Thank you, Carla. So welcome to KONE conference call. We have again many positive news to tell. For example, the growth in orders received was both for the full year last year as well as for the Q4 more than 20%. However, this time, I am most delighted about our good progress in cash flow.
The cash flow before financing items and taxes exceeded first time ever clear and even clearly the milestone of €1,000,000,000 Now this time I will talk a little bit longer than not typically because it is a full year we are discussing about. I will start first with by reviewing the our financial performance in quarter 4 and full year. Then after that, I will focus a little bit more on the, let's say, the transformation that we have had during our last years in our business mix both by business and by geography. Then I will give an update about the market development in the Q4. And finally, look in various ways and analyze in various ways what kind of progress we did in as a company last year and finally, of course, about our market outlook and business outlook for year 2013.
So let's start with the quarter four numbers. The growth in orders received was 20.2 percent in comparable currencies 16.9% and we reached a level of €1,320,000,000 Excluding Giant Kone, growth was 12.8%. And excluding Giant Kone, in comparable currencies, the growth in orders received now in quarter 4 was about 10%. The order book went up by more than 16% and to a level of €5,050,000,000 And I would again like to remind that we don't include maintenance contracts to our order book. Therefore, this order book gives us a good basis for this year 2013.
Sales growth was 16.9 percent in comparable currencies 13.5 percent and we reached the level of 1.85 €1,000,000,000 Excluding Zayant Kone, the growth was 12.8%. The operating income grew by close to 10% to €255,600,000 Also in operating income, we had again some positive impact from favorable impact from exchange translation exchange rates and that impact was €7,000,000 here in quarter 4. In the relative operating income was 13.8 percent and the cash flow went strongly up also here in quarter 4 from the already good level of last over the previous year 2,012,000,000 to €262,000,000 So this quarter, quarter 4 was positive development in many aspects, but naturally it is more important to take a look to the full year, where the progress was very much in line with the with quarter 4. The growth in orders received was 23.1 percent and in comparable currencies 17.4%. Excluding Giant Kone, the growth was 13.7% and excluding Caiyant Kone in comparable currencies.
So the, let's say, real organic growth was 8.5%. Oropuk, I already mentioned, the sales went up by 20.1% in comparable currencies, 15.2% and was went up from the level of SEK 5,200,000,000 to close to SEK 6,300,000,000. So relatively good step up. The growth in sales excluding Zayant Kone was 14.3 percent and the growth excluding Cajankone in comparable currencies was 9.6%. The operating income excluding the onetime cost that we booked in quarter 2, went up by 13.3% to €821,000,000 The positive impact of changes in currencies was €37,000,000 for the full year.
So it was rather significant impact here. The relative operating income was 13.0 excluding this one time item was 13.1%. And the cash flow for the full year went up from SEK 819 1,000,000 to SEK 1,055,000,000. And why did I say that I am most delighted about this achievement? The reason is that, as all of you know, that cash flow is with its items, different items, is a very good indicator about the direction of the business.
And we were developing positively in all of these various items, meaning that the operating income grew, the level of advanced payments as compared to inventories developed favorably, Inventory rotation improved. The rotation of receivables improved and the accounts payable went up. The earnings per share in comparable terms went up from €2.30 to €2.46 And the Board recommends to the Annual General Meeting a dividend which is €1.75 So these were the full year numbers. And let's now again take a closer look in orders received and sales and operating income and what was the development in these three areas. And from the visual pictures, we can also see that how the development in this quarter was compared to the same quarter previous years.
And here starting from orders, we first of all see that the level of orders received was at a record level in all of the quarters last year. In quarter 4, the orders received had a growth of a little bit more than 20%. And the growth was driven by the growth in Asia Pacific. And there we had the fastest growth in 2 big markets in China and in India. These are the topicest markets globally in the new equipment area.
In Europe, Middle East and Africa, the orders were stable compared to the previous year. In Central and Northern Europe, very slightly down. In the weak Southern European markets, more down. A bit more let's say more down. And whereas the orders have had a strong growth in Middle East, which then combined resulted in a stable development.
In the Americas, the Odyssey went a bit down because of the negative development in the United States. The reason there was that, as we have told, we slightly increased prices globally in all continents. But the most significant growth in prices we had in the United States and it somewhat impacted to our orders growth. But still, we feel that very much the right decision. Then next sales.
We had good sales growth in all of our businesses. In new equipment in quarter 4, we had a growth of 26% In comparable currencies, 21%. And but also in service business, our growth was 8.5% in comparable currencies more than 6%. Geographically, the growth in sales was fastest in Asia was very fast in Asia Pacific. In Europe, Middle East and Africa, it was stable.
The sales level was stable compared to the previous year. And in the North America and local currencies, the sales went slightly down because of the lower level of orders in when the markets were at their weakest in 2010 2011. And finally, operating income, we had the growth of close to 10% as relative operating income was 0.8% points lower than in quarter 4 2011. And the main reasons here were, first of all, the delivery of the lower margin orders from 20102011. Secondly, the change in our business mix where the share of new equipment business increased by 4% points.
And thirdly, the salary and basis inflation in Asia and as a 4th factor, the amortization of the intangible assets of Giant Kone. So this about the quarter four numbers and full year performance. And I am very pleased with our progress. And also in this context, I would again like to express my thanks to all of KONE people in various parts of the world. They have done a very good job in my opinion.
And then I will move to the to take a little bit, let's say, closer look to what to our business mix. As all of us know, the development of economy and hence also the development of our markets has been very different in different continents during the last few years. And in this situation, we as KONE, we have been able to use a lot of to take a lot of advantage of the strong urbanization development in Asia. And this has resulted in a major change and major growth in the share of new equipment sales about our total sales. And geographically, it has as a result, our the share of our sales in Asia Pacific has but our total sales has increased significantly.
So let's first take a look on last year. Last year, the share of new equipment of our total sales went up from 46% to 50% and the share of our service businesses went somewhat down. However, again here I would like to emphasize that last year also these in these service businesses, we had a growth of a little bit more than 10% and even in comparable currencies more than 8%. So we had good development also there. Geographically, the development was even bigger because the share of sales in Asia Pacific increased by 8% points from 27% to 35%.
The share of Europe, Middle East and Africa went down by 6% points to 49% and the share of Americas decreased by 2%. So this is quite significant, but it is more illustrative if we take a bit longer timescale and here take first a look to the business mix and the changes there between 2,005 and 2012. And here we see that new equipment sales was 40% of our sales in 2,005. And last year, it grew up to 50%. The share of and the average annual growth in new equipment over this period has been 13.5%.
And also this year of the service businesses has gone somewhat down. It is important to see that also in these businesses the average annual growth has been about 7%. The change is even more significant in the geography. From here, you'll see that the share of Asia Pacific has almost tripled from 12% to 35%. The average annual growth there has been 27.6%.
At the same time, also the share of sales in Europe, Middle East and Africa and Americas has gone down. We have been able to grow in also in these markets by more than 5% a year as an average. And remembering how the market has behaved, what has happened in the market size here from 2,000 in 2,009 and after that this 5% is more than 5% is like relatively good development. We see this we understand this even more concretely if I say in this in numbers. In Americas, our sales in 2005 was €700,000,000 in 2012 €1,000,000,000 in Europe, Middle East and Africa in 2005 €2,100,000,000 and in 2012 €3,400,000,000 These changes are quite significant and the positive impact naturally is that the current business mix geographical mix gives us a much better position to growth opportunities in the when you look at the development of the economy and our markets in the future.
Now to the 3rd part of my speech and where I will tell you about the how the markets developed in quarter 4. And starting again from Europe Middle East and Africa and from new equipment markets. In Central and North Europe, the market declined slightly but remained at relatively good levels. In Germany and Austria, which have been good markets, the markets also during the last years, the market stabilized. In Switzerland, it went slightly down.
In Nordic countries, the development was most positive in Sweden and Norway. In Finland, it went slightly down, but remained at a good level. In the U. K, market went a little bit down, but the major project activity was rather strong. In Netherlands and Ireland, the decline continued.
In Russia, again, the market developed positively. In South Europe, the demand continued to decline. In Italy and in Spain, the market declined from already low levels. And in France, where the market developed somewhat positively during the beginning of the year, it continued to decline. In the Middle East, demand remained strong in Saudi Arabia and also saw good positive signs in Qatar and Dubai.
In Turkey, the market continued to develop positively. About the modernization markets, the market declined slightly in Central and North Europe and continued to decline in South Europe. In maintenance markets, the markets continue to grow, although there were quite clear differences between countries. And again, here the development in Central and Northern Europe in general has been better compared to the, let's say, to the countries in South Europe with weak economic development. So this about Europe Middle Eastern Africa and then Americas where in Nuevo and Markets, the gradual market recovery continued driven by small and mid sized projects in the residential and office segments.
Regarding the different geographies, the markets in West Coast and Texas continue to develop positively. And we continue to see positive signs also in Florida and in Midwest after, let's say, long market weakness. In Canada, the market continued to grow and but at a lower rate than earlier during the year. And in Mexico, the market was stable. The modernization markets developed somewhat better than in Europe.
The market grew slightly. And in maintenance, the price competition remains very intense, particularly in the nonresidential segments. And then Asia Pacific, where the growth picked up clearly end of the year. And now I will give a few comments by country with regarding the new equipment market development. And I will start from China, where the market grew at a higher rate than during quarter 2 and quarter 3, with demand growing in all segments.
Many of you remember that in quarter 3 announcement, so in October, we communicated that our estimate about quarter 4 market growth in China was that market would grow between 0% to 5%. Now when we look back, our understanding is that the market growth was between 10% 15%, so clearly higher. So what happened? We have come to the following conclusion. The positive turn in the economic growth in China has first of all impacted in such a way that our customers have accelerated the ordering of elevators and escalators to those projects that had already been started.
Secondly, the key statistics related to real estate, they have continued to improve. The development in sales of new sales area has continued to be positive. It was clearly positive also in quarter 4. It was positive already in quarter 3. And the development also in the new construction area has all the time appeared to a positive direction so that it was already close to 0 last previous year's level in quarter 4.
And we estimate that in quarter 4 quarter 1 this year also that this new construction starts will be positive. And hence our forecast now or estimates regarding the market growth in China for the first half of this year is such that the market will grow by between 5% to 10% during the first half. And at the moment, also the outlook for the second half of the year is rather positive, but it is still too early to say. So we will communicate more about that then in April. Regarding different segments, growth was strongest in the affordable housing segment, but the growth was good also in the other residential outside of 45 big cities where the government restrictions are still in place, because governments wants to get the prices down there and avoid overheating.
Now actually the prices have gone a little bit up there, but if we take a longer time frame from 2,009 to 2012, the growth in prices have been clearly it has been much smaller than the growth in the disposable income. So therefore, also this situation has developed favorably. In these big cities, the growth of the commercial project has been quite good. So what happened in China in Q4, that was also to us it was clearly a positive surprise. In India, as we have all the time communicated during the 1st 9 months of last year, the growth was low because of difficulties and tightness in financing.
However, as we have all time communicated, we really saw some, let's say, pent up demand, which now especially in the residential segment, which now picked up. And actually, for example, our orders growth in the quarter four in India was very good. In Australia, the market grew, but here the route cost more than a high market level now was a favorable comparison time in quarter 42011 where the market was at very low level. In Southeast Asia, the markets continue to grow. In modernization, the demand in Australia declined clearly.
And in maintenance markets, the markets in different countries continue to grow. The maintenance market starts to be a rather significant, let's say, business to us already also here in Asia Pacific. One way to illustrate this again is to take China as an example between 20062012, the growth in our maintenance sales has been annually as an average 35%. So this was about market growth and then some interesting key highlights and figures in 2020 regarding 2012. Our new equipment orders received grew last year from 86,000 to 118,000 units and deliveries went up from 74,000 to 103,000 units.
Something interesting to mention is that we think that we are now the leader, the number one company in both of the 2 biggest new elevator and escalator markets globally. We were that already earlier in India. And now it is clear that we became the leader also in China, which is by far the biggest market globally. However, also last year, especially last year, our objective was not to maximize volumes. But as we have said all the time, our, let's say, ambition and effort was all the time to in China to get to increase our prices and also focus on our margins.
And this will be our approach also this year. It is naturally very so that we develop volumes and margins in a good balance. It is very clear as we believe that the price competition will be intense in China in 2013, but encouraging development of course. The second highlight here is the launch of our new global volume elevator in Europe, Middle Eastern Africa and in Asia Pacific. And now in this first half of this year, we will start to introduce it in the Americas.
The development ramp up start of the sales everything has started well. Customer feedback is encouraging. And what is very important here is that here is that we launched and brought into markets this product in a phase when the competitiveness of our panel products is very good. And hence, this new product range increases our competitive and has increased our competitiveness further. Also the move to our new, let's say, and bigger factory in Kunshan in China has gone very smoothly.
And in maintenance base, we have we accrued last year from 850,000 to 900,000. So these were some of the highlights regarding last year. Our, let's say, solid and positive development in our business over the years has been based pretty much on the active work in our development programs where we have clear focus. But actually, with this clear focus, we develop our competitives in a broad scope all the time. And here you see our 5 development programs that we have now been working with during the last 2 years.
This is now the last and third year that has started. And in the middle of the year, we again start to work that what would be the 5 best development programs for us for the coming years in order to continue to, let's say, build our path towards our vision and enable continuous profitable growth. Here, I have listed some just a few examples about what we have achieved with these programs last year. And I will start with the improvement of customer loyalty that further improved Also employee satisfaction improved further. In the 3rd development program, we had the as a main example, we had the introduction of the new global product range.
In service, we expanded our modernization offering and improved efficiency of field operations. In the delivery chain excellence, the demand share balancing is developing well in different parts of the world and has clearly contributed to our inventory management and working capital rotation. Now in addition to this, I would say a few words about how we think ourselves that was this a good year for KONE or not. As many of you remember, we have decided that we want to have positive progress in 5 key areas during the year, so that we can be pleased that yes, we are building up a stronger KONE impact into our long term development also last year. And about these 5, we know that the customer satisfaction developed positively, Employee satisfaction developed positively.
We will give our estimates about the what was the global market size last year in April in our quarter one announcement. But with this development, it is clear that we were growing faster than market. This is how we see it. So that is the 3rd area. The 4th is that every year we also are targeting a better development in financial performance compared to our key competitors during the 1st 9 months.
This was the case, but now we have still competitors some competitors that have not announced their full year results. This we don't know yet. But then the final the 5th factor is sustainability. And in that area, we did a lot of good progress last year. So this means that we can be rather pleased with our development in 2012.
Then a market outlook and business outlook. In Nuevekkan markets, the market in Asia Pacific is expected to grow clearly. The market in Central and North Europe is expected to decline slightly and the market in South Europe to decline further from the already weak levels. The market in North America is expected to continue to gradually recover and the modernization market is expected to be at about the same level as in 2012 or decline slightly. The maintenance market we expect to continue to develop rather well in most countries.
And then finally, the business outlook. We expect estimate that the net sales will grow by 5% to 9% at comparable exchange rates as compared to 2012. The operating income, we expect to be in the range of €840,000,000 to €920,000,000 assuming that translation exchange rates don't materially deviate from the situation of the beginning of 2012. In addition, also this year, our sales and EBIT will be second half weighted and the growth in EBIT will be lower in Q1 and then grow towards the end of the year. So this is now somewhat longer in long introduction, but now we have time for your questions please.
Thank you very much Matti. And before we jump into your questions, I would like to inform you of 2 practical matters namely, firstly, we have just launched a new IR app for the iPad that is free for download or available for download for free at the Apple App Store. So please do get it and download it if you're interested in getting easy access to KONE data. Then secondly, we have decided on the date for our 2013 Capital Markets Day and our CMD this year will be held on Tuesday 24th September. We will send a further note on this, but for your information already now.
And then next, we are ready for your questions please. Let's start with the questions from those present here in Espoo Finland. Do we have any questions here?
Pekka Sparreljekka, Bojekka. First technical question, I just want to check that your net financial items were negative in 4th quarter. Is it this roughly €19,000,000 revaluation of these options that are included in the Q4?
That's correct. So in the Q4, we had a about €90,000,000 charge relating to options to acquire further stakes in businesses and requirements for us to revalue those every year. So that was what weighed the financial items in Q4.
Okay. Second question about the price competition. You mentioned that it's remained at least tight or even increased in some areas. Could you discuss a little bit more in different areas? And compared for the beginning of last year, for example, how has the situation changed or has it changed?
Well, I think that the key developments here in tightening price competition are of course, let's say, markets which where the total activity level is low, especially South Europe. Then in the North America, in the United States, although the market is gradually improving, the level of the new market is still low and this has also impacted that the price competition in maintenance is tight. And then what comes to China, it is clearly that in the global situation when some of the markets, big markets are, let's say, relatively weak, the competition is tough also in the, let's say, best growth opportunities. And therefore, as some of our competitors have, let's say, communicated, they made, let's say, clear price decreases last year. And because of the size and growth dynamics of the Chinese market, we expect this to continue and try to be ready for that.
We are working to be ready to that, not only try.
Thank you. We are now ready for the first question from the phone line please.
Thank you. Your first question comes from Lars Borsen. Please go ahead.
Yes. Thank you very much. I have 3 if I could, Matthew. First of all, in terms of China in Q3 and looking into 2013, can you give a little more granularity as to what has surprised so materially the upside? It sounds like the affordable housing segment specifically can you talk about what kind of industry volume growth you're currently seeing here?
And also perhaps when you expect this segment to peak for the industry in terms of order growth?
In the what comes to the affordable housing markets, it slightly, let's say, increased what was expected, but that was not the that was not the big reason. The big thing is that overall in all segments, we saw more or less a pickup because of those reasons that I mentioned earlier.
Maybe this is Can I ask, do you expect the affordable housing segment to grow for you in the second half of twenty thirteen and in twenty fourteen?
We expect that the affordable housing segment will not grow in 2013. And the growth will be will come, let's say, pretty much evenly in all of the other segments.
Thank you. And secondly, the midpoint of your guidance for 2013 implies an EBITDA margin largely in line with that of 2012. Clearly, you are seeing a mix shift here that should adversely impact margins. But if you look at new equipment and services separately, can you give us a sense for how we should think about the like for like margin development in 2013?
Well, in new equipment, we have, let's say, a couple of points here. First of all, especially during the first half of this year, we continue to have deliveries with lower margins from 2010 2011. The time from orders to deliveries, they are pretty long in some cases, especially in some in case of some markets and especially in North America and especially naturally in the case of major projects. Then so that is impacting the new equipment margins. Then secondly, as we have communicated, we are taking in this situation when our competitiveness of our current products, new products is also strong.
So we are taking the ramp up of the new product trends smoothly. And therefore, the volumes for of the deliveries of the new product trends, they are very limited this year. And therefore, we really start to see the positive impact of and margin impact of the new product range in 2014 in line what we have said earlier. Then what comes to maintenance markets, let's say, a good impact about the margin pressure sees the situation in Southern Europe where the new equipment market has been at low levels or very low levels already for quite some time. And therefore, the conversions from new equipment to service to maintenance are lower.
And also, there are, let's say, situations where not so much, but still situations where some of the elevators are taken out of use. And then naturally when the markets are have this kind of dynamics also the as I mentioned also earlier, the pricing pressures are toughest there. Then in the service specific recurring modernization, especially in South Europe, the customers are investing to modernization more or less only when they must invest. So there is in Europe a lot of pent up demand, But before the economy starts to develop more positively, it is difficult to see that European modernization market would really start to grow.
Just one follow-up on that if I could. The you talk about a pricing environment in China on the new equipment side, which has further intensified in Q4. We heard from Otis yesterday that they believe they have regained material market share over the course of the second half in China. Would you say that you have seen a step change in the competitive environment and pricing environment in China over the course of the second half of twenty twelve?
I don't think that we have seen a step change. What I did not mention yet that in quarter 4, our orders growth in terms of units in China was without GiantConnect 25% and overall growth 70%. So it was a very strong quarter for us. In monetary value, in quarter 4, our growth was even more than this 25% clearly more. Thank you.
Your next question comes from Andre Kukhnin. Please go ahead.
Hi, good afternoon. Thanks for taking my question. Just a quick one on the U. S. Are you seeing any evidence of modernization market starting to pick up there?
Those little high rise buildings that went up in 50s there and some companies are suggesting that these provide an interesting opportunity for modernization revenues and I wonder if Elevator is getting involved in that as well.
Yes. We are seeing we are really seeing that kind of positive development over in the case of examples that you mentioned. And overall, the modernization market is developing more favorably in the U. S. Than what is the market in Europe.
Europe. Thank you. And just a follow-up on China on that comment that you made about pricing becoming tougher in new equipment in Q4. If you look at segments of the market and social housing in particular, is there any sort of differentiation across the segment? Or is it really broad based?
I would say that it is broad based. What continues to be, by the way, the situation is that we continue to see development where the demand, to a certain extent, continues to be moving from the smaller players to the bigger companies. What I what we are very pleased with is that also in the second half of the year, we had a very good development in orders both in case of, let's say, our I'm not call it main operation, but our traditional operation and Cayan Kone. Both developed very well. Really the integration of Caient Kone has gone so far very well and it contributed nicely to our, let's say, development in China.
Right. And the very final question. What you said about demand shifting from smaller place to larger ones. So is pricing competition increased pricing competition coming from the smaller players responding to it or larger players competing for the bigger piece of pie?
Well, the large players globally large players have different kind of, let's say market positions in China. And because China is China was already in 2011, clearly more than 60% of the global market last year even more. It is clear that both in terms of new equipment market, let's say, opportunity and an area which have a large major impact to global markets here and future service opportunity, all of the key players want to develop a strong position in China. So therefore, this is not just a phenomenon of smaller companies, but also, let's say, some of the bigger companies. And it is understandable.
Got it. Thank you
very much for your time.
Thank you.
The next question comes from Chris Reid. Please go ahead.
Hi. Just a question about the margin and trying to understand how it's varied over time. You talk a little bit about the lower margin on some of the projects, the orders received in 2010 2011. Can you give us just a sense of how that compares with the orders that you received during 2012, which will start to become revenues over the next year or so. What kind of difference do we see there?
And then when you think about the orders that you're getting now as we go into 2013, how would that compare to what we've seen?
Maybe Henrik you will now answer this. Sure.
So I would say, 1st of all, when we refer to the margins of the orders that we took in 20102011, I would say that the deliveries we have now are in certain markets more I would say in the Western part of the world. So I think that the difference in margins that we are seeing now between the situation a couple of years back there is quite a lot between different geographic regions. I would say you have to remember that we operate in a business to business environment. So we are not looking at any step changes. But what I would say is that during last year, we had a continuous and gradual improvement in all of our geographies.
But I would say there are certain geographies that where the development was even better than the others. And now talk about new equipment.
Okay. And when you think about the what are realistic expectations for new equipment orders this year given current market conditions even implied that there is some pricing pressure, but I think you probably say that every call. What is realistic to expect when we have this discussion a year from now?
So I would say that during the year, I'd say that we continuously during the year we're gradually able to improve our margins in orders received. And again, I would say a slight and gradual improvement at least in the right direction. I would say that in many markets, I believe that we have started to come to a level where it's probably difficult to get it much higher. So I think that we are starting to see clear resistance in terms of price increase in many areas. So I think that this is an area we need to continuously balance.
And I think for us to continue to develop well what is very important is that we continue to develop our competencies in the area, develop the both our processes, but also the competencies of our salespeople.
I would I totally agree what Henrik said. And I would like just to add to give a little bit, let's say, background to this situation is that when looking back, we can say that in 2010 2011, we prioritized if you think how we have prioritized volume or let's say, grow yes, volume and margin. We in 2010 2011, we maybe a little bit higher priority on volume growth or sales growth. And then last year, we had a higher priority on the margins. And now what Helik is saying, he's using the word balanced.
Now our objective is to be balanced as is our, let's say, main thinking has been all the time.
Okay. Thank you. That's helpful. If I can just finish off with a question. In the past, you've indicated that you have a long term EBIT target of 16%.
I mean clearly as the new equipment business grows maybe it's a bit of a challenge to get there. But how do you think about that target given the current market situation? And how you balance growth in the business areas and volume growth versus margins?
Yes. This 16% continues to be our objective. However and it is realistic. However, I would like to remind that all the time since 2,005, we have always said that the 2 highest priority objective for us in this business where we are a challenger and we continue to be a challenger and where we have a negative working capital. The 2 top priorities for us are to create in a long term a very strong market position globally as possible and as let's say strong absolute profit level as possible.
Therefore, we don't think in such a way that we would like that we would try to improve our relative operating income by trying to direct and to really influence that our business mix would be like 60 to 40, which used to be quite often in this business. Our objective is to develop actively as actively as possible all of our businesses. But we also know that we have a lot of possibilities to improve to continue to improve our, let's say, competitiveness. We will in terms of product and service offerings, We have a lot of opportunities to develop our internal efficiency. And we develop, of course, our people very actively.
So the orientation at the same time when I said that what are the top priorities is, of course, towards higher margins as well.
Thank you very much.
Your next question comes from Erik Golrang. Please go ahead.
Thank you. Two questions from me. The first one on incremental margins. You've been at around 10% for the last couple of quarters. Is it a fair assumption to think that you will be on that level for the sort of the start of 2013 and then for an improvement towards the second half of the year?
And then the second question then with Giant Kona, 1 full year in your books now. Could you give an update on the segment split for you in China between sort of affordable housing other residential commercial and infrastructure? Thank you.
So Henrik maybe Jorg can take this.
Okay. So first of all, we don't really manage this business by looking at the incremental margin. Again, I think for us the most important thing is to make sure that when we grow, we continue to grow profitably as Matti said and continue to grow with negative capital tied up in the business that this will increase our return on capital. I would say mathematically you're probably right what you say, but I would say you have to always remember there's the current business and the growth that we're both looking at that impacts the margin. I think Matti made a comment already earlier that if you look at our operating income development during 2013, we believe that the growth is slower beginning of the year and then faster towards the end of the year.
So hopefully that answers your question on relative. And your second question sorry again was?
China segment.
Segment. So we have not discussed our segments in detail between the two businesses. But if you think about the market overall, if we say that residential in total is about 2 thirds and commercial infrastructure is then about 1 third, Then affordable housing is about half of total residential. If we look at our business mix, we are still a bit less weighted towards affordable housing relative to market overall.
Okay. Thank you.
We have another question. It comes from the line of Michael Kalagueros. Please go ahead.
Yes. Hello. Can you hear me?
Yes, we do.
Yes. Hi. Just what is the contribution from M and A you are expecting in 2013 for sales and EBIT please?
So we acquired 24 businesses last year. Most of them were very small businesses. So the contribution from acquisitions in 2013 is both in sales and operating income is quite small. Usually in the 1st year also of these acquisitions given current rules on amortization intangible assets that we tend to have higher intangible asset amortizations in the 1st year, which therefore has an impact a little bit on operating income. So I would say that it is not material the impact of these acquisitions.
Okay. Thanks. I've got another one. Just to know out of your sales in 2012 of your original equipment sales, what was the share coming out from the backlog of 2019, 2010 orders that were badly priced? And what do you expect for 2013?
Henrik?
So I would say, if you think about the overall rotation of the order book then North America would be 18 to 24 months Europe somewhere around a year and China 6 months to 9 months or perhaps somewhere that region. So it's clear that if we look at the deliveries in North America, there are more of those and in Europe still also some of them. So I don't have an exact percentage, but there are still a number of these projects that have a clear impact on our margin.
Okay. And just the last one on regarding again China sorry. But you mentioned that you were quite confident on orders in H1. Just can you give us a bit more flavor on what kind of orders you expect in 2013? And how do you see that splits in between H1 and H2?
Well, yes, I talked about how we expect the market to grow during first half and share that at the moment also the outlook for the second half looks promising, but it is too early to say and we will communicate more in April. Our competitiveness in China at the moment, as was demonstrated also in quarter 4, is in a good shape. And our product competitiveness is strong. We have very a lot of sales activity. We have been able to develop our people very actively.
So therefore, China is so dynamic market. It is a little bit Thomas said that, yes, we are confident about the possibilities to develop our China business again positively this year, but the starting point really is good.
Okay. Thank you much.
You have another question. It comes from Alexis Dunlourde. Please go ahead.
Good afternoon. It's Alexis Dunard from Exane BNP Paribas. Two questions if I may. So first one, you had a positive development on the working capital. Just wondered how much is that linked to, I say, the regional development and the stronger sales in China?
Or if you could give in other words, what has been the development of the working capital in each of the region? And the second question, you gave through your assessment of I say your market position in the new installation in China. What is your assessment of your market position in the mail sales business in China? Thank you.
Maybe I'll take the question on working capital. So I would say firstly, we had good development in our working capital in virtually all parts of the world. So I would say that it was a broad based and good development. So that's firstly mostly important. Secondly, as you indicated, the change in the business mix with a higher mix towards Asia Pacific and China in particular has a positive impact also on our working capital that for example advanced payments are slightly higher proportion there than they are in other areas.
So it's both the geographic mix of sales, but also the fact that they've improved in most of our countries.
And maybe I start I continue with the second question of that was what is our position in the service business in China. There, let's say, we don't have equally good, let's say, data and statistics concerning different players. But yes, we have a very strong position also in maintenance in China. And the reason is that we have developed also in China our maintenance capability and maintenance business from the year from the beginning, from the year when KONE started in late 1990s in China. And I said during the last, let's say, from 2006 to 2012, the average cellular growth has been 35%.
So we are really indeed very well positioned in service as well. And that continues to be a very high priority for us.
Very good. Thank you.
You have no further questions at this time. Please continue.
Thank you very much for your active participation and questions and have a very nice rest of the week and weekend.