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Continued good performance by ASSA ABLOY

Continued good performance by ASSA ABLOY 
STOCKHOLM, SWEDEN -- (Marketwire) -- 10/29/12 -- 


 
 -- Sales increased by 6%, including 1% organic growth, and totaled
    SEK 11,545 M (10,841).
 -- Good growth on the emerging markets in Asia, South America and Africa.
 -- Stable progress in North America and weak but stable progress in
    Europe.
 -- Operating income (EBIT) increased by 10% and amounted to SEK 1,932 M
    (1,751). The operating margin was 16.7% (16.2).
 -- Net income amounted to SEK 1,303 M (1,653*).
 -- Earnings per share rose by 6% to SEK 3.49 (3.30**).
 -- Cash flow increased by 29% and amounted to SEK 1,967 M (1,528).
 -- Contracts have been agreed for the sale of Wangli, which is expected
    to take place in the first quarter of 2013.

 
SALES AND INCOME 


                               Third quarter   Jan-Sept
                                -------------------------------------------
                                   2011   2012 Change   2011    2012 Change
---------------------------------------------------------------------------
 Sales, SEK M                    10,841 11,545    +6%   30,042 34,380  +14%
 
   of which,
 
   Organic growth                                 +1%                   +2%
 
   Acquisitions                                   +7%                  +10%
 
   Exchange-rate effects                  -151    -2%            +502   +2%
 
 Operating income (EBIT), SEK M   1,751  1,932   +10%    4,743  5,471  +15%
 
 Operating margin (EBIT), %        16.2   16.7            15.8   15.9
 
 Income before tax, SEK M         1,582  1,748   +10%    4,256  4,906  +15%
 
 Net income, SEK M             1,653(*)  1,303   -21% 3,751(*)  3,739    0%
 
 Operating cash flow, SEK M       1,528  1,967   +29%    3,286  3,885  +18%
 
 Earnings per share (EPS), SEK**   3.30   3.49    +6%     8.86  10.10  +14%

 
* Net income for 2011 was affected positively by profit from the
disposal of
parts of the Cardo acquisition 
** Excluding items distorting comparison 
COMMENTS BY THE PRESIDENT
AND CEO 
"It is pleasing to see that ASSA ABLOY is doing very well in a hard
economic
climate," says Johan Molin, President and CEO. "Our good
performance in both
sales and income continued this quarter, with
rises of 6% and 10% respectively.
In particular, our investments in
presence on our emerging markets is bearing
full dividends, with
strong growth in Asia, Africa and South America, although I have to
conclude that progress on the mature markets is weak. 
"Despite the weak trend on the mature markets ASSA ABLOY has
sustained its success on the American market, with 3% organic growth
in both Americas and Global Technologies. In Europe the position is
tough, with continued weakness.
Notwithstanding this, EMEA has
succeeded in achieving 1% organic growth, while
Entrance Systems fell
back by 2%. 
"Investments in market presence and in Research and Development
continued at
undiminished levels during the quarter. Sales of new
products currently amount
to a full 24%. Among those launched this
quarter was Seos, the world's first
commercial ecosystem for issuing,
delivering and revoking digital keys. The Seos
system further
strengthens ASSA ABLOY's leading positions in Access Control
and
Logical Access - two vital future growth areas. 
"The impressive 10% improvement in income resulted mainly from
efficiency and
restructuring measures and from reduced costs for raw
materials. It was also
pleasing that the newly acquired companies
continued to produce very good results. 
"Many indicators point that the world economy will remain weak for a
foreseeable
future. It is therefore of the utmost importance that
ASSA ABLOY continues to
develop its presence on the new markets,
which are expected to go on growing,
and that investments in new
products and market presence are maintained." 
THIRD QUARTER 
The Group's sales totaled SEK 11,545 M (10,841), an increase of 6%
compared with
the third quarter of 2011. Organic growth for comparable
units was 1% (2). Acquired units contributed 7% (18). Exchange-rate
effects had a impact of SEK
-151 M on sales, that is -2% (-6). 
Operating income before depreciation, EBITDA, amounted to SEK 2,183 M
(2,002).
The corresponding EBITDA margin was 18.9% (18.5). The
Group's operating income,
EBIT, amounted to SEK 1,932 M (1,751), an
increase of 10%. The operating margin
was 16.7% (16.2). 
Net financial items amounted to SEK -184 M (-169). The Group's income
before tax amounted to SEK 1,748 M (1,582), an improvement of 10%
compared with the previous year. Exchange-rate effects had a negative
impact of SEK -12 M on the Group's income before tax. The profit
margin was 15.1% (14.6). The estimated
underlying effective tax rate
on an annual basis amounted to 24% (22). Earnings
per share excluding
items distorting comparison amounted to SEK 3.49 (3.30), an increase
of 6%. 
FIRST NINE MONTHS OF THE YEAR Sales for the first nine months of 2012
totaled SEK 34,380 M (30,042), representing an increase of 14%.
Organic growth was 2% (4). Acquired units contributed 10% (16).
Exchange-rate effects had a positive impact of SEK 502 M on sales,
that is 2% (-9), compared with the first nine months of 2011. 
Operating income before depreciation, EBITDA, for the first nine
months amounted
to SEK 6,268 M (5,495). The corresponding margin was
18.2% (18.3). The Group's
operating income, EBIT, amounted to SEK
5,471 M (4,743), which was an increase
of 15%. The corresponding EBIT
operating margin was 15.9% (15.8). 
Earnings per share for the first nine months, excluding items
distorting comparison, amounted to SEK 10.10 (8.86), an increase of
14%. Operating cash
flow totaled SEK 3,885 M (3,286). 
RESTRUCTURING MEASURES 
Payments related to all restructuring programs amounted to SEK 118 M
in the quarter. The restructuring programs proceeded according to
plan and led to a
reduction in personnel of 128 people during the
quarter and 6,464 people since
the projects began. A further 1,071
people will leave by the end of 2014. 
At the end of the quarter provisions of SEK 1,272 M remained in the
balance sheet for carrying out the programs. 
COMMENTS BY DIVISION 
EMEA 
Sales for the quarter in EMEA division totaled SEK 3,093 M (3,155),
with organic
growth of 1% (0). The market situation weakened during
the quarter. Growth was
good in the UK, Africa, eastern Europe and
Israel. Scandinavia, Finland, France
and Germany were stable, while
Spain, Benelux and Italy showed a negative sales
trend. Acquired
growth amounted to 3%. Operating income totaled SEK 539 M
(535),
which represents an operating margin (EBIT) of 17.4% (17.0).
Return on capital
employed amounted to 21.0% (20.9). Operating cash
flow before interest paid totaled SEK 751 M (586). 
AMERICAS 
Sales for the quarter in Americas division totaled SEK 2,474 M
(2,312), with
organic growth of 3% (-1). The sales trends for the
Residential Market, Mexico
and South America were strong, and the
trend for Electromechanical Products was
good. The sales trends
remained stable for Mechanical Products, Security Doors
and the
High-Security Market. Acquired growth was 2%. Operating income
totaled
SEK 510 M (466) and the operating margin was 20.6% (20.1).
Return on capital
employed amounted to 23.9% (23.5). Operating cash
flow before interest paid totaled SEK 529 M (493). 
ASIA PACIFIC 
Sales for the quarter in Asia Pacific division totaled SEK 1,979 M
(1,822), with
organic growth of 3% (7). Growth was strong in Korea and
South-East Asia but
there was a weak sales t
rend in India. Growth was
good for all product areas in China, while the sales trend was
strongly negative in Australia and stable in
New Zealand. Acquired
growth amounted to 2%. Operating income totaled SEK 293 M (275),
representing an operating margin (EBIT) of 14.8% (15.1). The
quarter's
return on capital employed amounted to 22.0% (25.0).
Operating cash flow before
interest paid totaled SEK 374 M (232). 
GLOBAL TECHNOLOGIES 
Sales for the quarter in Global Technologies division totaled SEK
1,568 M (1,524), with organic growth amounting to 3% (5). HID had
strong growth in identification technology and good growth in access
control and secure issuing
of smart cards. Government ID and project
orders had negative growth. Hospitality showed strong growth,
principally from the renovation market. Profitability for both
business units improved strongly. Acquired growth amounted to 1%. The
division's operating income amounted to SEK 298 M (248),
giving an
operating margin (EBIT) of 19.0% (16.3). Return on capital
employed
amounted to 18.3% (16.2). Operating cash flow before
interest paid totaled SEK
298 M (285). 
ENTRANCE SYSTEMS 
Sales for the quarter in Entrance Systems division totaled SEK 2,648
M (2,241),
with organic growth amounting to -2% (5). Growth was good
for Crawford, Albany
and Flexiforce. The sales trends for Ditec and
the private residential market
remained negative, affected by the
weak economic trend in southern Europe. Acquired growth amounted to
25%. Operating income totaled SEK 370 M (308), giving an operating
margin of 14.0% (13.8). Return on capital employed amounted
to 11.2%
(10.7). Operating cash flow before interest paid totaled SEK 327 M
(225). 
ACQUISITIONS AND DIVESTMENTS 
During the quarter Sanhe in China and two other minor acquisitions
were consolidated.
The combined acquisition price for the eleven
companies acquired in the first
nine months of the year amounts to
SEK 4,215 M, and preliminary acquisition analyses indicate that
goodwill and other intangible assets with indefinite useful life
amount to SEK 3,162 M. The acquisition price is adjusted for acquired
net debt and estimated earn-outs.
Estimated earn-outs amount to SEK
1,103 M. 
Contracts for the sale of Wangli Group have been agreed. The sale is
subject to approval by the authorities and it is expected to be
possible to complete it in the first quarter of 2013. 
SUSTAINABLE DEVELOPMENT 
ASSA  ABLOY works actively to minimize the Group's impact on the
environment. As one  part of these efforts,  so-called Environmental
Product Declarations (EPDs)
for  the Group's product groups are being
issued. EPDs show in a transparent way a  product's environmental
impact through its  entire life cycle. The procedures
ensure  that
production processes  are efficient and  that customers receive all
relevant  information about  our products.  ASSA ABLOY  believes that
 EPDs will
further improve the Group's environmental operations. 
PARENT COMPANY 
'Other operating income' for the Parent company ASSA ABLOY AB totaled
SEK 1,119
M (1,129) for the nine-month period. Income before tax
amounted to SEK 1,006 M (880). Investments in tangible and intangible
assets totaled SEK 9 M (3). Liquidity is good and the equity ratio
was 48.2% (36.9). The equity ratio has
risen mainly because of
amortization of interest-bearing loans and conversion of debenture
loans. 
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 88-93 of the 2011 Annual
Report. The agreed revision of
IAS 19 'Employee Benefits' applies
from 1 January 2013 with retroactive effect
during 2012. In this
recalculation of comparative information for 2012, unrecognized
expenses relating to service provided in previous years and
unrecognized actuarial losses are accounted for as an adjustment of
opening equity taking into account tax effects. The unrecognized
balance sheet items
totaled SEK 1,092 M as at 31 December 2011. 
This Interim 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'. 
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 and financial 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 risks and
risk management, see the 2011 Annual Report. No significant risks
other than the risks described there are judged to have occurred. 
AUDIT 
This Report has not been reviewed by the company's Auditors. 
OUTLOOK* 
Long-term outlook 
Long term, ASSA ABLOY expects an increase in security-driven demand.
Focus on
end-user value and innovation as well as leverage on ASSA
ABLOY's strong position will accelerate growth and increase
profitability. 
Organic sales growth is expected to continue at a good rate. The
operating margin (EBIT) and operating cash flow are expected to
develop well. 
* Outlook published on 27 July 2012: 
Long-term outlook 
Long term, ASSA ABLOY expects an increase in security-driven demand.
Focus on
end-user value and innovation as well as leverage on ASSA
ABLOY's strong position will accelerate growth and increase
profitability. 
Organic sales growth is expected to continue at a good rate. The
operating margin (EBIT) and operating cash flow are expected to
develop well. 
FINANCIAL INFORMATION 
The End-of-Year Report and Quarterly Report for the fourth quarter
will be published on 7 February 2013. 
ASSA ABLOY is holding an analysts' meeting at 10.00 today  
at Operaterrassen in Stockholm. 
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 5052 0270, +44 207 509 5139 or +1 718 354 1226 
This information is that which ASSA ABLOY is required to disclose
under the Swedish Securities Exchange and Clearing Operations Act
and/or the Swedish Financial Instruments Trading Act. The information
is released for publication at 08.00 on 29 October. 
Q3 2012: 
http://hugin.info/1014/R/1652942/533800.pdf 
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants
that: 
(i) the releases contained herein are protected by copyright and    
other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and     
originality of the information contained therein. 
Source: ASSA ABLOY via Thomson Reuters ONE 
[HUG#1652942] 
FURTHER INFORMATION CAN BE OBTAINED FROM:
Johan Molin
President and CEO
Tel: +46 8 506 485 42 
Carolina Dybeck Happe
Chief Financial Officer
Tel: +46 8 506 485 72