After introductions in that, Let's start with the presentation and then questions and answers as usual. So please, Matti, go ahead.
Thank you, Karva. Yes, we have 2 important news today that we have announced today. We will do it so that we will first have the last year's report, how our performance was developed in last year. And then after that, Hendrik and I, we will tell about how we see the transition in leadership in the beginning of or end of March, beginning of April. So let's start with the financial performance.
In addition to our development in quarter 4 and the full year of last year, I will also tell about market development and some highlights about some highlights of last year. And then finally, Nachita about market outlook and business outlook. In addition, this year beginning of this year also marks a start for a new phase not only in the change of the leadership from the beginning of April, but also with the start of new development programs now. And this is why Henrik and I will also also tell about our achievements in our previous programs and what our programs for the next 3 years will be. So let's start with the quarter 4 development.
It was a good quarter. Orders received was growing by 11.5% and in comparable currencies 16%. This is something Henrik and I are particularly pleased with. The orders received reached a level of €1,470,000,000 The order book went up by or grew by 10.6 percent and in comparable currencies, €16,000,000,000 and was more than €5,500,000,000 end of last year. And we have to remember, this means that this gives us a, let's say, good basis to start to have started the New Year.
In sales, 9.4% growth in comparable currencies, 13.1%. And this was in fact the 1st quarter when our sales level exceeded €2,000,000,000 The growth in operating income has been strong throughout the year. Now in quarter 4, it was 13.7% and the operating income was €292,800,000 so close to €300,000,000 euros And what was particularly dividing, again, also the EBIT percentage improved from 13.9% to 14.4%. And cash flow continued to be strong at more than 240,000,000 euros Then let's move to the full year 2013. The growth in orders received also for the full year was strong, 11.9% and in comparable currencies 14.1%.
And the orders received reached a level of €6,150,000,000 The sales was also growing fast 10.4 percent in comparable currencies 12.6 percent and was close to €7,000,000,000 Operating income growth was really strong. Last year, it was 15%, reaching €953,000,000 And what I also like a lot is that also the operating income margin for the full year improved from slightly more than 13% to close to 13% 14%. The cash flow also accrued to a record level to above €1,200,000,000 The basic earnings earnings per share went up from €1.23 to €1.37 And today, our Board of Directors have decided that it will propose to the annual shareholders meeting a dividend of €1 So I have to say that I am again very pleased with this development. It was a good year. And it is the development is again thanks to our the top of our people all around the world.
Now at the end of the year, we had 43,000 people in different continents. So also in this context, I want to thank them. Then let's take a closer look at how what was the development in orders, sales and operating income and first orders. So the orders growth in orders received was 11.5% and in comparable currencies 16%. The growth was fastest in Asia Pacific and there in India, Malaysia and China.
The growth was very strong also in the Americas. And I have to say that our performance in North America clearly improved towards the end of the year broadly. The orders development was relatively good also in this quarter in Europe, Middle East and Africa, where the development in orders was best in Great Britain, Germany and Russia. So overall, good development in orders received. Next, sales.
The growth in sales was very strong in Nove Equipment. It was close to 20% and in comparable currencies clearly more than 20%. The growth in maintenance also continued at earlier good levels and whereas the modernization sales declined. However, in modernizations, the orders received receipt was growing. We had a sales growth in all main geographical areas.
Then we come to operating income. The good growth in operating income was driven by continuing strong progress in Asia Pacific and also by the overall strong development in North America. The interesting point here is that the operating income margin improved also the share of new equipment sales of our total sales increased. And this was thanks to the good work we have been doing in different parts of the world in developing pricing competence. Now the better prices came through increasingly also in North America.
And the overall good development in the quality of our operations. Because of these developments that I have mentioned, the our business mix is again quite significant changes. First of all, the share of new equipment sales of our total sales grew from 50% to 54%. And while the share of our maintenance went slightly down to 32% and modernization to 14%. Geographically, the share of Asia Pacific grew by 3% points to 38%.
But I want to point out that Europe, Middle East and Africa still continues to be the biggest geographical area for us with its 46% share of our sales. Now the conclusion about the development of these two business mixes is that this is a good starting point for the future because we are well positioned to grow because of our strength in Asia Pacific And on the other hand, our global strength in service business gives us stability to our business. So let's now take a look at a little bit longer term development in our geographical mix in sales. As we have several times discussed, our strategy, growth strategy is based on our thinking target setting that we have since 2,005, we have been targeting market share growth especially in big growth markets. And at the same time, our objective has all the time to grow our operating income.
And with this, let's say, approach, we have been able by focusing on market share, let's say, packaging increasing market share, focusing on the big growth markets, we have been able to do both increased market share and increased operating income on more or less a continuous basis. And you see that the share of Asia Pacific Global sales has grown from in this time period from 12% to 38%. And the average annual growth in Asia Pacific has been as high as 26.9%. However, I have to say that when we remember how many markets in Europe and North America collapsed in 2008. I am almost equally pleased with the 6% in Americas as an average annual growth and about 5% in Europe, Middle East and Africa.
In the sales by business, this year of new equipment has been grown from 40% to 54%. And the average annual growth in new equipment has been 14%, but also in the service businesses between 6% 7%. Now let's next move to the review of how markets developed in quarter 4. And I will start with Europe, Middle East and Africa and with the new equipment markets. In Central and North Europe, the market declined slightly.
The markets in Germany, in Great Britain and Russia, they are growing and markets were stable in Switzerland, in Austria and in Sweden. The other markets declined either slightly or a bit more. In South Europe, the demand continued to decline. However, a positive sign was that sequentially, the markets in topic countries in Italy and in Spain were stable. So that is like a promising sign for the future development.
However, the market in the 3rd big country France, where the market level has continued to be better, continued to decline quite clearly. In the Middle East and Turkey, demand continued to grow. In modernization, the market grew somewhat in Central and North Europe, but remained weak in South Europe. Modernization market is we are learning that all of the time is very much very closely correlated has very close correlation to the GDP growth. And maintenance markets grew.
Although we saw significant variations between countries, price competition continued to be intense especially in South Europe, but also in some countries in Central and North Europe. Next, North America, where growth continued. In new equipment in the United States, growth continued, driven by residential and office segments. In Canada, the market was stable. And in Mexico, the demand declined.
In the modernization market, the market grew slightly. So it developed more positively than in Europe. In maintenance, the market continued to grow, but price competition remained intense, particularly in the nonresidential segments. And now Asia Pacific. Where growth continued across the region and accelerated in China.
And now again some country specific comments regarding the new equipment markets. In China, the market growth accelerated to slightly more than 20%. The full year this means that the full year market growth in China was slightly more than 15%. Our growth in 4th quarter was same as market growth, slightly more than 20%. And for the full year, clearly more than market growth, 23%.
Also, we tell you we will tell you our, let's say, official estimates of the market sizes globally and in different geographical areas, we can already now give preliminary information that in China, our market share last year grew from 17% to 18% and our global market share increased from 18% to 19%. Last year actually developed in our case very much as we planned in the beginning of last year. We expected that the price competition will get tougher by the end of the year. And therefore, we wanted to have and we worked very actively to have a very strong start for the year. And we in the first half, we were even able to slightly increase prices.
And what happened in the second half with the price competition as typical, it is a pattern that in typically in Q4, the price competition is most more is toughest. We were able to maintain our prices and actually continue to increase our margins. What comes to the, let's say, comparison to competition, we were the fastest growing company in this industry about the when compared to the our 4 key our 3 key competitors. So in top 4, we were growing fastest. This means that the distance between us and number 2 increased.
When we take all of the medium sized and big companies, we were the 2nd fastest growing company in China last year. And I will soon come back to how we see the expect the market to develop and going forward, which looks solid as well. In China, the affordable housing segment declined the growth in the affordable housing market size declined slightly. However, the growth was strong everywhere in the other residential segment, including the Tier 1 cities, where the government restrictions to manage prices continue to be in place. And good point is that the reason for the growth picking up also in the Tier one cities was that the demand was strong also there.
The commercial segment was also growing fast by about 15%. And the infrastructure market was quite stable. Now when looking at the development in the statistics of the 4th quarter real estate data, it also they also saw, let's say, good indications of strong good promising indications about the future development. The new construction land purchases increased by more than 40%, New construction starts by more than 30%. And also the new apartment sales continue to grow and was close to 10%.
We estimate that this year the market growth in China will be about 10%. In India, the market growth continued driven by the especially by the residential segment, but also the activity in large projects was quite strong. In Australia, demand was stable, both in new equipment as well as in modernization. In Southeast Asia, the markets grew somewhat where markets were growing, although the growth was somewhat slower than in the previous quarter. And in maintenance, all our markets continue to grow.
Here are some highlights regarding last year. First of all, we launched in June the Kone Ultra rope hoisting technology. And in October, Kone People Flow Intelligent Solutions. The KONE Ultra rope has been very well, let's say, we have got a lot of good strong interest to this technology. And what we already now see regarding this current people of law intelligence entry is that while we now have an integrated implementation of access corridor and installation control, this has clearly improved our competitiveness again in the high rise segment.
2nd important point is that the ramp up of the new global elevator offering that we launched in the middle of 2012 has developed as planned. And our and we will be in our full volumes by the end of this year. Also in escalators, we had content to have product renewal last year. Now the design language that we have in escalators is same. We have had in elevators and we have got already several awards also different awards also for these new products.
And finally, this I have said and we have said also earlier, but it is a highlight of last year that while Forbes has listed the world's 100 Most Innovative Companies now for 3 years, we have been in the list every year with improving positions. Last year, we were number 37. On the right side of this picture, you'll see the some key figures. The new equipment orders were growing by 16%. The deliveries by 60% as well.
And the maintenance space exceeded 950,000. And now I come to the development programs. This approach where we decide every 3 years 5 key development programs that best bring us through profitable growth towards our vision has proven to be a very good way to develop competitive assets. And this is now the 4th time we start this kind of new phase. Here you see the list of our development programs that we worked with from 2011 to end of last year.
And I will now just give some, let's say, key comments about the development, which was good. Customer loyalty improved every year. Employee satisfaction as well improved every year. I already talked about these, let's say, great production renewal that we have had during the last 3 years. In service leadership program, we got good progress in developing sales capabilities and quality and productivity of feed activities.
And in Delivery Chain Excellence Program, we got very good development in the end to end logistics chain from suppliers to installation sites. And now I will ask I ask Henrik to tell about our way forward with the new development programs. Please Henrik.
So thank you, Martin. And also welcome on my behalf to our webcast. First of all, it is I wanted to say that it's clearly a huge honor and a very inspiring challenge to succeed Matti as CEO of KONE as of 1st April. But we'll come more to that later during this session. But I want to talk about again how we plan to develop KONE during the next 3 year period.
And Matti talked already about our development programs and how we use them to constantly develop KONE into a more competitive company. So we have for the next 3 year period, we have again chosen 5 development programs. The first one is we want to be the 1st in customer loyalty. Here, our simple target is to have the most loyal customers in our industry. And this we intend to achieve through better customer service and customer communication.
The second one is we want to have a winning team of crew professionals. And by this, we want to have a committed and competent employee in every job and this way make Kone an even better place to work. I think this is a good continuation of the very strong people development that KONE has been doing since 2,008. The next three programs are really designed to again further differentiate us from our competition with our product services and solutions. The first one is we want to have the most competitive Peopleflow solutions.
This is a great continuation of what we have been doing and what we have been developing in the past years. And we're here we want to have to make sure that our products become even more competitive every year. The 4th one is that we want to be the preferred maintenance partner, so that we can continue to drive profitable growth in our maintenance business. Here, we'll renew our maintenance offering and also improving our sales setup. And the last one is to be the top modernization provider.
We think that there are significant opportunities in the modernization markets both in Europe and North America. And here we want to accelerate our growth by making sure we have the best modernization solutions in our industry. But if I can turn to a holistic picture, many of you know our previous one and we have now updated it with our new development programs. And this picture is the idea it describes how we in a systematic way develop KONE towards our vision. And first of all, we have our megatrends.
We are operating in a growth industry driven by many strong megatrends. Those are very familiar to most of you. They are urbanization, demographic change, growth in middle income consumer and aging population. The third one is safety and then we have environment. So these are continuous good growth drivers for our industry.
Then we have our strategic targets. In the past years, we have measured our progress through 5 measures each year to see how we have developed and whether we have developed in a positive direction as a company. Now we have aligned our strategic targets with these five measures. So strategic targets are we want to have the most loyal customers in our industry, make KONE into a great place to work. Our ambition is to continuously grow faster than our markets and to have the best financial development.
And the last one is to be the leader in sustainability. Then, of course, essential is that we continuously develop connect towards our vision, which is that we deliver the best people to experience. This is our promise to our customers and our end users. And our way to make this strategy live and to get towards our vision are our development programs, which I talked about already. Then we have our high priority areas, which are the most important factors in everything we do, and those are safety and quality.
Then all of this development is then supported by KONE's values and by KONE Way, which is our product process architecture, which describes how we conduct our business. So again, our ambition is that every Kona person should know every Kona employee should know what this picture means and understand how they in their role can contribute towards our development. If we achieve that, we have very strong possibilities to continue our strong development of KONE. At this stage, I'll give word back to Matti to finish with our outlook and both market outlook and our business outlook.
Thank you, Henrik. Next, Sandrik mentioned market outlook. And starting with new equipment, the market in Asia Pacific is expected to grow clearly. The market in China, as I already mentioned, is expected to grow by about 10%. The market in the Europe, Middle East and Africa region is expected to grow slightly.
So this is, let's say, a bit better than what was the development last year. With a relatively stable demand in Central and North Europe and further slight decline in South Europe and a growing demand in the Middle East. The market in North America is expected to continue to grow. And in modernization, the globally market is expected to grow slightly. In maintenance, the market is expected to develop rather well in most countries.
And finally, the business outlook for this year. Net sales is estimated to grow by 6% to 9% at comparable excess rates as compared to last year. The operating income is expected to be in the range of €980,000,000 to €1,050,000,000 assuming that translation exchange rates don't materially deviate from the situation of the beginning of 2014. So this completes the review of our last year's results. And now we will move to the other big topic.
That is the leadership change in the beginning of April. And now Erik and I will give our comments how we see this change and maybe I will start with that. This is to leave Kone as the CEO and President for Santeezu. This has been an exciting job in a great company. However, these decisions and these thinking started to develop in my mind gradually during the last 12 months.
And it was based on a few factors. First of all, KONE's business is developing at the moment very well. We are in a strong phase at the moment. Secondly, our new development programs also are starting again a new phase at KONE. Thirdly, I'm very pleased with the engagement of our personnel of 43,000 people and also with the spirit that we have in the company.
I'm also very pleased with our executive board with my management team. In our management team, we have several strong people, and many of them were potential candidates to be my successors. My newly appointed successor, Henrik, has grown very well to his new responsibility during the last 5 years. And he clearly has brought new energy and new speed to our company. I am convinced that the decision that Henrik will be the new President and CEO after me is a good decision for KONE.
In addition, 9 years is already a quite long period as President and CEO of a company. At the age of 61, which I am now, it starts to be useful to think that do I still want to be in this work couple of years? Or do I decide to leave it now after 9 years in order to be able to start the next phase of my career again with a little bit different challenges and again new kind of learning opportunities. And I decided to take the lateral alternative and not to continue and maybe then again decide to continue and then finally run into phase when I would believe that I can't be replaced. That would not have been a nice path.
So this means that beginning of April, I will be involved with many interesting, let's say, responsibilities. I plan to continue with my current positions of trust. And in addition, this my the scope of my activities will further expand also with new and even with new kind of interesting challenges. I see that this is a good sense for KONE. And now I ask Henrik how you see the situation and your situation in front of the new challenges for many, many years to come.
Please Henrik.
Thank you again Matti. As I already mentioned, it is naturally a huge privilege and a very inspiring challenge to take over after Mattias, President and CEO of KONE.
But I would say
I'm doing that with great confidence. I have strong confidence that we can continue to develop Kona in a positive way that we have developed Kona in the past years as well. And the reason for my confidence, first of all, the breadth, diversity and strength of KONE's management as well as the knowledge and skills and competencies of Konec's employees more broadly. So I would say the whole people aspect we have in a very good shape and that's of course very important. The second important factor is KONE's culture.
We have a very strong culture, a very dedicated people and a culture to continuously drive renewal and improvement. And of course, the third one relates to what I discussed earlier that we operate in an industry with many exciting growth opportunities. So we have growth possibilities. We remain the challenger in our industry. Our objective is to continue to grow faster in our markets.
So we see a lot of opportunities in our markets and we also see good opportunities to continuously develop KONE into even more competitive company. So I think that all these three factors give me very strong confidence that we can continue this very good path of wire. Then even though we will be working for 2 months together with Bhakti, He is still President and CEO until end of March. But this is the last results announcement for him. So I think I wanted to personally thank you for your everything you have done for KONE, for the very strong development during your period, your unbelievable dedication and commitment constantly to this company and to develop both the company and its people and its leadership.
I think I can say that all of us who have worked with you can be very privileged to have been working with you and we have learned a lot. That has been a true joy. And I think that gives us a great path going forward. So with that, I think we will probably hand over then to Q and A and I'll hand over over to Matti again.
Thank you, Henrik. And now we are ready for your questions. And you can ask your questions both in the area of the results or the transition, whatever you like.
Thank you, Matti and Henrik. Let's start with the questions from those present here in case you have questions.
Pekka Spronder from Pohowa Bank. Last year, you still delivered some lower margin projects, big project. The strong result in Q4, does this indicate that those projects are now more or less delivered out? Or shall we expect some to be delivered later this year?
So the intensity of those deliveries was highest this year, But we still have these deliveries continuing next year, but getting to low levels by the end of next year. The improvement in our North American and U. S. Results very much was a result of the delivering of the orders that we had caught with the improving, let's say, prices and margins. You remember that already in the middle of 2011, we started to increase prices and have increased those quite significantly over the last two and a half years.
Thank you. And the second question about the pricing competition. You mentioned in quite many points that the price competition remains tough. But has there been any changes during the Q4 or generally speaking 2013?
Let's say, so that the price competition to become continue to be intense. However, I would say that the only changes in quarter 4 compared to quarter 3 there that it got somewhat even tougher in South Europe. And the as I mentioned in Nuvik and in China, the price competition was tougher well.
Thank you. Jussi Koskinen. New equipment business growth has been 14,000,000 per year over a long period of time. And maintenance growth has been only let's say good, but still clearly lower only 6 plus crorescent. So how do you see development in the future?
How this maintenance business growth will continue?
[SPEAKER SEBASTIEN DE MONTESSUS:] Well, I mean, first of all, when we take this specific period that where from 2,005 to 2013 and having a let's say closer to 7% growth there, I would say that that is a good growth. Then if I would a little bit evaluate that can be pleased with the development last year, a few factors. First of all, conversions continue to be at good levels. The global conversion rate was about 80%. When outside China, it was between 85% to 90%.
In China, we have highest conversions in the industry. With KONE Grand, the conversion is and has been conversion level 60%. And when we take also into account GiantONE where historically the maintenance business has been such a priority as in the Kone branded activity, the overall conversion rate was 50%. In then what comes acquisitions? We had relatively good development also in acquisitions.
They were about 1 third of the new additions. Then we had also, let's say, a couple of negative factors. First of all, and this is a naturally interesting point. Close to in the Western markets, the close to 1% of the elevators and escalators, they were taking out of use during last year, so close to 1%. And then let's say, operatively, as we have said also earlier, during the first half of last year, we can't be fully satisfied with our development in competition balance.
Then we took that to a stronger focus in the middle of last year and the development towards the end of last year was very good. So this means that we have a good possibility to let's say further improve our maintenance activity from the maintenance base point of view. And now as Henrik mentioned, the maintenance is also one of our key development programs. So the activity in developing that will be strong.
Okay. So I think we are next ready for the questions from the lines. But just before we go there, there are usually quite a few questions during these calls about China share of our orders and sales. So just for your reference, there is an additional slide at the very end of our results presentation that highlights some of the key figures for the Chinese market and our performance in 2013 there. So you will see at what rate we estimate the market to have grown last year as well as our growth rate.
And in addition to this, China share of our overall orders received and of our sales for the full year. In addition to this, I thought I would here just refer to China's share of orders and sales in the last quarter of the year. So these figures were a little less than 35% of our orders received. So this is China's share of our Q4 orders received and roughly 25% of our sales in Q4. And next, we are ready for the first question from the lines.
And if I may ask you to please present one question at a time. Thank you.
Thank you. Your first question comes from the line of Ben Maslin. Please ask your question.
Yes. Thank you. Hi, Matti. Hi, Henrik. Congratulations to both of you.
First question, please. Just on the to come back to the growth of the maintenance base, your slide 13, which I guess you just touched on. I mean, it still seems like fairly low growth to kind of 900,000 to 950,000 units given the very strong deliveries and the M and A that you mentioned. I mean, how what percentage of the book would you kind of lose on a normal year basically? And how bigger how much bigger is that this year than you've seen say in 2011 or 2012?
Thank you.
Henrik please. So first of
all as Matti mentioned our additions were at a good level during last year's. And then if we look at Matti mentioned already that in the Western world, can take us a rule of thumb that about 1% of the units are taken out of use each year. So and we have to remember that quite a large share of our base is still in Europe. So that is a clear negative number. And that has been I would say quite constant that number over the past few years.
Of course, the absolute number grows a little bit every year as the base grows.
Yeah.
So that's one point. The second one, which Matti mentioned was competition balance, I. E, how many units we win versus how many units we lose in the market. And as Matti already mentioned, in the beginning of the year, we were not satisfied with our performance and we had clearly more losses than wins. But the situation then improved towards the end of the year.
So when we look at additions, we think about gross adds, then we think about conversions and acquisitions. Their conversions were about 2 thirds acquisitions, 1 third and then we had these 2 negative factors.
Got it. Thank you. The second question just on sales growth in Asia, which seemed to slow down in the quarter quite a lot from the rate you saw in the 1st 9 months. I think it was 11% in Q4, 20% to 30% in the 1st 9 months. Given orders and momentum is so strong in your Asian business and that you tend to have shorter lead times, just why are you seeing growth rates slow at the moment?
Is that just a timing issue? Are there some deferrals? Is it capacity in terms of installation staff? That would be helpful. Thank you.
The answer is here very straightforward because the sales growth in Asia Pacific was in historical currencies 11.8 percent, but in comparable currencies 17.5 percent. Okay.
Okay. Great. So it's a currency effect. Thank you. And then my final one if I can.
Just the extra charge you have in financial expenses of your the revaluation of your Giant Kona option. I noticed you had it last year and you've had it this year. If we assume that the China business keeps growing and Giant Kona keeps growing, would it be right to assume that you have this revaluation charge every year? Thank you.
So yes, I can take that question. Yes. So exactly as you said, the charge related to the revaluation of the option of the 20% that we had the right to buy in Japan. And the charge of roughly 23 percent $23,000,000 that we had, not all of it is Giant Kone, but the majority of it is. And if we continue to grow, then the value of the option would increase each year and is charged to be there.
It is of course at the moment a non cash charge. And you can see it in our balance sheet the value we have for all of such options to be able to buy out minority stakes.
Got it. Thanks very much.
Thank you.
The next question comes from the line of Aron Ipetsen. Please ask your question.
Yes. Hi there. Congratulations again to both of you to your new ventures. I have two questions if I may. The first one was just if it was possible to get organic growth in service I.
E. Excluding the acquired bits? You said 2.6% in constant currency. So I assume there was a little bit of that that was acquired. And secondly, if I may, just on your top line guidance of 69% in constant currency, It seems as per usual practice pretty conservative I have to say in light of backlog and orders up 16% 14% on an equivalent basis.
And generally, you do some small acquisitions as well. So I'm trying to get my head around why you if this is indeed or if we should see this as a sort of normal conservative start to the year? And this in particular in light of the 10% demand growth that you're expecting in China, which presumably is where you will experience the vast majority of the in for out orders in the year? And those were my two questions. Thank you.
[SPEAKER STEPHEN ROBERT BINNIE:] I will start with the latter one. And then Henrik, I ask you to comment the first one. Yes, I understand your question very well. This why only 6% to 9%. And there are 3 key reasons.
First of all, we have a major order book in major a big order book in major projects. And in many of those, we have very little deliveries during this year and significant deliveries then in the future years. 2nd is the dynamics in the mix of the U. S. Business.
We have had a good growth there in orders. But and in the mix in orders, the share of midsized projects has been growing. And the again, the delivery time from order to delivery is or the time from order to delivery is longer in the case of this. And therefore, our sales growth in the U. S.
And North America is low this year. The third reason is the consolidation of Fone Areco in Saudi Arabia. Before end of last year until end of last year, KONE Aereko was our distributor. And therefore, we recognized sales when we had delivered material. Now when it is Kone Aereco is in our management and we are consolidating that, we are naturally recognized revenue in line with sales completions.
And this actually and this is a very, very, very good question, because this is important because of two reasons. First of all, the impact of this means that this consolidation just for this year, it decreases our sale in for Tuconeira Grande. It decreases our sales compared to the situation if we would not have done this transaction. And the same is the case also for EBIT. And the impact is strongest in the during the beginning of the year.
And this is again one of the elements why also when we look at the our outlook for this year, both growth in both sales and operating income in the beginning of the year is clearly lower compared to last year than in the let's say in the rest of the year.
Okay. Thank you.
I think let me one thing other than this Konea Rico is a complex wonder why It has this impact. But one clarification, it has in the beginning, it has a negative impact to our sales. Of course, eventually, as we recognize the full project, it will have a positive impact to our sales. The cash flow profile is very similar to what it was previously, But it's one of these impacts of consolidating it. But your first question was in relation to the growth of our overall service business that was at comparable currencies in Q4, 2.6%.
First of all, we have to remember here that our maintenance business grew at its historical good rate and we had negative growth in the modernization business. So we had good growth continued good growth in our maintenance business. Yes, we did acquire businesses during the year and end of last year, but they are not a material part of our sales growth. They have a small impact, but not material.
Okay. So you did grow sort of organically as well in constant currency, so it was positive?
Clearly, clearly, yes.
Okay. We see the pace
of the business, yes.
Okay. Okay. Thank you.
Next question comes from the line of Frederic Stahl. Please ask your question.
Hi, good afternoon. It's actually Guillermo Pena from UBS. Have three questions. Have you guided or can you guide us to how much of your China revenues are actually coming from 3rd and 4th Tier Cities in China? Then secondly, of the 10% growth that you expect for the overall market in China, can you basically guide us how is your backlog looking like versus that 10%?
E. Are you be why are you going to be outgrowing going into 2014 a year again with all these capacity increases from your competitors? Why would you be growing the market? And then last but not least, when it comes to working capital changes, we saw a $72,000,000 cash outflow, which is materially higher than what you saw actually last year. And I was wondering the reasons behind this.
Okay. So the first question I understood that it related that what is our let's say, split and outlook in the recurrent tier cities in China. That we have not opened and communicated. Then the second question, where the marketing is,
so why we believe we can continue to outgrow the market and the 10%
outlook for market growth? Okay. So the first of all, okay, why
we are why we do we
believe that why we are confident that we are able to grow faster than the market also this year in China because of many reasons. First of all, our product competitiveness continues to be very strong both in our both activities and the new global product range that we are ramping up is further improving this competitiveness. Secondly, what is very essential is that our, let's say, broad, let's say, management team in China, including the branches and regions that has been developing very well. And we have one very key strength is that our key management we have stability in our key management in China. And then well, the other factors continue to be those that we have discussed several times.
We are all the time expanding more and more to the inner parts of China. That increases the accessible market for us. And then well, I think that and then this combination of having 2 parallel activities, 2 parallel plans KONE brand and Giant KONE. It has really proven to be to us a very big strength in this phase when the market is very thick and then the price competition has become tougher.
I'd like to add one which was in your question Guillermo which was relating to the capacity increase in the industry. We don't think that capacity increase is a growth driver for anyone in China. Of course, one needs the capacity to deliver. But we have to remember that we operate in a very capital light industry where we assemble the products. So I think we don't see that that is a concern or that is driving anyone's growth in China.
Then your third question was relating to working capital and the negative working capital we had in the quarter. First of all, I would say that it's very normal for us to have negative working capital development in Q2 and Q4. Very much of our service billing happens in Q1 and Q3. So seasonally, this was a totally normal thing. In 2012, we had an exceptionally strong performance in working capital in Q4.
And I would say that the situation for Q4 in 2013 was a very normal one. At the end of the year, our working capital was again more than $600,000,000 negative, which I would consider to be a very good number. And during the year, we again improved our working capital. So we think actually that cash flow was at a good level in Q4 taking into account seasonal factors.
I still would like to comment on this let's say production capacity issues. And really when taking KONE, a company with sales of 7 close €7,000,000,000 our annual investments when excluding acquisitions are in the level of €70,000,000 to €80,000,000 And a relatively small part of that is in the production capacity. So we never make and I don't we don't believe that other companies as well, for example, pricing decision or the business decisions based on these investments.
Okay. But then can I ask the question differently maybe? When you look at the European market or the U. S. Market and you compare basically total installed capacity from you and your competitors and total demand ongoing demand and then you look at the Chinese market and you see total installed capacity or actually the numbers that you probably see at the moment that is going to be in terms of installed capacity in 2015 versus current demand levels.
Is China normal? Meaning that I basically read reports talking about the fact that maybe 700,000 units capacity will be built by the end of 2015, which the current run rate of installations is around 475 to 500. I just wonder whether China is just normal and then you have 200,000, 300,000 extra capacity and that is just basically something that you see in other markets
as well? It's just to say that this is not a I will say that this is not any kind of issues even let's say without commenting on these specific levels. I think I would add to this that I think
when you look at what people talk about capacity in China that is probably what they look at where they build their factory, the maximum design capacity. We have to remember in assembly operations, these are very modular. It's quite easy to expand then your capacity at your site. And frankly, if you have a little bit extra capacity, that means that you have an industrial haul that may not be fully utilized and that is frankly not a lot of extra capital charge to have that. So we don't see the concern in the way that you describe it.
This is very helpful. Thank you very much.
Thank you very much. Thank
you. The question comes from the line of Lars Brorsen. Please ask your question.
Yes. Thank you very much. Matti, thanks very much for the last few years and best of luck to you. And Henrik, congratulations on the appointment. A couple of questions if I could.
First on your 10% market growth for China in 2014, I was wondering if you could give us your segmental assumptions here across your non residential, residential and affordable housing segments in terms of what you expect to see here in 2014? And maybe just to that, whether you feel this year versus what we saw last year with affordable housing now a smaller portion in 2014 and arguably with liquidity concerns in that market, you feel that visibility on your market outlook here is perhaps somewhat reduced from what you had last year?
Segment wise, what we can say is that the operable house the peak of the current kind of affordable housing segment is over. It was declining slightly already last year and we expect that to decline also this year. On the other hand, we expect to see good growth both in the rest of the residential segment as well as in the commercial segment.
You talked about 10% volume growth. What do you expect value growth to be? Or maybe I could ask differently, do you expect that to be the same delta as you saw in 2013?
Henrik, would you like to comment?
We have not predicted that. But I would say that there shouldn't be a big reason for it to be a big deviation from what we have seen so far.
Thanks, Henrik. And finally, if I just could on your maintenance growth in China, you talked about in your last slide a 35% CAGR since 2006. I think earlier we've talked about a 40% CAGR. I appreciate obviously in the mid-two 1000s you saw quite low base numbers and therefore high growth numbers. But can you give us a sense for how the Chinese maintenance base is growing or did grow in 2013 relative to 2012?
And what perhaps we how we should think about that growth either accelerating or decelerating in 2014?
What we said is that we have very it's annual growth between in the maintenance space between 2,006 and 2013 has been more than 35%. And earlier, we have said that it was less than 40% between 2,006 2012. The growth has been strong, but it has slightly declined just because of the comparison base has become large higher.
Just to be clear. So the growth has declined in 2013 relative to 2012. Is that right?
Well, slightly, just because the maintenance space it's just a maintenance space that is the comparison point is has been becoming bigger.
That's clear, Maciej. If I could fill out one final follow-up please. Just on your current order book comment that it currently has a lot of large project orders. Can you give us a sense of the order of magnitude of this? And what sort of margin impact we should think about this would have I.
E. What percentage of orders currently is large project orders relative to what has been say in the last 5 years or so? And any sort of margin differential between that and small base orders would be of interest? Thanks.
So our order book in major projects is roughly 30% of our order book that has grown somewhat from previous year. Overall, of course, our ambition through pricing otherwise is to continue a good margin development overall. So this mix shift should not have a material impact over time on our margins. I'd like to just still clarify on the maintenance growth in China in 2013 that it continued to be at a very good level.
That's clear. Thanks very much.
The next question comes from the line of Glen Liddy. Please ask your question.
Hi, there. On the tax rate, could you give us an idea what's going to be changing with your tax rate going forward over this year and next year? And also some comments on the costs for purchasing materials and components if there's any change in the outlook there.
Okay. So first of all, as
you saw our tax rate for the full year was somewhat was higher than the previous year. The reason for the higher reported tax rate, there were 2 specific items that impact our result but are not tax deductible. One is this revaluation of these options for acquisitions. So that reduced our result but not tax deductible. And also then we have deferred tax assets in Finland.
And the Finnish tax rate beginning of 2014 changed from 24.5% to 20% and that impacted when we revalued these deferred tax assets last year that impacted our tax rate. So therefore, last year, the comparison point is our tax rate from our normal operation, normal business was 23.6%. The impact then of the decline in the Finnish statutory tax rate will have an impact of close to 1 percentage point on our overall tax rate. But as I said, as a comparison point, it is 23.6%.
Okay. Thank you.
Now, no further questions at this time. Please continue.
Carole? Okay. So before we close the call, I wanted to ask Matti whether there was something that you still wanted to close this call with?
Yes. I will see many of you still during the next 2 months in roadshows in different countries. However, because this is my last, let's say, quarterly conference call, I want to really thank you for a great cooperation during the last 9 years. And all of this has been very professional. Also, we are all time learning a lot from you.
And this has I have to say this has been very energizing. Thank you.
Thank you very much. And have a nice rest of the day and of the week and let's stay in touch. Thank you.