) percent were generated from EMEA, 19 (21)
percent by the Americas and 16 (14) percent by Asia-Pacific. The
largest individual countries in terms of net sales in 2008 were the
United States, France, the United Kingdom and China.

Financial result

KONE's operating income was EUR 558.4 (320.8) million or 12.1 (7.9)
percent of net sales. The growth in operating income was the result
of sales growth, healthy sales margins and improved productivity
gained from the development programs. Business developed particularly
well in maintenance and modernization. The rapid price growth in hot
rolled steel and cast iron in May-June had an estimated impact of
about EUR 20 million during the second half of the year. Net
financing items were EUR 2.8 (-8.5) million.

KONE's income before taxes was EUR 563.8 (314.0) million. Taxes
totaled EUR 145.7 (133.7) million, which represents a tax rate of
25.8 percent. Net income for the financial period was EUR 418.1
(180.3) million.

The profit attributable to shareholders was EUR 417.3 (180.1)
million, corresponding to earnings per share of EUR 1.66 (0.72).
Equity per share was EUR 4.10 (2.98).

Balance sheet and Cash flow

The balance sheet stayed strong and the company had a positive net
cash position at the end of the year. Capital is managed to maintain
a strong financial position and to ensure that the Group's funding
needs can be optimized in a cost-efficient way even in a critical
funding environment. In the present weak economic environment, having
no debt is a major strength.

Cash flow generated from operations (before financing items and
taxes) was EUR 527.4 (380.0) million. Net working capital was
negative at EUR -76.4 (Dec 31, 2007: -121.8) million, including
financing items and taxes.

In the end of 2008, interest-bearing assets exceeded interest-bearing
debts and the net cash position totaled EUR 58.3 (Dec 31, 2007:
-91.7) million. Gearing was -5.6 (12.2) percent. KONE's total
equity/total assets ratio was 39.0 (31.7) percent.

Capital expenditure and acquisitions

KONE's capital expenditure, including acquisitions, totaled EUR 134.4
(116.9) million. Capital expenditure, excluding acquisitions, was
mainly R&D, IT and installation devices, and production. Acquisitions
accounted for EUR 60.0 (49.6) million of this figure. Acquisitions
made during the accounting period had no material effect on the 2008
full year figures.

In 2008, one of the biggest acquisitions was the acquisition of the
French elevator company ARA Lyon. ARA Lyon maintains and modernizes
elevators in the area of Lyon. KONE also acquired the Arundel
Elevator Company, a full service elevator company based in Baltimore,
Maryland, USA. This acquisition increased KONE's customer base in
Maryland and the neighboring Mid-Atlantic states. In Spain, KONE
acquired RPG Mantenimiento S.L., in Murcia, that maintains and
modernizes elevators and TECAS S.A., based in Valencia. TECAS
maintains elevators, sells new equipment and is specialized in
elevator installations for existing buildings. The acquisition
strengthens KONE's position in the large metropolitan areas in Spain.
The acquisitions also generate synergies, which enable KONE to
improve its maintenance and modernization operations in the region.
In addition, KONE acquired the International Elevator Company (IEC),
a full service elevator company based in New Jersey, USA. The
acquisition significantly increases KONE's maintenance base in
northern New Jersey. IEC excels in elevator installation,
maintenance, modernizations and repairs.

Research and development

Research and development expenses totaled EUR 58.3 (50.7) million,
representing 1.3 (1.2) percent of net sales. R&D expenses include
development of new product concepts and further developments of
existing products and services.

During 2008, new solutions to expand KONE's accessible markets and to
strengthen its competitiveness in both volume and high-rise markets
globally
were released. KONE's new offering development continued strongly in
the areas of performance, space efficiency, visual design, user
experience and in further improving the energy efficiency of KONE's
products.

In Europe, KONE's counterweight-less offering was expanded with a new
release of KONE MaxiSpace(TM), an elevator solution especially
designed for the modernization market.

In the Asia-Pacific region, a new elevator release expanded KONE's
standard
offering with improved ride quality, user experience, energy
efficiency as well as new designs and options.

KONE also launched in early 2008 a next generation equipment
monitoring system which is able, with an almost unlimited capacity,
to monitor and manage large building complexes and geographically
remote buildings from a single location. The system is easily
integrated with a building's facility management systems.

Other events during the financial period

The Austrian Supreme Court decided to uphold the fine of EUR 22.5
million
imposed on KONE's Austrian subsidiary in December 2007. The fine was
imposed on KONE Austria by the Austrian Cartel Court based on
anticompetitive
practices before mid-2004. The fine was booked as an expense in the
2007 statement of income and paid in the last quarter of 2008.

Personnel

The objective of KONE's personnel strategy is to help the company
meet its business targets. The main goals of KONE's personnel
strategy are to further secure the availability, commitment and
continuous development of its personnel. All KONE's activities are
also guided by ethical principles. The personnel's rights and
responsibilities include the right to a safe and healthy working
environment, personal wellbeing as well as the prohibition of any
kind of discrimination.

In early 2008, in conjunction with the revised strategy, KONE's
management
decided to train 110 facilitators to help line managers communicate
the key messages and goals. "People Leadership" was chosen as one of
KONE's new five development programs. The purpose of the program is
to improve leadership capabilities in order to inspire, engage and
develop people for outstanding performance. The required leadership
competences were redefined and new recruitment and assessment tools
were built and taken into use. Training and development actions
continued both on local and global levels. As a part of the global
training offering, a new development program was built for
supervisors focusing firstly on people leadership and later on
process capabilities. The first three modules of the program were
implemented fully in the North American organization and piloted in
Europe and Asia. Development work to build a leadership program for
top management was completed for roll-out in January 2009.

The work to further harmonize the key people processes continued and
development projects started for common tools for recruitment and
performance management. In performance management, processes to deal
with both poor performance and to recognize high performance were
launched. A global employee survey was prepared for roll-out in
December 2008 and
January 2009.

The efforts to improve workplace safety continued with an improvement
target of 20 % in IIFR (industrial injury frequency rate).
Cooperation with the employees to promote safety intensified and, in
connection with the annual international employee meeting, a Zero
Accident Declaration was signed by the President & CEO and the
Chairman of the employee representatives. Regular virtual safety
meetings worldwide were held to share information on best practices
and new developments concerning safety.

KONE had 34,831 (Dec 31, 2007: 32,544) employees at the end of 2008.
The average number of employees was 33,935 (30,796). Most of the
personnel
growth was in the fastest growing markets, such as Asia-Pacific and
the Middle East. Additional recruitments in other markets were
carried out mainly in installation and modernization operations.

The geographical distribution of KONE employees was 56 (56) percent
in EMEA, 17 (18) percent in the Americas and 27 (26) percent in
Asia-Pacific.

Environment

KONE's aim is to be the eco-efficiency leader in its industry. The
early credentials of the company's eco-efficiency relate to the KONE
EcoDisc® hoisting machine, a permanent magnet gearless motor
innovation. It consumes 70% less energy than a hydraulic drive and
40% less than a geared traction elevator drive, thus making it one of
the most eco-efficient solutions on the market today. Some other
features of the KONE EcoDisc® include oil-free operation and the
compact design based on recyclable materials.

In order to enhance eco-efficiency leadership, "Environmental
Excellence" was selected as one of KONE's five development programs
in the beginning of 2008. Environmental Excellence embraces actions
aiming to develop KONE's innovation leadership in the area of
eco-efficiency, to minimize KONE's carbon footprint and to ensure the
compliance of KONE's suppliers with the corresponding requirements
and environmental targets.

In order to set carbon footprint reduction targets for its own
operations,
KONE had its carbon footprint assessed by a third party in accordance
with the Greenhouse Gas Protocol guidelines (GHG Protocol). The
largest part of KONE's entire global impact relates to the amount of
electricity used by KONE equipment in their life-time, underlining
the importance of energy-efficient innovations for elevators and
escalators. The most significant Carbon dioxide (CO2) impact of
KONE's own operations relate to the company vehicle car fleet,
electricity consumption and logistics. As a consequence, projects
relating to KONE's global car fleet and business travel are ongoing
and also electricity consumption and logistics related initiatives
were started during 2008.

Capital and risk management

The ultimate goal of capital and risk management in the KONE Group is
to contribute to the creation of shareholder value.

Capital is managed in order to maintain a strong financial position
and to ensure that the Group's funding needs can be optimized in a
cost-efficient way even in a critical funding environment. In the
present weak economic situation, having no debt is a strength.

The economic turmoil has been extremely severe in the last months and
weeks. KONE will focus on two major issues regarding its capital and
risk management. Firstly, the capability to adapt its cost structure
in changing volumes in order to stay competitive, and secondly, to
ensure that the Group's liquidity is guaranteed to cover both
short-term and long-term funding needs.

Overall cost control has been tightened to avoid unnecessary cost
burdens in this phase with increasing uncertainty in the market
environment. In addition, the Group's cost structure is flexible
because of outsourcing in different areas of the business.

The key area in guaranteeing good liquidity in the short run is to
keep the present working capital position. In a difficult economic
situation, it is increasingly important to maintain a healthy order
book without deterioration in payment terms, and to improve credit
control and collection activities. Long-term funding is guaranteed by
existing committed lines.

KONE's business activities are exposed to risks, which may arise from
changes in KONE's business environment or events or incidents
resulting from operating activities. Most significant risks are
increases in personnel costs and raw material costs, fluctuation in
currency and changes in the development of the world economy.

A global slowdown in economic growth may bring about a decrease in
the number of new equipment orders received by KONE, cancellations of
agreed-on deliveries, or delays in the commencement of projects. A
significant part of KONE's sales consist of services which are less
susceptible to the effects of an economic recession. An economic
recession may affect the liquidity and payment schedules of KONE's
customers and lead to credit losses. Credit risks are managed by
applying advance payments and actively monitoring the liquidity of
customers.

As a global group, KONE is exposed to foreign exchange fluctuations.
The Group Treasury function manages exchange rates and other
financial risks centrally on the basis of principles approved by the
Board of Directors. The main effect of exchange rate fluctuations is
seen in the consolidated financial statements of the KONE Group
resulting from the translation of financial statements of foreign
subsidiaries into euros.

A significant part of KONE's sales consist of services which are very
labor-intensive. If the increases in labor costs cannot be
transferred to prices or the productivity targets are not met, the
profit development of the Group will be adversely affected. A failure
to efficiently reallocate personnel resources in response to reduced
business opportunities may also have a negative effect on the profit
development.

Changes in raw material prices are reflected directly in the
production costs of components made by KONE, such as doors and cars,
and indirectly in the prices of purchased components. The maintenance
business deploys a significant fleet of service vehicles, for which
reason oil price fluctuations affect the cost of maintenance.

Appointment to the Executive Board

KONE appointed Anne Korkiakoski, M.Sc. (Econ) Executive Vice
President, Marketing & Communications and Member of the Executive
Board as of September 1, 2008. She is responsible for KONE
Corporation's Marketing, External and Internal Communications as well
as Investor Relations. In addition, Ari Lehtoranta, M.Sc.
(Engineering) was appointed Executive Vice President, Major Projects
and a Member of the Executive Board as of November 3, 2008. Ari
Lehtoranta will succeed William Orchard, who has served as Executive
Vice President since 2001.

Decisions of the Annual General Meeting

KONE Corporation's Annual General Meeting held in Helsinki on
February 25, 2008 confirmed the number of members of the Board of
Directors to be seven and the number of deputy members to be one.
Re-elected as full members of the Board were Matti Alahuhta, Reino
Hanhinen, Antti Herlin, Sirkka Hämäläinen-Lindfors, Sirpa
Pietikäinen, Masayuki Shimono and Iiro Viinanen, and as a deputy
member Jussi Herlin. The term of the Board ends at the next Annual
General Meeting.

At its meeting held after the Annual General Meeting, the Board of
Directors elected Antti Herlin as its Chairman and Sirkka
Hämäläinen-Lindfors as the Vice Chairman of the Board.

The Annual General Meeting decided to amend the Articles of
Association due to the new Companies Act, which entered into force on
September 1, 2006. The new Articles of Association can be found at
www.kone.com.

In addition, the Annual General Meeting decided to increase the
number of shares in the company by issuing new shares to the
shareholders without payment in proportion to their holdings so that
one class A share was given for each class A share and one class B
share was given for each class B share. The new shares were admitted
to public trading and entered into the book-entry system on February
29, 2008.

The Annual General Meeting decided that the share subscription period
for the 2005C option rights would begin on April 1, 2008. In
addition, it was decided that EUR 0.25 of the subscription price to
be paid for the new shares issued based on the 2005A, 2005B, 2005C,
and 2007 option rights will be credited to the share capital, and
that the remaining part will be credited to the paid-up unrestricted
equity reserve. Due to the increase in the number of shares, the
Annual General Meeting decided that the number of shares to be
subscribed for based on the 2005A, 2005B, 2005C and 2007 option
rights will increase, and the share subscription price will decrease
in the same proportion.

In addition, the Annual General Meeting authorized the Board of
Directors to repurchase KONE's own shares with assets distributable
as profit. The shares may be repurchased in order to develop the
capital structure of the Company, finance or carry out possible
acquisitions, implement the Company's share-based incentive plans, or
to be transferred for other purposes or to be cancelled. Altogether
no more than 25,570,000 shares may be repurchased, of which no more
than 3,810,000 may be class A shares and 21,760,000 class B shares.

The Annual General Meeting also authorized the Board of Directors to
decide on the distribution of any shares repurchased by the company.
The authorization is limited to a maximum of 3,810,000 class A shares
and 21,760,000 class B shares. The Board shall have the right to
decide to whom to issue the shares, i.e. to issue shares in deviation
from the pre-emptive rights of shareholders.

The repurchased shares may be used as compensation in acquisitions
and in other arrangements as well as to implement the Company's
share-based incentive plans in the manner and to the extent decided
by the Board of Directors. The Board of Directors also has the right
to decide on the distribution of the shares in public trading on the
NASDAQ OMX Helsinki Ltd for the purpose of financing possible
acquisitions. The shares shall be distributed at least at the market
price at the moment of their transfer determined on the basis of the
trading price for class B shares determined in public trading on the
NASDAQ OMX Helsinki Ltd.

These authorizations shall remain in effect for a period of one year
from the date of the decision of the Annual General Meeting.

PricewaterhouseCoopers Oy, Authorized Public Accountants and Heikki
Lassila, APA, were re-elected as the Company's auditors.

The Annual General Meeting approved the Board's proposal for a
dividend of EUR 1.29 for each class A share and EUR 1.30 for each
outstanding class B share before the increase in the number of shares
due to the share issue without payment. This amounted to EUR
163,619,671.52 for the financial year, which ended December 31, 2007.
The date of the dividend payment was March 6, 2008.

Share capital and Market capitalization

The KONE 2005A and KONE 2005B options based on the KONE Corporation
option program 2005 were listed on the main list of the NASDAQ OMX
Helsinki Ltd on June 1, 2005. Each option entitles its holder to
subscribe for twelve (12) class B shares at a price of EUR 4.02 per
share.

In 2005, KONE also granted a conditional option program, 2005C. The
2005C stock options were listed on the NASDAQ OMX Helsinki in Finland
as of April 1, 2008. The total number of 2005C stock options is
2,000,000 of which 522,000 are owned by a subsidiary of KONE
Corporation. Each option right entitles its owner to subscribe for
two (2) KONE Corporation class B shares at a price of EUR 12.55 per
share.

As of December 31, 2008, 2,417,902 shares have been subscribed for
with the options, raising KONE's share capital to EUR 64,359,230.50.
The share capital comprises 219,332,566 listed class B shares and
38,104,356 unlisted class A shares.

At the end of December 2008, the remaining number of shares that can
be subscribed for was 4,199,118. The remaining 2005B options entitle
their holders to subscribe for 289,968 and the remaining 2005C for
3,909,150 class B shares. The share subscription period for series A
options ended on March 31, 2008. The share subscription period for
series B and series C options will end on March 31, 2009, and April
30, 2010, respectively. As the 2005A options subscription period
ended on March 31, 2008, all remaining series A options have been
used and the shares were entered in the Finnish Trade Register in
April.

In December 2007, KONE Corporation's Board of Directors decided to
grant stock option rights to approximately 350 employees of the
global organization of KONE based on the authorization granted by the
Annual General Meeting on February 26, 2007. A maximum of 2,000,000
options in total can be granted. The share subscription period for
stock option 2007 will be April 1, 2010-April 30, 2012. The share
subscription period begins only if the average turnover growth of the
KONE Group for the 2008 and 2009 financial years exceeds the market
growth and if the earnings before interest and taxes (EBIT) of the
KONE Group for the financial year 2008 exceeds the EBIT for the 2007
financial year, and the EBIT for the 2009 financial year exceeds the
EBIT for the 2008 financial year.

The share issue without payment approved by KONE Corporation's Annual
General Meeting on February 25, 2008 was entered in the Trade
Register
on February 28, 2008. The share issue without payment has the same
effect as a share split. The number of shares in the company was
increased by issuing new shares to the shareholders without payment
in proportion to their holdings so that one class A share was given
for each class A share and one class B share for each class B share.

KONE's market capitalization was EUR 3,922 million as of December 31,
2008, disregarding own shares in the Group's possession.

Repurchase of KONE shares

On the basis of the Annual General Meeting's authorization, KONE
Corpo ration's Board of Directors decided to commence repurchasing
shares at the earliest on March 7, 2008.

During the financial year, KONE Corporation did not use its
authorization to purchase own shares. Relating to the share-based
incentive plan, KNEBV Incentive Oy, a company included in the
consolidated financial statements, granted 326,000 shares to the
management during 2008. At the end of the reporting period, the group
had 4,905,506 class B shares in its possession (at an average price
of EUR 17.01). The shares in the group's possession represent 1.9
percent of the total number of class B shares. This corresponds to
0.8 percent of the total voting rights.

Shares traded on the NASDAQ OMX Helsinki Ltd.

The NASDAQ OMX Helsinki Ltd. traded 207.8 million KONE Corporation's
class B shares in 2008, equivalent to a turnover of EUR 4,247 million
(number of shares has been adjusted to the increase in shares due to
the share issue without payment). The share price on December 30,
2008 was EUR 15.53. The highest quotation was EUR 27.87 and the
lowest 13.80.

Flagging notifications

Tweedy Brown Company LLC (Reg. no. 801/10669) announced on April 30,
2008, pursuant to the Securities Markets Act chapter 2, section 9,
that its holding in KONE Corporation was below five (5) percent
(1/20) of the share capital on March 9, 2007.

Market outlook

In 2009, the new equipment market will continue to decline because of
the weakening global economy. Modernization will be less impacted.
The maintenance market will continue to develop well.

Outlook

In 2009, KONE's objective in net sales is to reach a growth of 5
percent or at least approximately the net sales level of 2008. In
operating income (EBIT), the objective is to reach a growth of 5
percent or at least approximately the operating income level of 2008.

The Board's proposal for the distribution of profit

The parent company's non-restricted equity on December 31, 2008 is
EUR 1,533,733,113.48 of which net profit from the financial year is
EUR 264,692,626.91.

The Board of Directors proposes to the Annual General Meeting that a
dividend of EUR 0.645 be paid on the 38,104,356 class A shares and
EUR 0.65 on the outstanding 214,643,060 class B shares, excluding own
shares in the company's possession.

The total amount of proposed dividends will be EUR 164,095,298.62.
The Board of Directors further proposes that the rest, EUR
1,369,637,814.86 be retained and carried further.

The dividend record date for the proposed dividend is February 26,
2009 and the dividend will be paid on March 5, 2009. All the shares
existing on the dividend record date are entitled to dividend for the
year 2008, except for the own shares held by the parent company.

Annual General Meeting 2009

KONE Corporation's Annual General Meeting will be held at 11:00 a.m.
on Monday, February 23, 2009 at Finlandia Hall, Mannerheimintie 13,
in Helsinki, Finland.

Helsinki, January 23, 2009

KONE Corporation's Board of Directors


This bulletin contains forward-looking statements that are based on
the current expectations, known factors, decisions and plans of the
management of KONE. Although management believes that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct. Accordingly, results could differ materially
from those implied in the forward-looking statements as a result of,
among other factors, changes in economic, market and competitive
conditions, changes in the regulatory environment and other
government actions and fluctuations in exchange rates.


Consolidated Statement of Income


                    Oct           Oct           Jan           Jan
                  1-Dec         1-Dec         1-Dec         1-Dec
MEUR           31, 2008    % 31, 2007    % 31, 2008    % 31, 2007   %
Sales           1,431.6       1,294.2       4,602.8       4,078.9
Costs,
expenses and
depreciation   -1,242.4      -1,143.8      -4,044.4      -3,758.1
Operating
Income            189.2 13.2    150.4 11.6    558.4 12.1    320.8 7.9
Share of
associated
companies' net
income              0.9           0.8           2.6           1.7
Financing
income             11.6           4.8          24.4          16.6
Financing
expenses           -2.0          -6.2         -21.6         -25.1
Income before
Taxes             199.7 13.9    149.8 11.6    563.8 12.2    314.0 7.7
Taxes             -51.8         -49.2        -145.7        -133.7
Net Income        147.9 10.3    100.6  7.8    418.1  9.1    180.3 4.4

Net Income
attributable
to:
Shareholders
of the parent
company           147.5         100.7         417.3         180.1

Minority
interests           0.4          -0.1           0.8           0.2
Total             147.9         100.6         418.1         180.3
Earnings pershare for
profit
attributable
to the
share-holders
of the parent
company, EUR

Basic earnings
per share,
EUR                0.59          0.40          1.66          0.72
Diluted
earnings per
share, EUR         0.58          0.39          1.65          0.71


The result for the comparison period of 1-12/2007 icludes an expense
of MEUR 142.0 related to the European Commission's fine decision. In
addition to this, the result for the comparison period of 10-12/2007
and 1-12/2007  includes a MEUR 22.5 provision for the Austrian Cartel
Court's fine decision and a MEUR 12.1 profit from the sale of the
KONE Building.

Consolidated Balance Sheet

Assets MEUR                           Dec 31, 2008 Dec 31, 2007
Non-Current Assets
Goodwill                                     621.3        577.2
Other intangible assets                       48.9         53.2
Property, plant and equipment                214.7        201.0
Investments in associated companies           13.6         10.9
Shares                                       149.9        114.5
Available-for-sale investments                 5.6          5.9
Non-current loans and receivables   I          2.3          1.7
Deferred tax assets                          122.1        118.6
Total Non-Current Assets                   1,178.4      1,083.0

Current Assets
Inventories                                  885.5        773.2
Advance payments received                   -805.4       -694.6
Accounts receivable                          789.4        706.3
Deferred assets                              216.3        174.1
Income tax receivables                        40.8         44.1
Current loans and receivables       I        204.0        118.9
Cash and cash equivalents           I        147.8        154.9
Total Current Assets                       1,478.4      1,276.9

Total Assets                               2,656.8      2,359.9



Equity and Liabilities MEUR                 Dec 31, 2008 Dec 31, 2007
Capital and reserves attributable to
the shareholders of the parent company
Share capital                                       64.4         64.2
Share premium account                              100.4        100.2
Paid-up unrestricted equity reserve                  3.3            -
Fair value and other reserves                        9.0          5.5
Translation differences                            -16.2        -31.3
Retained earnings                                  874.1        610.3
Total Shareholders' Equity                       1,035.0        748.9

Minority interests                                   0.9          0.3

Total Equity                                     1,035.9        749.2

Non-Current Liabilities
Loans                                     I        172.4        175.8
Deferred tax liabilities                            39.7         25.9
Employee benefits                                  115.8        131.9
Total Non-Current Liabilities                      327.9        333.6

Provisions                                          49.9         86.6

Current Liabilities
Current portion of long-term loans        I         11.5         62.1
Other liabilities                         I        111.9        129.3
Accounts payable                                   282.2        274.6
Accruals                                           725.5        632.5
Income tax payables                                112.0         92.0
Total Current Liabilities                        1,243.1      1,190.5

Total Equity and Liabilities                     2,656.8      2,359.9

Items designated " I " comprise
interest-bearing net debt


Consolidated Statement of Changes in Equity
1) Share capital
2) Share premium account
3) paid-up unrestricted equity reserve
4) Fair value and other reserves
5) Translation differences
6) Own shares
7) Retained earnings
8) Minority interests
9) Total equity


MEUR                 1)    2)  3)  4)    5)    6)     7)   8)      9)
Jan 1, 2008        64.2 100.2   - 5.5 -31.3 -87.8  698.1  0.3   749.2

Net income for the
period                                             417.3  0.8   418.1

Items booked
directly into
equity:
Trans-actions with
share-holders and
minority
shareholders:
Dividends paid                                    -163.6       -163.6
Issue of shares
(option rights)     0.2   0.2 3.3                                 3.7
Purchase of own
shares                                                              -
Sale of own shares                                                  -
Change in
mino-rity
inter-ests                                               -0.2    -0.2
Cash flow hedge                   3.5                             3.5
Trans-lation
differ-ences                           38.0                      38.0
Hedging of foreign
subsid-iaries                         -30.9                     -30.9
Tax impact of
hedging                                 8.0                       8.0
Option and
share-based
compen-sation                                 4.7    5.4         10.1
Dec 31, 2008       64.4 100.4 3.3 9.0 -16.2 -83.1  957.2  0.9 1,035.9



MEUR                   1)    2)     4)    5)    6)     7)   8)     9)
Jan 1, 2007          64.0  98.0   -0.5 -14.0 -91.2  638.8  3.5  698.6

Net income for the
period                                              180.1  0.2  180.3

Items booked
directly into
equity:
Transactions with
share-holders and
minority
share-holders:
Dividends paid                                     -125.1      -125.1
Issue of shares
(option rights)       0.2   2.2                                   2.4
Purchase of own
shares                                        -0.3               -0.3
Sale of own shares                                                  -
Change in minority
inter-ests                                                -3.4   -3.4
Cash flow hedge                    6.0                            6.0
Translation
differences                            -18.4                    -18.4
Hedging of foreign
subsid-iaries                            1.5                      1.5
Tax impact of
hedging                                 -0.4                     -0.4
Option and
sharebased
compensation                                   3.7    4.3         8.0
Dec 31, 2007         64.2 100.2    5.5 -31.3 -87.8  698.1  0.3  749.2


Consolidated Statement of Cash Flow


                                                        Jan 1-Dec 31,
MEUR                                 Jan 1-Dec 31, 2008          2007

Cash receipts from customers                    4,624.5       4,168.1
Cash paid to suppliers and employees           -4,097.1      -3,788.1

Cash Flow from Operations                         527.4         380.0

Interest received                                  13.1          13.9
Interest paid                                      -6.4         -18.8
Dividends received                                  5.3           3.3
Other financing items                              -2.3         -12.5
Income taxes paid                                -109.2        -119.9

Cash Flow from Operating Activities               427.9         246.0

Capital expenditure                               -75.7         -66.0
Proceeds from sales of fixed assets                 9.5          42.8
Acquisitions, net of cash                         -62.4         -71.4
Proceeds from divested operations,
net of cash                                           -             -

Cash Flow from Investing Activities              -128.6         -94.6

Cash Flow after Investing Activities              299.3         151.4

Change in loans receivable                        -82.7          42.0
Change in current creditors, net                   -7.9        -113.9
Proceeds from long-term borrowings                    -         149.0
Repayments of long-term borrowings                -54.8         -59.1
Purchase of own shares                                -          -0.3
Sale of own shares                                    -             -
Issue of shares                                     3.7           2.4
Dividends paid                                   -163.3        -125.1

Cash Flow from Financing Activities              -305.0        -105.0

Change in Cash and Cash Equivalents                -5.7          46.4

Cash and cash equivalents at end of
period                                            147.8         154.9
Translation differences                             1.4           1.0
Cash and cash equivalents at
beginning of period                               154.9         109.5

Change in Cash and Cash Equivalents                -5.7          46.4




Reconciliation of Net Income to Cash Flow from Operating
Activities

Net income                                               418.1  180.3
Depreciation and impairment                               64.8   70.2

Income before Change in Working Capital                  482.9  250.5

Change in receivables                                   -130.5 -101.2
Change in payables                                        70.7   58.8
Change in inventories                                      4.8   37.9

Cash Flow from Operating Activities                      427.9  246.0


In drawing up the Statement of Cash Flow, the impact of variations
in exchange rates has been eliminated by adjusting the beginning
balance to reflect the exchange rate prevailing at the time of
the closing of the books for the period under review.

Change in Interest-bearing Net Debt


                                          Jan 1-Dec 31, Jan 1-Dec 31,
MEUR                                               2008          2007

Interest-bearing net debt at beginning of
period                                             91.7         124.9
Interest-bearing net debt at end of
period                                            -58.3          91.7

Change in interest-bearing net debt              -150.0         -33.2


The EUR 142.0 million fine for the European Commision's decision is
included in the interest-bearing net debt. KONE has appealed the
decision and therefore the amount of the fine may change.

Key Figures


                                                  1-12/2008 1-12/2007
Basic earnings per share                      EUR      1.66      0.72
Diluted earnings per share                    EUR      1.65      0.71
Equity per share                              EUR      4.10      2.98
Interest bearing net debt                    MEUR     -58.3      91.7
Total equity/total assets                       %      39.0      31.7
Gearing                                         %      -5.6      12.2
Return on equity                                %      46.8      24.9
Return on capital employed                      %      35.9      18.6
Total assets                                 MEUR   2,656.8   2,359.9
Assets employed                              MEUR     977.6     840.9
Working capital (including financing and tax
items)                                       MEUR     -76.4    -121.8



Quarterly Key Figures

                      Q4/2008 Q3/2008 Q2/2008 Q1/2008
Orders received  MEUR   845.2   892.4 1,092.4 1,117.5
Order book       MEUR 3,576.7 4,002.8 3,838.7 3,617.4
Sales            MEUR 1,431.6 1,123.8 1,142.1   905.3
Operating income MEUR   189.2   146.0   136.7    86.5
Operating income %       13.2    13.0    12.0     9.6



 Q4/2007 Q3/2007 Q2/2007 Q1/2007 Q4/2006 Q3/2006 Q2/2006 Q1/2006
   901.9   926.3   944.4   902.1   712.1   742.0   821.9   840.3
 3,282.3 3,473.6 3,318.0 3,105.7 2,762.1 2,951.0 2,818.0 2,654.0
 1,294.2   971.6 1,001.9   811.2 1,145.6   879.8   840.4   735.0
160.8 1)   126.7   116.4 69.3 2)   123.4   101.1    83.9    51.7
 12.4 1)    13.0    11.6  8.5 2)    10.8    11.5    10.0     7.0


1) Excluding a MEUR 22.5 provision for the Austrian cartel court's
fine decision and a MEUR 12.1 sales profit from the sale of KONE
Building
2) Excluding a MEUR 142.0 fine for the European Commission's decision

Orders Received

MEUR 1-12/2008 1-12/2007
       3,947.5   3,674.7


Order Book

MEUR 31.12.2008 31.12.2007
        3,576.7    3,282.3



Capital Expenditure


MEUR                  1-12/2008 1-12/2007
In fixed assets            65.1      58.1
In leasing agreements       9.3       9.2
In acquisitions            60.0      49.6
Total                     134.4     116.9



Expenditure for R&D


MEUR                                       1-12/2008 1-12/2007
                                                58.3      50.7
Expenditure for R&D as percentage of sales       1.3       1.2

Number of employees


                         1-12/2008 1-12/2007
Average                     33,935    30,796
In the end of the period    34,831    32,544


Commitments


MEUR                                        Dec 31, 2008 Dec 31, 2007
Mortgages
Group and parent company                             0.7          0.7
Pledged assets
Group and parent company                             2.0          4.8
Guarantees
Associated companies                                 4.1          5.3
Others                                               7.2          6.3
Operating leases                                   171.7        148.9
Total                                              185.7        166.0


The future minimum lease payments under
non-cancellable operating leases, MEUR      Dec 31, 2008 Dec 31, 2007
Less than 1 year                                    43.3         39.0
1-5 years                                           96.9         91.2
Over 5 years                                        31.5         18.7
Total                                              171.7        148.9



Derivatives


                            Derivative   Derivative Net fair Net fair
                                assets  liabilities    value    value
Fair values of derivative
financial instruments,                               31 Dec,  31 Dec,
MEUR                      31 Dec, 2008 31 Dec, 2008     2008     2007
FX Forward contracts
Cash flow hedges under
IAS 39 hedge accounting           14.3          3.8     10.5      6.7
Net investment hedges
under IAS 39 hedge
accounting                         1.6            -      1.6      0.4
Other hedges                       9.4         10.6     -1.2     -1.1
Currency options                   1.9          1.5      0.4      0.0
Cross-currency swaps, due
under one year
Net investment hedges
under IAS 39 hedge
accounting                           -            -        -      2.9
Other hedges                       1.8            -      1.8        -
Cross-currency swaps, due
in 1-3 years
Net investment hedges
under IAS 39 hedge
accounting                           -            -        -      2.6
Other net investment
hedges                               -         22.7    -22.7      6.3
Electricity derivatives            0.0          1.0     -1.0      0.9
Total                             29.0         39.6    -10.6     18.7



Nominal values of derivative financial
instruments, MEUR                           31 Dec, 2008 31 Dec, 2007
FX Forward contracts
Cash flow hedges under IAS 39 hedge
accounting                                         204.0        159.4
Net investment hedges under IAS 39 hedge
accounting                                          26.8         47.4
Other hedges                                       384.9        320.5
Currency options                                    90.4          156
Cross-currency swaps, due under one year
Net investment hedges under IAS 39 hedge
accounting                                             -         20.0
Other hedges                                        23.6            -
Cross-currency swaps, due in 1-3 years
Net investment hedges under IAS 39 hedge
accounting                                             -         23.6
Other net investment hedges                        113.1        113.1
Electricity derivatives                              4.7          2.5
Total                                              847.5        702.1




Shares and shareholders


                                Class A     Class B
                                 shares      shares       Total
Number of shares             38,104,356 219,332,566 257,436,922
Own shares in
possession 1)                             4,905,506
Share capital, EUR                                   64,359,231
Market capitalization, MEUR                               3,922
Number of shares traded,
million, 2008                                 207.8
Value of shares traded MEUR,
2008                                          4,247
Number of shareholders                3      16,354      16,354

                                  Close        High         Low
Class B share price,
EUR, 2008                         15.53       27.87       13.80



During 2008, the authorization to repurchase shares was not used.
In April, 326,000 class B shares assigned to the share-based
incentive plan for the company's senior management were
transferred from KNEBV Incentive Oy to the participants due to
achieved targets for the financial year 2007. Due to the share
issue without payment (registered on February 28, 2008) the number
of shares in the company was increased by issuing new shares to the
shareholders without payment in proportion to their holdings so that
one class A share was given for each class A share and one class B
share for each class B share.

Attachments

KONE Financial statement bulletin 2008.pdf