ASSA ABLOY: Solid sales and profit despite a weak market

ASSA ABLOY: Solid sales and profit despite a weak market 
STOCKHOLM, SWEDEN -- (Marketwired) -- 04/24/13 -- 


 
  * Sales totaled SEK 10,868 M (10,839), with organic growth of -1%.
  * Good growth in Americas and continued growth in Asia.
  * EMEA and Entrance Systems were affected negatively by the weak economy
    in Europe.
  * Three minor acquisitions with total annual sales of SEK 130 M were
    completed during the year.
  * Operating income (EBIT) amounted to SEK 1,662 M (1,655). The operating
    margin was 15.3% (15.3).
  * Net income amounted to SEK 1,138 M (1,146).
  * Earnings per share fell by 1% to SEK 3.07 (3.11).
  * Cash flow was normal for the season and totaled SEK 498 M (483).
 
SALES AND INCOME
 
                                    Full year          First quarter
                                 ------------------------------------------
                                  2011     2012 Change   2012   2013 Change
---------------------------------------------------------------------------
 Sales, SEK M                     41,786 46,619   +12% 10,839 10,868  0%
 
   of which,
 
   Organic growth                                  +2%               -1%
 
   Acquisitions                                    +9%               +5%
 
   Exchange-rate effects          -2,309   +290    +1%   +149   -379 -4%
 
 Operating income (EBIT), SEK M1)  6,624  7,501   +13%  1,655  1,662  0%
 
 Operating margin (EBIT), %1)       15.9   16.1          15.3   15.3
 
 Income before tax, SEK M1)        5,979  6,784   +13%  1,490  1,533 +3%
 
 Net income, SEK M2)               3,869  5,172   +34%  1,146  1,138 -1%
 
 Operating cash flow, SEK M        6,080  7,044   +16%    483    498 +3%
 
 Earnings per share (EPS), SEK2)   12.30  13.97   +14%   3.11   3.07 -1%

 
1)  Excluding restructuring costs in 2011 amounting to SEK 1,420 M. 
2)  If items affecting comparability are excluded, net income for the
full year 2011 was SEK 4,605 M. 
COMMENTS BY THE PRESIDENT AND CEO 
"The development for the first quarter was stable for ASSA ABLOY,
with a growth of 4% in local currencies, made up of -1% organic
growth and 5% acquired growth," says Johan Molin, President and CEO.
"It is particularly pleasing that North and South America and Asia
continued to grow. But the European economy con
tinued to weaken,
which produced a negative outcome for EMEA and Entrance Systems. 
"Against the background of the relatively weak market trend, it gives
ASSA ABLOY a great sense of confidence that we have so many new
products that are selling well. New products' share of sales
continued to rise to a new record level of 26% (20). 
"Earnings showed a solid performance, with the gross profit margin
continuing to improve, as a result of new products and a more
efficient production set-up. However, the improvement does not show on
the bottom line since we have ongoing investments in Research &
Development and market presence. 
"Activities on the acquisition front continued to go well, and so far
this year we have completed three minor acquisitions. Especially
interesting was the acquisition of the Slovakian security-door
company Sherlock, which complements our range of total door solutions
in the region extremely well. 
"My judgment is that the outlook from the fourth quarter is
unchanged, with a continuing weak world economy affected by the
budget cutbacks that many countries are making. It is therefore of
the utmost importance that ASSA ABLOY should continue its expansion
on the new markets, which are expected to go on growing well, and
that our investments in new products and market presence are
sustained." 
FIRST QUARTER 
The Group's sales totaled SEK 10,868 M (10,839). Organic growth for
comparable units was -1% (3). Acquired units contributed 5% (19).
Exchange- rate effects had an impact of SEK -379 M on sales, that is
-4% (3). 
Operating income before depreciation, EBITDA, amounted to SEK 1,911 M
(1,929). The corresponding EBITDA margin was 17.6% (17.8). The
Group's operating income, EBIT, amounted to SEK 1,662 M (1,655). The
operating margin was 15.3% (15.3). 
Net financial items amounted to SEK -129 M (-165). The Group's income
before tax amounted to SEK 1,533 M (1,490), an improvement of 3%
compared with the previous year. Exchange-rate effects had an impact
of SEK -59 M (17) on the Group's income before tax. The profit margin
was 14.1% (13.7). The underlying effective tax rate on an annual
basis was estimated to be 25% (23). Earnings per share amounted to
SEK 3.07 (3.11). 
RESTRUCTURING MEASURES 
Payments related to all restructuring programs amounted to SEK 190 M
in the quarter. 
All restructuring programs proceeded according to plan and led to a
reduction in personnel of 101 people during the quarter and 6,866
people since the projects began. 
At the end of the quarter provisions of SEK 897 M remained in the
balance sheet for carrying out the programs. 
COMMENTS BY DIVISION 
EMEA 
Sales for the quarter in EMEA division totaled SEK 3,171 M (3,431),
with organic growth of -6% (4). The market situation in Europe
weakened and the division was also affected by a negative day effect.
Growth was good in Africa, the Middle East and eastern Europe. The
sales trend on all other markets was negative, with strong negative
growth in Spain, Italy, France, the Netherlands and Finland. Acquired
growth amounted to 2%. Operating income totaled SEK 509 M (574),
which represented an operating margin (EBIT) of 16.1% (16.7). Return
on capital employed amounted to 19.3% (23.1). Operating cash flow
before interest paid totaled SEK 105 M (273). 
AMERICAS 
Sales for the quarter in Americas division totaled SEK 2,353 M
(2,308), with organic growth of 5% (3). The sales trends for the
private residential market, electromechanical products and South
America remained strong. Growth was good for mechanical locks,
high-security products and security doors and in Canada and Mexico.
Acquired growth amounted to 2%. Operating income totaled SEK 494 M
(473) and the operating margin was 21.0% (20.5). Return on capital
employed amounted to 23.5% (22.3). Operating cash flow before
interest paid totaled SEK 148 M (220). 
ASIA PACIFIC 
Sales for the quarter in Asia Pacific division totaled SEK 1,355 M
(1,319), with organic growth of 2% (3). Growth was strong in South
Korea, driven by exports of digital door-locks, and in South-East
Asia and New Zealand. China showed low growth, affected by lower
exports to Europe. Australia showed weak negative growth. Acquired
growth amounted to 4%. Operating income totaled SEK 151 M (138),
representing an operating margin (EBIT) of 11.1% (10.5). The
quarter's return on capital employed amounted to 11.7% (12.2).
Operating cash flow before interest paid totaled SEK -59 M (-327). 
GLOBAL TECHNOLOGIES 
Sales for the quarter in Global Technologies division totaled SEK
1,426 M (1,477), with organic growth of 0% (8). HID had good growth
in access control and major projects. Logical access and
identification technology showed a stable trend while Government ID
had negative growth. Hospitality continued to show good growth,
principally in the renovation market. Profitability for the HID
business unit improved strongly. Acquired growth amounted to 0%. The
division's operating income amounted to SEK 242 M (225), with an
operating margin (EBIT) of 17.0% (15.2). Return on capital employed
amounted to 16.4% (13.7). Operating cash flow before interest paid
totaled SEK 23 M (102). 
ENTRANCE SYSTEMS 
Sales for the quarter in Entrance Systems division totaled SEK 2,762
M (2,526), with organic growth of -3% (3). Sales were affected by the
weak trend in Europe and a negative day effect. All segments in Europe
showed negative growth while sales in America showed strong growth and
the trend in Asia was good. Acquired growth amounted to 16%.
Operating income totaled SEK 341 M (307), giving an operating margin
of 12.4% (12.2). The operating margin was affected by 0,1 of a
percentage point by dilution from acquisitions. Return on capital
employed amounted to 10.0% (10.1). Operating cash flow before interest
paid totaled SEK 419 M (376). 
ACQUISITIONS AND DIVESTMENTS 
During the first quarter two minor acquisitions were consolidated.
The combined
acquisition price for these two acquisitions amounted to
SEK 92 M, and preliminary acquisition analyses indicate that goodwill
and other intangible
assets with indefinite useful life amount to SEK
85 M. The acquisition price is adjusted for acquired net financial
assets and estimated earn-outs. Estimated
earn-outs amount to SEK 54
M. 
In February 2013 the Wangli Group was sold off. Since June 2012 the
business has been reported under 'Assets held for sale' in accordance
with IFRS 5. 
SUSTAINABLE DEVELOPMENT 
ASSA ABLOY is publishing its  Sustainability Report for 2012 at the
time of the
Annual General Meeting on 25 April 2013. 
Important matters described in the Report include the work with the
Group's suppliers and their sustainability work; water and energy
consumption; reduction
of organic solvents and environmentally
dangerous waste; and independent social
reviews. Activities to
continually spread the message and the set targets among
the Group's
employees carried on during the year. Major efforts to
integrate
sustainability considerations in product development are
also in hand in the
Group, with the object of minimizing the
products' environmental impact over
their whole life cycle. 
Most of the reviewed areas have improved in 2012 and the trends for
these lie in line with the targets set for 2015. 
PARENT COMPANY 
Other operating income for the Parent company ASSA ABLOY AB totaled
SEK 367 M
(322) for the first quarter. Income before tax amounted to
SEK 174 M (451). Investments in tangible and intangible assets
totaled SEK 0 M (1). Liquidity is good and the equity ratio was 49.0%
(49.3). 
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 90-95 of the 2012 Annual
Report. 
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'. 
EFFECTS OF CHANGED ACCOUNTING PRINCIPLES 
In 2013 financial reporting is affected by changes relating to the
reporting of defined-benefit pension plans. The changed accounting
principles remove the option of using the so-called corridor method:
that is, the option of reporting
only a proportion of actuarial gains
and losses as income or expense. The significant changed valuations
are instead reported as they arise in 'Other comprehensive income'.
The changes also mean that the return on plan assets is
no longer
reported as expected return but is reported as an interest income
item
in the income statement, based on the value of the discount rate
at the start of the financial year. The accounting principles for
defined-benefit pension plans
are therefore changed from the Group's
accounting principles in the 2012 Annual
Report and the Interim
Reports published earlier in 2012. 
The new principles affect reporting retroactively, and the opening
balance at 1 January 2012 has been recalculated, as have the
comparatives for 2012, as follows: 
On the balance-sheet date of 1 January 2012, pension obligations and
net debt
increased by SEK 1,092 M. Equity was reduced by SEK 737 M and
financial assets
increased by SEK 355 M. Operating income for the
quarter and the full year 2012
is unchanged. Financial items for the
quarter and the full year 2012 improved by SEK 8 M and SEK 53 M
respectively. The tax expense for the quarter and the full
year 2012
increased by SEK 2 M and SEK 6 M respectively. Net profit for the
quarter and the full year 2012 increased by SEK 6 M and SEK 47 M
respectively.
Earnings per share after dilution for the quarter and
the full year 2012 increased by SEK 0.01 per share and SEK 0.13 per
share respectively. 
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 2012 Annual Report. No significant risks
other than the risks described there are judged to have occurred. 
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 7 February 2013: 
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, 24 April 2013 
Johan Molin 
President and CEO 
This Interim Report has not been reviewed by the Company's Auditor. 
FINANCIAL INFORMATION 
The Interim Report for the second quarter will be published on 19
July
2013. 


 
           ASSA ABLOY is holding an analysts' meeting at 13.00 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 6476, +44 203 364 5371 or +1 877 679 2993 .

 
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 12.00 on 24 April. 
Q1 2013: 
http://hugin.info/1014/R/1695736/558158.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
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     originality of the information contained therein.

 
Source: ASSA ABLOY via Thomson Reuters ONE 
[HUG#1695736] 
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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