TIDM77BL
RNS Number : 0981P
ASSA ABLOY AB (publ)
05 February 2019
Organic growth
+6%
Operating income
(2)
+12%
Earnings per share
(2)
+9%
Strong sales growth
Fourth quarter
-- Net sales increased by 15% to SEK 23,167 M (20,109), with
organic growth of 6% (5) and acquired net growth of 3% (3)
-- Very strong sales growth in Americas and Asia Pacific. Strong
growth for Global Technologies, good growth in EMEA and growth in
Entrance Systems
-- Five acquisitions have been signed with combined expected annual sales of about SEK 800 M
-- A new manufacturing footprint program was launched at
year-end. The total estimated cost amounts to around SEK 1,500 M
with a pay-back time of less than three years
-- Operating income (2) (EBIT) amounted to SEK 3,746 M (3,359),
with an operating margin of 16.2% (16.7)
-- Net income (2) amounted to SEK 2,588 M (2,385)
-- Earnings per share (2) amounted to SEK 2.33 (2.15)
-- Operating cash flow amounted to SEK 4,923 M (4,876)
-- The Board of Directors proposes a dividend of SEK 3.50 (3.30) per share for 2018.
Sales and income
Fourth quarter January-December
================= ======== =================== ========
2017 2018 <DELTA> 2017 2018 <DELTA>
---------------------------- -------- ------- -------- --------- -------- --------
Sales, SEK M 20,109 23,167 15% 76,137 84,048 10%
Of which:
Organic growth 878 1,281 6% 2,834 3,901 5%
Acquisitions and disposals 480 714 3% 1,753 1,793 2%
Exchange-rate effects -733 1,063 6% 257 2,217 3%
Operating income (EBIT)
(1) 2) , SEK M 3,359 3,746 12% 12,341 12,909 5%
Operating margin (EBITA)
(1) 2) , % 17.1% 16.7% 16.5% 15.8%
Operating margin (EBIT)
(1) 2) , % 16.7% 16.2% 16.2% 15.4%
Income before tax (1)
2) , SEK M 3,226 3,515 9% 11,673 12,110 4%
Net income (1) 2) , SEK
M 2,385 2,588 9% 8,635 8,984 4%
Operating cash flow, SEK
M 4,876 4,923 1% 10,929 11,357 4%
Earnings per share (1)
2) , SEK 2.15 2.33 9% 7.77 8.09 4%
1) Excluding impairment of goodwill and other intangible assets
in the second quarter of 2018, totaling SEK -5,595 M before tax,
corresponding to SEK -5,268 M after tax.
2) Excluding costs for a new manufacturing footprint program in
the fourth quarter of 2018, totaling SEK -1,218 M before tax,
corresponding to SEK -961 M after tax.
Comments by the President and CEO
Strong growth in the quarter
In the fourth quarter our organic growth accelerated to 6%,
resulting in a strong organic sales growth of 5% for the full year.
Acquired net growth was 3% during the quarter (2% for the full
year). All divisions reported organic growth. The organic growth
was very strong in Americas (14%) and Asia Pacific (11%), strong in
Global Technologies (8%), while EMEA and Entrance Systems grew by
3% and 2% respectively.
Operating income for the quarter increased by 12% year-on-year
to SEK 3,746 M, corresponding to an operating margin of 16.2%. The
operating margin was stable in Americas and Asia Pacific, but
declined in the other divisions mainly due to dilution from
acquisitions and higher raw material costs.
Even with actions to balance the seasonal variations, cash flow
came in strong at SEK 4,923 M, up 1% year-on-year.
Strong growth in electromechanical products
One of ASSA ABLOY's value creation strategies is product
leadership and we have invested in the development of
electromechanical solutions over a long period. This is clearly
generating results. Today, 30% of our sales are generated by
electromechanical products and in the fourth quarter sales also
increased by 30%. We are seeing gratifying improvements in both the
commercial and residential segments.
High acquisition level
During the quarter we closed five acquisitions with total
annualized sales of SEK 0.8 billion. With the acquisition of Luxer
One, we will integrate a US market leader in the last mile delivery
space, including 'click and collect' at retail stores. We also
acquired Lorient, extending our door sealing portfolio alongside
the innovative drop-down seals and finger protection solutions from
Planet. The three other acquisitions were Exidor, Marenco and
Pacific Door Systems. In the full year we acquired 19 companies
with annualized sales of SEK 3.8 billion.
Launch of our next manufacturing footprint program
To maintain our market leadership, we are continuously working
to optimize our operations. During the quarter, we launched our
seventh manufacturing footprint program. As part of the program we
will close about 50 offices and factories, outsource more non-core
activities and further increase automation. The restructuring cost
for the total program is estimated at SEK 1.5 billion, with a
pay-back period of less than three years. SEK 1.2 billion was
expensed in the fourth quarter and the remainder is expected to be
expensed in Q4 2019.
Finally, I would like to welcome our new CFO Erik Pieder, who
joined ASSA ABLOY in January. Erik has a solid finance and
international industrial background and I look forward to working
with him on ASSA ABLOY's continued journey of profitable
growth.
Stockholm, 5 February 2019
Nico Delvaux
President and CEO
Fourth quarter
The Group's sales increased by 15% to SEK 23,167 M (20,109).
Organic growth amounted to 6% (5). Acquisitions and disposals were
3% (3), of which 4% (5) were acquisitions and -1% (-2) were
disposals. Exchange-rates affected sales by 6% (-5).
The Group's operating income, EBIT, excluding items affecting
comparability, amounted to SEK 3,746 M (3,359) an increase of 12%.
The corresponding operating margin was 16.2% (16.7). Exchange-rates
had an impact of SEK 190 M (-130) on EBIT. Operating income before
amortization from acquisitions, EBITA, excluding items affecting
comparability, amounted to SEK 3,858 M (3,446). The corresponding
EBITA margin was 16.7% (17.1).
Net financial items amounted to SEK -230 M (-133). The Group's
income
before tax, excluding items affecting comparability, was SEK
3,515 M (3,226), an increase of 9% compared with last year. The
corresponding profit margin was 15.2% (16.0). Exchange-rates had an
impact of SEK 187 M (-130) on income before tax.
The effective tax rate, excluding items affecting comparability,
was 25.8% (26.0) on an annual basis. Earnings per share excluding
items affecting comparability amounted to SEK 2.33 (2.15), an
increase of 9% compared to last year.
Full year
The Group's sales for the full year 2018 totaled SEK 84,048 M
(76,137), representing an increase of 10%. Organic growth was 5%
(4). Acquisitions and disposals were 2% (2), of which 4% (3) were
acquisitions and -2% (-1) were disposals. Exchange-rate effects
affected sales by 3% (1).
The Group's operating income, EBIT, excluding items affecting
comparability amounted to SEK 12,909 M (12,341), an increase of 5%
compared with last year. The corresponding operating margin was
15.4% (16.2). Operating income before amortization from
acquisitions, EBITA, excluding items affecting comparability
amounted to SEK 13,302 M (12,584). The corresponding EBITA margin
was 15.8% (16.5).
Earnings per share excluding items affecting comparability
amounted to SEK 8.09 (7.77), an increase of 4% compared with last
year. Operating cash flow totaled SEK 11,357 M (10,929).
Restructuring measures
A new manufacturing footprint program was launched at year-end
2018. The closing of more than 30 offices and 15 factories is
expected to take place over a period of three years. The estimated
cost of the manufacturing footprint program amounts to about SEK
1,500 M, with an expected payback time (inclusive of investments)
of less than three years. The restructuring cost will be expensed
over two years, of which SEK 1,218 M was expensed in the fourth
quarter of 2018 and the remaining part is expected to be expensed
in the fourth quarter 2019.
Payments related to all programs amounted to SEK 351 M (286) in
the quarter. The manufacturing footprint programs proceeded
according to plan and led to a reduction in personnel of 962 people
during the quarter and 15,362 people since the projects began in
2006. At the end of the quarter provisions of SEK 1,190 M remained
in the balance sheet for carrying out the programs.
Organization
Maria Romberg Ewerth has been appointed Chief Human Resources
Officer and member of the Group Executive Team in ASSA ABLOY
effective 1 February 2019. She has worked at ASSA ABLOY since 2008
and in recent years has held the position of SVP Human Resources
ASSA ABLOY AB. Maria Romberg Ewerth holds an MBA from Blekinge
Institute of Technology and a Bachelor's Degree in Human Resources
from Kristianstad University, Sweden.
Comments by division
EMEA
Sales for the quarter in EMEA totaled SEK 5,485 M (4,869), with
organic sales growth of 3% (5). The growth was strong in Finland,
Germany, the UK and Africa/Middle East and good in Eastern Europe.
Sales also grew in Benelux, Scandinavia and South Europe while
there was a small decline in France. Acquired growth net was 5%.
Operating income excluding restructuring costs totaled SEK 911 M
(842), which represents an operating margin (EBIT) of 16.6% (17.3).
Return on capital employed amounted to 20.6% (22.9). Operating cash
flow before interest paid totaled SEK 1,323 M (1,489).
Americas
Sales for the quarter in Americas totaled SEK 5,173 M (4,243),
with organic sales growth of 14% (4). The growth was very strong
for US Residential, Electromechanical & High-security and
Security doors. Sales were strong in Mexico, Chile and for US
Architectural Hardware, while sales were stable in the other South
American markets, Canada and for US Perimeter Protection. The
demand for electromechanical products in the US in general, and for
smart locks in particular, continued to be very strong. Acquired
growth net was 0%. Operating income excluding restructuring costs
totaled SEK 1,027 M (847), which represents an operating margin
(EBIT) of 19.9% (19.9). Return on capital employed amounted to
22.4% (21.6). Operating cash flow before interest paid totaled SEK
1,214 M (1,085).
Asia Pacific
Sales for the quarter in Asia Pacific totaled SEK 2,756 M
(2,400), with organic sales growth of 11% (3). The growth was very
strong in Japan, India and South East Asia. The growth was also
driven by very strong intra-group sales. There was good sales
growth in South Korea and China, while the growth in Pacific was
stable. The new organization in China was established at the end of
2018 and the implementation of the strategy is ongoing.
Electromechanical products continued to grow strongly. Acquired
growth was 0%. Operating income excluding restructuring costs
totaled SEK 264 M (232), which represents an operating margin
(EBIT) of 9.6% (9.7). Return on capital employed amounted to 13.5%
(7.5). Operating cash flow before interest paid totaled SEK 606 M
(742).
Global Technologies
Sales for the quarter in Global Technologies totaled SEK 3,602 M
(2,835), with organic sales growth of 8% (9). The growth was driven
by very strong development in Identity & Access Solutions and
Secure Issuance. Sales growth for Physical Access Control was
strong. Sales growth for Extended Access and Identification
Technology was good, while growth was negative for Citizen ID. ASSA
ABLOY Global Solutions grew strongly. Acquired growth net was 11%.
Operating income excluding restructuring costs totaled SEK 716 M
(608), which represents an operating margin (EBIT) of 19.9% (21.5).
Return on capital employed amounted to 15.3% (17.5). Operating cash
flow before interest paid totaled SEK 947 M (791).
Entrance Systems
Sales for the quarter in Entrance Systems totaled SEK 6,616 M
(6,072), with organic growth of 2% (3). The sales growth in the
quarter was negatively affected by one percentage point due to a
change in the sales cut-off procedure in one business area. This
has no impact on the full year's sales growth. US Residential Doors
grew strongly, while Industrial Doors and Pedestrian Doors reported
good growth. Sales for Door Components were stable, while High
Performance Doors and Residential Doors in Europe had a negative
development. Acquired growth was 1%. Operating income excluding
restructuring costs totaled SEK 998 M (966), which represents an
operating margin (EBIT) of 15.1% (15.9). Return on capital employed
amounted to 18.8% (20.2). Operating cash flow before interest paid
totaled SEK 1,224 M (1,174).
Acquisitions and disposals
A total of five acquisitions were consolidated during the
quarter. The combined acquisition price for the businesses acquired
during the year, including adjustments from prior-year
acquisitions, amounted to SEK 6,752 M. The acquisition price for
these companies on a cash and debt free basis amounted to SEK 7,300
M. Preliminary acquisition analyses indicate that goodwill and
other intangible assets with indefinite useful life amount to SEK
5,329 M. Estimated deferred considerations amounted to SEK 1,150
M.
On December 17 it was announced that ASSA ABLOY had acquired
Lorient, a leading designer and manufacturer of high performance
door sealing systems based in the UK. The company has about 135
employees and its sales in 2018 are expected to amount to SEK 220
M.
On December 19 it was announced that ASSA ABLOY had acquired
Luxer One, a leading US supplier of advanced locker systems for
receiving packages. The company has about 130 employees and its
sales in 2018 are expected to amount to SEK 335 M.
On December 20 it was announced that ASSA ABLOY had acquired
Pacific Door Systems, a leading manufacturer of commercial door and
window systems in New Zealand. The company has about 80 employees
and its sales in 2018 are expected to amount to SEK 125 M.
Sustainable development
Reduction of the Group's water consumption is a prioritized
activity. The greatest volume of water consumption is related to
industrial processes in the Group's factories. New technology is
continually being introduced with the aim of decreasing both water
consumption and costs. Several units have recently introduced
solutions for the cleaning and circulation of process water so that
it can be reused in the same process or in other processes.
Improved systems for measurement and control are also contributing
to reduced consumption.
In the manufacturing of tubes for fences at Ameristar Perimeter
Security's factory in Tulsa, USA, water is used for cooling. By
introducing a system for efficient cleaning and smart control of
the pH-value, the water can be reused in a closed loop system. Only
the water that evaporates during the cooling process needs to be
replaced. The new process reduces the annual water consumption by
1,300 cubic meters. The cost is reduced by USD 200,000 per year,
primarily by eliminating the external cost of handling and cleaning
the contaminated water.
The Sustainability Report for 2018, with reviews of the Group's
targets and other information about sustainable development, will
be available from 21 March 2019 on the company's website,
www.assaabloy.com.
Parent company
Other operating income for the Parent company ASSA ABLOY AB
totaled SEK 4,750 M (4,063) for the full year. Operating income for
the same period amounted to SEK 1,801 M (1,701). Investments in
tangible and intangible assets totaled SEK 115 M (3,291). Liquidity
is good and the equity ratio was 41.6% (43.0).
Dividend and Annual General meeting
The Board of Directors proposes a dividend of SEK 3.50 (3.30)
per share for
the 2018 financial year, an increase of 6%. The Annual General
Meeting will
be held on 25 April 2019. The Annual Report for 2018 will be
available from 21 March 2019 on the company's website,
www.assaabloy.com.
Accounting principles
ASSA ABLOY applies International Financial Reporting Standards
(IFRS) as endorsed by the European Union. The same accounting and
valuation principles as in the latest Annual Report have been
applied, with the exception of new and changed Standards and
interpretations that came into force on 1 January 2018 and are
described briefly on page 17. This Report was prepared in
accordance with IAS 34 'Interim Financial Reporting' and the Annual
Accounts Act. The Report for the Parent company was prepared in
accordance with the Annual Accounts Act and RFR 2 'Reporting by a
Legal Entity'.
From 1 January 2019 ASSA ABLOY will apply IFRS 16 'Leases' and
IFRIC 23 'Uncertainty over Income Tax Treatments'. The financial
effects of applying these standards are described in more detail on
page 17.
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 18 of
this 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 fourth quarter of 2018.
Stockholm, 5 February 2019
Nico Delvaux
President and CEO
Financial information
The Quarterly Report for the first quarter of 2019 will be
published on 25 April 2019.
The Annual General meeting will be held on 25 April 2019 at the
Museum of Modern Art in Stockholm, Sweden.
Further information can be obtained from:
Nico Delvaux,
President and CEO, Tel: +46 8 506 485 82
Erik Pieder,
Chief Financial Officer, Tel: +46 8 506 485 72
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/0981P_1-2019-2-5.pdf
ASSA ABLOY is holding a telephone and web conference at 10.00
today
which can be followed on the Internet at www.assaabloy.com.
It is possible to submit questions by telephone on:
+46 8-519 993 83, +44 333 300 9261 or +1 646 722 4957
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 CET on 5 February 2019.
ASSA ABLOY AB (publ) Tel +46 (0)8 506 485
Box 703 40 00
107 23 Stockholm Fax +46 (0)8 506 485
Visiting address 85
Klarabergsviadukten www.assaabloy.com No. 02/2019
90, Stockholm, Sweden
Corporate identity number:
556059-3575
Financial information - Group
Financial information - Group
Financial information - Group
Financial information - Parent company
Quarterly information - Group
Reporting by division
Financial information - Notes
Financial information - Notes
New accounting standards and standards not yet effective
Definitions of financial performance measures
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GIGDDUXGBGCU
(END) Dow Jones Newswires
February 05, 2019 03:41 ET (08:41 GMT)
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