Back to growth with increased earnings for ASSA ABLOY

Back to growth with increased earnings for ASSA ABLOY 
STOCKHOLM, SWEDEN -- (Marketwired) -- 07/19/13 --    * Sales
increased by 2%, with organic growth of 3%, and totaled SEK 12,239 M  
(11,997). 
* Strong growth in Americas and Global Technologies and good growth
in Asia 
Pacific. 
* Weak but stable development in EMEA and Entrance Systems. 
* Operating income (EBIT) increased by 5% and amounted to SEK 1,970
M     (1,885). 
The operating margin was 16.1% (15.7). 
* Net income amounted to SEK 1,374 M (1,306). 
* Earnings per share rose by 5% to SEK 3.71 (3.54). 
* Cash flow remained good and totaled SEK 1,589 M (1,435). 
SALES AND INCOME 


 
 
                                    Second quarter       First half-year
                               --------------------------------------------
                                  2012   2013   Change   2012   2013 Change
---------------------------------------------------------------------------
 Sales, SEK M                   11,997 12,239      +2% 22,835 23,108    +1%
 
   of which,
 
   Organic growth                                  +3%                  +1%
 
   Acquisitions                                    +4%                  +4%
 
   Exchange-rate effects                 -509      -5%          -888    -4%
 
 Operating income (EBIT), SEK M  1,885  1,970      +5%  3,540  3,632    +3%
 
 Operating margin (EBIT), %       15.7   16.1            15.5   15.7
 
 Income before tax, SEK M        1,692  1,832      +8%  3,182  3,365    +6%
 
 Net income, SEK M               1,306  1,374      +5%  2,452  2,512    +2%
 
 Operating cash flow, SEK M      1,435  1,589     +11%  1,918  2,087    +9%
 
 Earnings per share EPS), SEK     3.54   3.71      +5%   6.65   6.78    +2%

 
COMMENTS BY THE PRESIDENT AND CEO 
"I am pleased that the organic growth has returned this quarter,"
says Johan
Molin, President and CEO. "It is particularly pleasing that
North and South America and Asia showed good growth, while Europe
stabilized at around zero.
Total growth for the Group was 7% in local
currencies, made up of 3% organic
growth and 4% acquired growth.
However, exchange-rate effects were strongly negative, at -5%, which
meant that overall growth was kept to 2%. 
"Both earnings and margins continued to improve
 as a result of a
increased share
of new products and major savings and efficiency
measures in production. Especially satisfying are the strong earnings
from EMEA and Entrance Systems
despite their lack of growth, at the
same time as Americas and Global Technologies showed strongly rising
margins. 
"Activity on the acquisition front remained very high, with several
interesting
acquisitions under discussion. However, only two minor
acquisitions, which complement Entrance Systems' local presence, came
to completion during the quarter. 
"My assessment is that the outlook 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." 
SECOND QUARTER 
The Group's sales totaled SEK 12,239 M (11,997), an increase of 2%
compared with
the second quarter of 2012. Organic growth for
comparable units was 3% (3). Acquired units contributed 4% (6).
Exchange-rate effects had an impact of SEK
-509 M on sales, that is
-5% (5). 
Operating income before depreciation, EBITDA, amounted to SEK 2,226 M
(2,157).
The corresponding EBITDA margin was 18.2% (18.0). The
Group's operating income,
EBIT, amounted to SEK 1,970 M (1,885), a
rise of 5%. The operating margin was
16.1% (15.7). 
Net financial items amounted to SEK -138 M (-192). The Group's income
before tax amounted to SEK 1,832 M (1,692), an improvement of 8%
compared with the previous
year. Exchange-rate effects had an impact
of SEK -94 M on the Group's income
before tax. The profit margin was
15.0% (14.1). The underlying effective tax
rate on an annual basis
was estimated to be 25%. Earnings per share amounted to SEK 3.71
(3.54), an increase of 5%. 
FIRST HALF-YEAR 
Sales for the first half of 2013 totaled SEK 23,108 M (22,835),
representing an increase of 1%. Organic growth was 1% (3). Acquired
units contributed 4% (12).
Exchange-rate effects had an impact of SEK
-888 M on sales, that is -4% (4),
compared with the first half of
2012. 
Operating income before depreciation, EBITDA, for the half-year
amounted to SEK
4,138 M (4,086). The corresponding margin was 17.9%
(17.9). The Group's operating income, EBIT, amounted to SEK 3,632 M
(3,540), which was an increase
of 3%. The corresponding EBIT
operating margin was 15.7% (15.5). 
Earnings per share for the first half-year increased to SEK 6.78
(6.65), a rise
of 2%. Operating cash flow for the half-year totaled
SEK 2,087 M (1,918). 
RESTRUCTURING MEASURES 
Payments related to all restructuring programs amounted to SEK 109 M
in the quarter. The restructuring programs proceeded according to
plan and led to a
reduction in personnel of 91 people during the
quarter and 6,957 people since
the projects began. 
At the end of the quarter provisions of SEK 793 M remained in the
balance sheet
for carrying out the programs. 
FINANCING 
The Group's credit facility (RCF) was renewed during the second
quarter. The
value of the facility has been reduced from EUR 1,100 M
to EUR 900 M. The duration has been set at five years with the option
of extension. The number of banks taking part now totals 14. The
credit is primarily a strategic loan reserve and at present is
completely unutilized. 
COMMENTS BY DIVISION 
EMEA 
Sales for the quarter in EMEA division totaled SEK 3,285 M (3,379),
with organic
growth of 0% (0). The market situation remained weak but
stable during the quarter. Growth was good in Africa, the Middle
East, eastern Europe, the United
Kingdom and Scandinavia. Sales in
Germany were stable but growth was negative in Finland, France, the
Netherlands and southern Europe. Acquired growth amounted
to 1%.
Operating income totaled SEK 511 M (533), which represented an
operating
margin (EBIT) of 15.6% (15.8). Return on capital employed
amounted to 18.9% (20.6). Operating cash flow before interest paid
totaled SEK 422 M (430). 
AMERICAS 
Sales for the quarter in Americas division totaled SEK 2,620 M
(2,548), with
organic growth of 8% (5). The sales trends for
high-security products, security
doors and the residential market
were strong, and very strong for electromechanical products. Canada
and Mexico showed a weak negative trend while
South America was
stable. Acquired growth amounted to 1%. Operating income totaled SEK
571 M (540) and the operating margin was 21.8% (21.2). Return
on
capital employed amounted to 25.5% (24.1). Operating cash flow
before interest
paid totaled SEK 507 M (500). 
ASIA PACIFIC 
Sales for the quarter in Asia Pacific division totaled SEK 1,904 M
(1,892), with
organic growth of 3% (5). Growth was strong in Korea,
driven by export successes
for digital door-locks. China showed
continuing weak growth as a result of rather lower activity in new
building, while the sales trend in Australia was
stable. Acquired
growth amounted to 2%. Operating income totaled SEK 269 M (271),
representing an operating margin (EBIT) of 14.1% (14.3). The
quarter's
return on capital employed amounted to 20.4% (20.8).
Operating cash flow before
interest paid totaled SEK 349 M (373). 
GLOBAL TECHNOLOGIES 
Sales for the quarter in Global Technologies division totaled SEK
1,711 M (1,701), with organic growth of 6% (11). HID continued to
show strong growth in Access Control, Secure Issuance of smart cards
and project sales. New-product launches and innovations contributed
to this positive trend. However, Government ID and Identification
Technology had negative growth. Hospitality showed strong
growth with
good profitability. Acquired growth amounted to 0%. The
division's
operating income amounted to SEK 304 M (289), with an
operating margin (EBIT) of 17.8% (17.0). Return on capital employed
amounted to 19.8% (17.5). Operating
cash flow before interest paid
totaled SEK 276 M (273). 
ENTRANCE SYSTEMS 
Sales for the quarter in Entrance Systems division totaled SEK 2,960
M (2,725),
with organic growth of -1% (-1). Europe continued to be
weak while Americas and
Asia showed continued growth. Industrial
doors and high-speed doors showed continued good growth. Door
automatics reported unchanged sales. Acquired growth
amounted to 14%.
Operating income totaled SEK 400 M (354), giving an operating
margin
of 13.5% (13.0). Return on capital employed amounted to 11.6%
(10.8).
Operating cash flow before interest paid totaled SEK 293 M
(293). 
ACQUISITIONS AND DIVESTMENTS 
During the first quarter three minor acquisitions were consolidated.
The combined acquisition price for the five acquisitions completed in
the half-year period amounted to SEK 191 M, and preliminary
acquisition analyses indicate that goodwill and other intangible
assets with indefinite useful life amount to SEK 158 M. The
acquisition price is adjusted for acquired net debt and
estimated
earn-outs. Estimated earn-outs amount to SEK 79 M. In May
2013 the joint-venture contract for Baodean in China was brought to
an end when ASSA ABLOY acquired the outstanding 30% of shares. 
SUSTAINABLE DEVELOPMENT 
ASSA ABLOY published its Sustainability Report for 2012 in April
2013, and the
Report indicates that the majority of key indicators
are continuing to move in a positive direction. 
One high-priority area is the evaluation of the Group's suppliers in
low-cost countries. 795 supplier audits were conducted in 2012,
compared with 493 audits in the previous year. Originally the
supplier audits mainly concerned suppliers in China, but the program
has been progressively expanded and now covers all low-cost
countries. To be able to evaluate the supplier bases in South and
Central
America effectively, more than 20 ASSA ABLOY employed
auditors had been trained
in Mexico and Colombia by the end of the
second quarter of 2013. Already suppliers representing 15 percent of
procurement value in South and Central America have been evaluated in
accordance with the Group's standardized process. 
PARENT COMPANY 
Other operating income for the Parent company ASSA ABLOY AB totaled
SEK 988 M
(898) for the half-year. Income before tax amounted to SEK
1,201 M (966). Investments in tangible and intangible assets totaled
SEK 80 M (9). Liquidity is good and the equity ratio was 47.1%
(48.2). 
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 16 M and SEK 53 M
respectively. The tax expense for the quarter and the full
year 2012
increased by SEK 6 M and SEK 6 M respectively. Net profit for the
quarter and the full year 2012 increased by SEK 10 M and SEK 47 M
respectively.
Earnings per share after dilution for the quarter and
the full year 2012 increased by SEK 0.03 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 24 April 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. 
The Board of Directors and the President and CEO
declare that this half-year report gives an accurate picture of the
Parent company's and the Group's
operations, position and income and
describes significant risks and uncertainty
factors faced by the
Parent company an
d the companies making up the Group. 


                         Stockholm, 18 July 2013
 
      Lars Renstroem           Carl Douglas        Birgitta Klasen
 
        Chairman              Vice Chairman           Board member
 
      Eva Lindqvist            Johan Molin        Sven-Christer Nilsson
 
      Board member          President and CEO         Board member
 
      Jan Svensson           Ulrik Svensson          Kurt Hellstroem
 
      Board member            Board member       Employee representative
 
      Mats Persson
 
 Employee representative

 
REVIEW REPORT 
Introduction 
We have reviewed this Report for the period 1 January to 30 June 2013
for ASSA
ABLOY AB (publ). The Board of Directors and the CEO are
responsible for the preparation and presentation of this Interim
Report in accordance with IAS 34
and the Swedish Annual Accounts Act.
Our responsibility is to express a conclusion on this Interim Report
based on our review. 
Scope of Review 
We have conducted our review in accordance with the Swedish Standard
on Review
Engagements SOeG 2410, 'Review of Interim Report Performed
by the Independent
Auditor of the Entity'. A review consists of
making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope
than an audit
conducted in accordance with International Standards on
Auditing,
ISA, and other generally accepted auditing standards in
Sweden. The procedures
performed in a review do not enable us to
obtain assurance that we would become
aware of all significant
matters that might be identified in an audit. Accordingly, we do not
express an audit opinion. 
Conclusion 
Based on our review, nothing has come to our attention that causes us
to believe
that the Interim Report is not prepared, in all material
respects, in accordance
with IAS 34 and the Swedish Annual Accounts
Act, regarding the Group, and with
the Swedish Annual Accounts Act,
regarding the Parent company. 
Stockholm, 18 July 2013 
PricewaterhouseCoopers AB 
Bo Karlsson 
Authorized Public Accountant 
Auditor in charge 
FINANCIAL INFORMATION 
The Interim Report for the third quarter will be published on 28
October 2013. 
ASSA ABLOY is holding an analysts' meeting at
11.00 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 08.00 on 19 July. 
Q2 2013: http://hugin.info/1014/R/1717541/571151.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#1717541] 
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
 
 
Press spacebar to pause and continue. Press esc to stop.