ASSA ABLOY: Good performance in a weak market

ASSA ABLOY: Good performance in a weak market 
STOCKHOLM, SWEDEN -- (Marketwire) -- 02/07/13 --  
Fourth quarter 
* Sales increased by 4% in the quarter, with 0% organic growth, and
totaled SEK 12,239 M (11,744). 
* Good growth in Americas and improved performance in Australia and
New Zealand. 
* Markets in EMEA and Asia and Global Technologies were stable, while
Entrance Systems was affected negatively by the weak trend in
southern Europe. 
* Acquisition of the US company 4Front was completed. Its annual
sales are expected to total SEK 1,100 M, representing 2% growth. 
* Operating income (EBIT) amounted to SEK 2,030 M (1,881[1]), which
represents an increase of 8%. The operating margin was 16.6%
(16.0[1]). 
* Net income amounted to SEK 1,386 M (118[2]). 
* Earnings per share rose by 9% to SEK 3.74 (3.43[3]). 
* Record-high operating cash flow totaling SEK 3,160 M (2,794). 
Full year 
* Sales increased by 12%, including 2% organic growth, and totaled
SEK 46,619 M (41,786). 
* Operating income (EBIT) amounted to SEK 7,501 M (6,624[1]),
representing an increase of 13%. The operating margin was 16.1%
(15.9[1]). 
* Net income amounted to SEK 5,125 M (3,869[2]). 
* Earnings per share rose by 13% to SEK 13.84 (12.30[3]). 
* Strong operating cash flow totaling SEK 7,044 M (6,080). 
* The Board of Directors proposes a dividend of SEK 5.10 per share
(4.50). 
[1]  Excluding restructuring costs in 2011 amounting to SEK -1,420 M
for the
quarter and for the full year. 
[2]  If restructuring and one-time items are excluded, net income in
2011 was
SEK 1,285 M for the quarter and SEK 4,605 M for the full
year. 
[3]  Excluding restructuring and one-time items in 2011 amounting to
SEK - 1,167
M for the quarter and SEK -736 M for the full year. 


 
 
SALES AND INCOME
 
                             Fourth quarter    Full year
                             ------------------------------------------
                             2011   2012  Change  2011   2012  Change
------------------------------------------------------------------------
 Sales, SEK M                11,744 12,239  +4%   41,786 46,619  +12%
 
   of which,
 
   Organic growth                           +0%                  +2%
 
   Acquisitions                             +7%                  +9%
 
Exchange-rate effects         -195   -212   -3%   -2,309   290   +1%
 
Operating income (EBIT),
 SEK M[1]                    1,881  2,030   +8%   6,624  7,501  +13%
 
Operating margin (EBIT), %[1] 16.0   16.6          15.9   16.1
 
 Income before tax, SEK M[1] 1,723  1,825   +6%   5,979  6,731   +13%
 
 Net income, SEK M[2]           118 1,386  +8%[2] 3,869  5,125  +11%[2]
 
 Operating cash flow, SEK M  2,794  3,160   +13%  6,080  7,044   +16%
 
 Earnings per share (EPS),
SEK[2]                       3.43   3.74    +9%   12.30  13.84   +13%

 
[1] Excluding restructuring costs in 2011 amounting to SEK -1,420 M
for the quarter and for the full year. 
[2] If restructuring and one-time items are excluded, net income in
2011 was
SEK 1,285 M for the quarter and SEK 4,605 M for the full
year. 
COMMENTS BY THE PRESIDENT AND CEO 
"The fourth quarter showed a satisfactory increase in sales and
strong earnings," says Johan Molin, President and CEO. "The weakening
of the global
economy continued, which resulted in zero organic
growth, but at the same time
acquired sales revenue added 7% growth.
Operating income increased by a full
8%, which was a consequence of
increased efficiency in acquired units, reduced
raw-material costs
and good savings from the restructuring programs we have carried out. 
"Sales of new products were stronger than ever before and accounted
for 25% of
total sales revenue in the fourth quarter. A number of
innovative new products
in both the mechanical and electromechanical
sectors were launched during the
year. Particularly successful were
the new series of door-closers in Europe, the new generation of
digital door-locks, HID's SE readers, RFID locks for hotels,
and the
new Aperio and Cliq Remote electronic lock systems. 
"The full-year operating income for 2012 improved by a full 13%, with
strong
contributions coming from efficiency improvements and the
continuing relocation
of production to low-cost countries. Operating
cash flow also remained very strong as a result of increased profit
and improved effectiveness in managing
our working capital. 
"Activity in the acquisition field continued at a high level in 2012.
A total of 13 acquisitions were completed, whose combined annual sales
of SEK 4,500 M represent 11% growth. The expansion of Entrance
Systems continued during the
year with the strategic acquisitions of
Albany, Dynaco and 4Front. The first two of these gave us world
leadership in the fast-growing segment of high-speed industrial
doors, while 4Front gave us market leadership for docking stations in
North America. 
"Many indicators suggest that the world economy will remain weak for
the foreseeable future, due primarily to the budget cutbacks that many
countries are making. It is therefore of the utmost importance that
ASSA ABLOY continues its
expansion on the new markets, which are
expected to go on growing well, while at the same time maintaining
its investments in new products and market presence." 
FOURTH QUARTER 
The Group's sales totaled SEK 12,239 M (11,744), an increase of 4%
compared with
the fourth quarter of 2011. Organic growth for
comparable units was 0% (4). Acquired units contributed 7% (20).
Exchange-rate effects had an impact of SEK
-212 M on sales, that is
-3% (-2). 
Operating income before depreciation, EBITDA, amounted to SEK 2,268 M
(2,151).
The corresponding EBITDA margin was 18.5% (18.3). The
Group's operating income,
EBIT, excluding items affecting
comparability, amounted to SEK 2,030 M (1,881),
an increase of 8%.
The operating margin was 16.6% (16.0). 
Net financial items amounted to SEK -205 M (-158). The Group's income
before
tax, excluding items affecting comparability, amounted to SEK
1,825 M (1,723),
an improvement of 6% compared with the previous
year. Exchange-rate effects had
a negative impact of SEK 47 M on the
Group's income before tax. The profit margin, excluding items
affecting comparability, was 14.9% (14.7). The effective
tax rate on
an annual basis amounted to 24% (24). Earnings per share,
excluding
items affecting comparability, amounted to SEK 3.74 (3.43),
an increase of 9%. 
FULL YEAR 
Full-year sales for 2012 totaled SEK 46,619 M (41,786), representing
an increase
of 12%. Organic growth was 2% (4). Acquired units
contributed 9% (17). Exchange-rate effects affected sales positively
by SEK 290 M, representing 1% (-8), compared with 2011. 
Operating income before depreciation, EBITDA, for the full year
amounted to SEK
8,536 M (7,646). The corresponding margin was 18.3%
(18.3). The Group's operating income, EBIT, excluding items affecting
comparability, amounted to
SEK 7,501 M (6,624), which was an increase
of 13%. The corresponding operating
margin (EBIT) was 16.1% (15.9). 
Earnings per share, excluding items affecting comparability, amounted
to SEK
13.84 (12.30), an increase of 13%. Operating cash flow totaled
SEK 7,044 M (6,080). 
RESTRUCTURING MEASURES 
Payments related to all restructuring programs amounted to SEK 202 M
in the quarter. The restructuring programs proceeded according to
plan and led to a
reduction in personnel of 301 people during the
quarter and 6,765 people since
the projects began. A further 770
people will leave by the end of 2014. 
At the end of the quarter provisions of SEK 1,068 M remained in the
balance sheet for carrying out the programs. 
COMMENTS BY DIVISION 
EMEA 
Sales for the quarter in EMEA division totaled SEK 3,479 M (3,524),
with organic
growth of -1% (1). The market situation weakened during
the quarter. The markets
in the UK, France, eastern Europe and Israel
showed growth. Scandinavia, Finland, Germany and Spain fell back a
little, while Italy and Benelux showed a negative sales trend.
Acquired growth amounted to 3%. Operating income totaled
SEK 633 M
(640). The operating margin (EBIT) was maintained at a continuing
high
level of 18.2% (18.2). Return on capital employed amounted to
24.0% (25.4). Operating cash flow before interest paid totaled SEK
788 M (851). 
AMERICAS 
Sales for the quarter in Americas division totaled SEK 2,340 M
(2,228), with
organic growth of 5% (0). The sales trends for the
Private Residential Market,
Electromechanical Products, Mexico and
South America were strong. Locks, Security Doors and the
High-Security Market showed stable growth, while sales in Canada
diminished. Acquired growth amounted to 2%. Operating income totaled
SEK 484 M (450) and the operating margin was 20.7% (20.2). Return on
capital
employed amounted to 22.9% (21.9). Operating cash flow before
interest paid totaled SEK 548 M (525). 
ASIA PACIFIC 
Sales for the quarter in Asia Pacific division totaled SEK 2,034 M
(1,990), with
organic growth of 2% (9). Growth was strong in Korea and
good in China, Australia and New Zealand. In South-East Asia growth
continued to weaken. Acquired growth amounted to 0%. Operating income
totaled SEK 276 M (280), representing an operating margin (EBIT) of
13.6% (14.1). The quarter's return on capital employed amounted to
20.9% (26.0). Operating cash flow before interest
paid totaled SEK
928 M (617). 
GLOBAL TECHNOLOGIES 
Sales for the quarter in Global Technologies division totaled SEK
1,516 M (1,510), with organic growth amounting to 2% (7). HID had
strong growth in Logical access and Identification technology, while
Access control showed good
growth. Government ID was stable and
project orders had negative growth. Hospitality continued to show
strong growth, principally in the renovation market. Profitability
for both business units improved strongly. Acquired growth
amounted
to 1%. The division's operating income amounted to SEK 262 M
(237),
giving an operating margin (EBIT) of 17.3% (15.7). Return on
capital employed
amounted to 17.3% (14.7). Operating cash flow before
interest paid totaled SEK 467 M (430). 
ENTRANCE SYSTEMS 
Sales for the quarter in Entrance Systems division totaled SEK 3,080
M (2,704),
with organic growth amounting to -5% (7). Growth was good
for Albany, Dynaco and Flexiforce, while industrial doors and
automatic doors showed a slight negative
trend. Ditec and the private
residential market remained negative. Acquired growth amounted to
22%. Operating income totaled SEK 515 M (449), giving an operating
margin of 16.7% (16.6). Return on capital employed amounted to
15.3%
(15.6). Operating cash flow before interest paid totaled SEK
651 M (713). 
ACQUISITIONS AND DIVESTMENTS 
During the quarter 4Front in the USA and one other minor acquisition
were consolidated. The combined acquisition price for the thirteen
companies acquired
during the year amounts to SEK 4,892 M, and
preliminary acquisition analyses
show that goodwill and other
intangible assets with indefinite useful life amount to SEK 3,768 M.
The acquisition price is adjusted for acquired net debt
and estimated
earn-outs. Estimated earn-outs amount to SEK 923 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's manufacturing processes are continually improved by
means of ongoing efficiency measures and investments in
environmentally friendly technology. Energy consumption and water
consumption are two high-priority areas. One example that can be
cited is the Group's lock factory in Romania,
which has recently
increased the operational efficiency of the painting plant
and
invested in new technology for recovery of water and has thereby
reduced the energy consumption for these processes by 50% and water
consumption by 80%. These improvements give the factory annual
savings of SEK 1 M. 
To enable more effective benchmarking of water consumption in the
Group's factories, environmental monitoring has been augmented with a
number of new indicators. 
The 2012 Sustainability Report, reporting on the Group's targets and
giving other information about sustainable development, will be
published at the time
of the Annual General Meeting in April 2013. 
PARENT COMPANY 
Other  operating income for the Parent company ASSA ABLOY AB totaled
SEK 1,938 M (1,808)  for the full year.  Income before tax amounted 
to SEK 3,507 M (2,297).
Investments  in tangible  and intangible 
assets totaled  SEK 1,063 M (116), of which  intangible assets
accounted for SEK  1,062 M (115). Liquidity is good and the equity
ratio was 50.0% (39.3). 
DIVIDEND AND ANNUAL GENERAL MEETING 
The Board of Directors proposes a dividend of SEK 5.10 (4.50) per
share for the
2012 financial year. The Annual General Meeting will be
held on 25 April 2013.
The annual report for 2012 will be available
as from 27 March 2013 on the corporate website, at www.assaabloy.com. 
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 at 31 December 2011 and 31 December 2012 totaled
SEK 1,092 M and SEK 1,073 M respectively. 
This Year-end Report was prepared in accordance with IAS 34 'Interim
Financial
Reporting' and the Annual Accounts Act. The Year-end 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 
The company's auditors have not conducted a special review of the Q4
report 2012. 
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 29 October 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. 
Stockholm, 7 February 2013 
Johan Molin 
President and CEO 
FINANCIAL INFORMATION 
The Interim Report for the first quarter will be published on 24
April 2013. The Annual General Meeting will be held on 25 April at the
Museum of Modern Art in
Stockholm. 
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 5055 6483, +44 203 364 5371 or +1 877 788 9023. 
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 7 February. 
Q4 2012: 
http://hugin.info/1014/R/1676224/546273.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#1676224] 
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
 
 
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