TIDM77BL
RNS Number : 2060M
ASSA ABLOY AB (publ)
26 April 2018
Organic growth
+4%
Operating income
+2%
Earnings per
share
+2%
A good start to the year
First quarter
-- Net sales increased by 2% to SEK 18,550 M (18,142), with
organic growth of 4% (6) and acquired net growth of 2% (3)
-- Strong growth was shown by Global Technologies and Entrance
Systems and good growth by Asia Pacific, EMEA and Americas
-- Operating income (EBIT) increased by 2% and amounted to SEK
2,829 M (2,787), corresponding to an operating margin of 15.3%
(15.4)
-- Net income amounted to SEK 1,964 M (1,918)
-- Earnings per share amounted to SEK 1.77 (1.73)
-- Operating cash flow amounted to SEK 575 M (824).
Sales and income
Full year First quarter
================ ======== ================ ========
2016 2017 <DELTA> 2017 2018 <DELTA>
----------------------- ------- ------- -------- ------- ------- --------
Sales, SEK M 71,293 76,137 7% 18,142 18,550 2%
Of which:
Organic growth 1,428 2,834 4% 1,022 705 4%
Acquisitions and
divestments 1,967 1,753 2% 448 268 2%
Exchange-rate effects -201 257 1% 780 -565 -4%
Operating income(1)
(EBIT), SEK M 11,254 12,341 10% 2,787 2,829 2%
Operating margin(1)
(EBITA), % 16.1% 16.5% 15.6% 15.7%
Operating margin(1)
(EBIT), % 15.8% 16.2% 15.4% 15.3%
Income before tax(1)
, SEK M 10,549 11,673 11% 2,593 2,654 2%
Net income(1) ,
SEK M 7,874 8,635 10% 1,918 1,964 2%
Operating cash
flow, SEK M 10,467 10,929 4% 824 575 -30%
Earnings per share(1)
, SEK 7.09 7.77 10% 1.73 1.77 2%
(1) Excluding costs for a new restructuring program for the full
year 2016, totaling
SEK -1,597 M before tax, corresponding to SEK -1,221 M after
tax.
Comments by the President and CEO
A good start to the year
The year took off with good organic growth of 4% in the first
quarter, despite the negative calendar effect of two trading days
less due to an early Easter. We achieved strong or good growth in
all divisions. Global Technologies and Entrance Systems reported
strong organic growth of 6% and 5% respectively. EMEA and Americas
reported 3% organic growth and Asia Pacific reported 4%. Our new
products contributed strongly, with high demand for
electromechanical locks and for access control solutions.
The first quarter's operating income increased by 2%
year-on-year and amounted to SEK 2,829 M, corresponding to an
operating margin of 15.3%. The Group's underlying margin improved
but was diluted by the acquisitions.
Operating cash flow was seasonally low totaling SEK 575 M for
the quarter. We are continuing to focus on cost-efficiency and to
deliver on our current restructuring program and, as previously
communicated, we expect to announce a new program by the end of
2018.
First impressions
I spent my first months at ASSA ABLOY on the move, visiting the
different Group locations to meet our people, our partners and our
customers as well as to get acquainted with the sites, the
corporate culture and the business. So far, I have visited 18 of
our main locations and I am impressed by the competence, the
innovation capacity and the technology driven culture. There have
been several changes in ASSA ABLOYs executive team over the last 12
months. I am convinced that we have a strong team in place,
equipped with energy and ambition to continue the Group's
successful journey. I am both eager and humble in taking on the
mission to further develop ASSA ABLOY.
Strong market position
As the new CEO, it is very encouraging to see our strong market
position. Product and innovation leadership, backed by the largest
installed base of door opening solutions in the world, gives us a
very strong platform to grow from. I am confident that we will
create new business opportunities through our new products and
solutions, and that we have seen only the initial phase of the
market transition and technology shift from mechanical solutions to
digital, connected products and services.
Strategic direction
ASSA ABLOY's strategy, with focus on market presence, product
leadership and cost efficiency, has been very successful for many
years. In combination with a strong acquisition agenda, this
strategy has generated significant long-term value. I look forward
to further developing this successful strategy together with my
colleagues.
Stockholm, 26 April 2018
Nico Delvaux
President and CEO
First quarter
The Group's sales increased by 2% to SEK 18,550 M (18,142).
Organic growth amounted to 4% (6). Acquisitions and divestments
were 2% (3), of which 3% (3) were acquisitions and -1% (0) were
divestments. Exchange-rates affected sales by -4% (5).
The Group's operating income, EBIT amounted to SEK 2,829 M
(2,787) an increase of 2%. The operating margin was 15.3% (15.4).
Operating income before amortizations from acquisitions, EBITA
amounted to SEK 2,921 M (2,839). The corresponding EBITA margin was
15.7% (15.6).
Net financial items amounted to SEK -175 M (-195). The Group's
income
before tax was SEK 2,654 M (2,593), an increase of 2% compared
with last year. Exchange-rates had an impact of SEK -80 M (126) on
income before tax. The profit margin was 14.3% (14.3).
The estimated effective tax rate on an annual basis was 26%
(26). Earnings per share amounted to SEK 1.77 (1.73), an increase
of 2% compared to last year.
Restructuring measures
Payments related to all restructuring programs amounted to SEK
173 M (84)
in the quarter. The restructuring programs proceeded according
to plan and
led to a reduction in personnel of 508 people during the quarter
and 14,072 people since the projects began in 2006. At the end of
the quarter provisions of SEK 795 M remained in the balance sheet
for carrying out the programs.
The planning of a new restructuring program has begun. The
launch is scheduled for the fourth quarter and the program is
expected to take place over a period of three years. The cost of
the restructuring is estimated to be in line with previous
programs, with a payback time of around three years.
Organization
Lucas Boselli has been appointed Executive Vice President and
Head of Americas Division with effect from 2 April 2018. He
succeeds Thanasis Molokotos, who has decided to leave the group.
Lucas Boselli has worked at ASSA ABLOY since 2010 and in recent
years has held the position of Head of ASSA ABLOY Central and South
America in the Americas Division. Lucas Boselli is an engineer and
holds a degree from Virginia Polytechnic Institute and State
University in the USA.
Comments by division
EMEA
Sales for the quarter in EMEA division totaled SEK 4,775 M
(4,404), with organic growth of 3% (5). Growth was strong in the
UK, France and Eastern Europe, and was good in Scandinavia and
Germany. Finland, Southern Europe and Africa/ Middle East also
showed growth while Benelux had negative sales development.
Electromechanical products showed strong growth, and demand was
especially strong for smart door locks for the private residential
market. Acquired growth net was 3%. Operating income totaled SEK
764 M (718), which represents an operating margin (EBIT) of 16.0%
(16.3).
Return on capital employed amounted to 20.0% (20.0). Operating
cash flow before interest paid totaled SEK 262 M (387).
Americas
Sales for the quarter in Americas division totaled SEK 4,354 M
(4,566), with organic growth of 3% (7). Growth was strong for
Electromechanical and High-security products, the Private
residential market in the USA and for Canada. Good growth was shown
by Perimeter Security, Mexico and South America apart from Brazil
and Colombia. Traditional lock products also showed growth while
Security Doors, Brazil and Colombia had negative sales development.
Acquired growth was 1%. Operating income totaled SEK 845 M (961),
which represents an operating margin (EBIT) of 19.4% (21.0). Return
on capital employed amounted to 21.0% (24.2). Operating cash flow
before interest paid totaled SEK 241 M (197).
Asia Pacific
Sales for the quarter in Asia Pacific division totaled SEK 1,959
M (1,917), with organic growth of 4% (3). Strong growth was
achieved in South Korea and Japan, and sales were stable in Pacific
and South Asia. Sales in China showed growth for lock products
while sales of doors continued to decrease. Smart door-locks grew
strongly in the region. Acquired growth was 1%. Operating income
totaled SEK 154 M (151), which represents an operating margin
(EBIT) of 7.9% (7.9). Return on capital employed amounted to 4.9%
(5.0). Operating cash flow before interest paid totaled SEK -158 M
(-154).
Global Technologies
Sales for the quarter in Global Technologies division totaled
SEK 2,477 M (2,481), with organic growth of 6% (9). Physical Access
control and Identification technology had strong growth within HID
Global, Secure issuance showed growth while Citizen ID and Logical
access had negative sales development. Hospitality showed continued
strong growth. Sales of mobile key solutions continued strongly.
Acquired growth net was -1%. Operating income totaled SEK 466 M
(422), which represents an operating margin (EBIT) of 18.8% (17.0).
Return on capital employed amounted to 11.6% (14.6). Operating cash
flow before interest paid totaled SEK 201 M (57).
Entrance Systems
Sales for the quarter in Entrance Systems division totaled SEK
5,322 M (5,087), with organic growth of 5% (7). High-speed doors,
US Garage doors, Door components and Solutions for warehouses and
logistics in the USA showed strong growth. Pedestrian doors had
good growth and Industrial doors showed growth. EU residential
doors showed negative sales growth. Acquired growth was 2%.
Operating income totaled SEK 710 M (638), which represents an
operating margin (EBIT) of 13.3% (12.5). Return on capital employed
amounted to 14.5% (13.3). Operating cash flow before interest paid
totaled SEK 379 M (660).
Acquisitions and divestments
A total of four acquisitions were consolidated during the
quarter. The combined acquisition price for these companies,
including adjustments from prior year acquisitions, amounted to SEK
1,156 M. The acquisition price for these companies on a cash and
debt free basis amounted to SEK 1,050 M.
Preliminary acquisition analyses indicate that goodwill and
other intangible assets with indefinite useful life amount to SEK
854 M. Estimated deferred considerations amounted to SEK 221 M.
Sustainable development
ASSA ABLOY's Sustainability Report for 2017 was published on 21
March 2018 and the report shows that key indicators continue to
improve.
The increased focus on Health and Safety has led to a 20%
decrease in the injury rate. The Group's total greenhouse-gas
emissions fell by 6% during 2017, driven by new production
technologies and efficiency improvements. Water consumption in
relation to the activities of the business was reduced by 12%
during the year. The number of entities covered by ISO 14001 or
other certifiable environmental management systems increased from
124 to 131, which means that the system covers 79% of employees in
the Group's factories. ASSA ABLOY had 276 Environmental Product
Declarations verified and published by the end of 2017.
Parent company
Other operating income for the Parent company ASSA ABLOY AB
totaled SEK 431 M (498) for the interim period. Operating income
for the same period amounted to SEK -261 M (-91). Investments in
tangible and intangible assets totaled SEK 12 M (5). Liquidity is
good and the equity ratio is 41.5% (45.8).
Accounting principles
ASSA ABLOY applies International Financial Reporting Standards
(IFRS) as endorsed by the European Union. Significant accounting
and valuation principles are detailed on pages 68-73 of the 2017
Annual Report. This Report was prepared in accordance with IAS 34
'Interim Financial Reporting' and the Annual Accounts Act. The
Interim Report for the Parent company was prepared in accordance
with the Annual Accounts Act and RFR 2 'Reporting by a Legal
Entity'.
The Group applies IFRS 9 Financial instruments and IFRS 15
Revenue from contracts with customers as of 1 January 2018.
IFRS 9 addresses classification, measurement and recognition of
financial liabilities and assets and replaces the parts of IAS 39
that relate to the classification and measurement of financial
instruments. With IFRS 9 a new impairment model is being
implemented, based on expected credit losses rather than incurred
losses. For the Group, the new model will entail a new procedure
for measurement of credit losses, the standard will however have no
material impact on the Group's performance and financial
position.
IFRS 15 supersedes IAS 11 Construction contracts and IAS 18
Revenue and includes a new single model for revenue recognition
related to customer contracts. The standard introduces a five-step
model that requires revenue to be recognized when a performance
obligation is met as control over goods and services are
transferred to the customer. The goods or service is transferred as
control over the asset is transferred to the customer, which is
either over time or at a point in time. The Group's previous
revenue recognition practices are essentially in accordance with
IFRS 15 why the new standard will have no impact on the Group's
performance and financial position, however additional information
on disaggregated revenue has been disclosed in note 1.
Since IFRS 9 and IFRS 15 have no material impacts on the
financial reports, no new opening balance is presented in 2018.
IFRS 16 will apply to the accounting year that begins on 1
January 2019. Earlier application is permitted but the Group has
chosen not to take up this option.
ASSA ABLOY makes use of a number of financial performance
measures that are not defined in the reporting rules that the
company uses - so-called 'alternative performance measures'. For
definitions of financial performance measures, refer to Page 16 of
this Quarterly Report and to the company's latest Annual Report. To
check how the financial measurements have been calculated for
current and earlier periods, refer to the tabulated figures in this
Quarterly Report and to the company's Annual Report. The Annual
Reports for the years 1994 to 2017 appear on the company's website
www.assaabloy.com.
Totals quoted in tables and statements may not always be the
exact sum of the individual items because of rounding differences.
The aim is that each line item should correspond to its source, and
rounding differences may therefore arise.
Transactions with related parties
No transactions that significantly affected the company's
position and income have taken place between ASSA ABLOY and related
parties.
Risks and uncertainty factors
As an international Group with a wide geographic spread, ASSA
ABLOY is exposed to a number of business, financial and tax-related
risks. The business risks can be divided into strategic,
operational and legal risks. The financial risks are related to
such factors as exchange rates, interest rates, liquidity, the
giving of credit, raw materials and financial instruments. Risk
management in ASSA ABLOY aims to identify, control and reduce
risks. This work begins with an assessment of the probability of
risks occurring and their potential effect on the Group. For a more
detailed description of particular risks and risk management, see
the 2017 Annual Report.
Review
The Company's Auditors have not carried out any review of this
Report for the first quarter of 2018.
Stockholm, 26 April 2018
Nico Delvaux
President and CEO
Financial information
The Interim Report for the second quarter will be published on
18 July 2018.
The Interim Report for the third quarter will be published on 19
October 2018.
Further information can be obtained from:
Nico Delvaux,
President and CEO, Tel: +46 8 506 485 82
Carolina Dybeck Happe,
Chief Financial Officer, Tel: +46 8 506 485 72
ASSA ABLOY is holding an analysts' meeting at 10.00 today
at Operaterrassen in Stockholm, Sweden.
The analysts' meeting can also be followed on the Internet at
www.assaabloy.com. It is possible to submit questions by telephone
on:
+46 8 5055 6476, +44 203 364 5371 or +1 877 679 2993
This information is information that ASSA ABLOY AB
is obliged to make public pursuant to the EU Market
Abuse Regulation. The information was submitted for
publication, through the agency of the contact persons
set out above, at 08.00 CEST on 26 April 2018.
ASSA ABLOY AB Tel +46 (0)8 506
(publ) 485 00
Box 703 40 Fax +46 (0)8 506
107 23 Stockholm 485 85
Visiting address www.assaabloy.com No.07/2018
Klarabergsviadukten
90, Stockholm, Corporate identity
Sweden number: 556059-3575
http://www.rns-pdf.londonstockexchange.com/rns/2060M_-2018-4-26.pdf
Financial information - Group
Financial information - Group
Financial information - Group
Financial information - Parent company
Quarterly information - Group
Reporting by division
Reporting by division
Financial information - Notes
Definitions of financial performance measures
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFFKADBOBKKPQB
(END) Dow Jones Newswires
April 26, 2018 03:33 ET (07:33 GMT)
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