TIDM77BL
RNS Number : 3746D
ASSA ABLOY AB (publ)
26 April 2017
Organic growth
+6%
Operating income
+16%
Earnings per
share
+17%
A strong start to 2017
First quarter
-- Sales increased by 14% to SEK 18,142 M (15,891), with organic growth
of 6% (3). Acquisitions contributed 3%
-- Strong growth was shown by Global Technologies, Entrance
Systems, Americas and EMEA, and good growth by Asia Pacific
-- Contracts have been signed for the acquisition of seven
companies with expected combined annual sales of about SEK 700
M
-- Operating income (EBIT) increased by 16% and totaled SEK
2,787 M (2,411), which represents an operating margin of 15.4%
(15.2)
-- Net income amounted to SEK 1,918 M (1,638)
-- Earnings per share amounted to SEK 1.73 (1.47)
-- Operating cash flow amounted to SEK 824 M (498).
Sales and income
First quarter
================ ========
2016 2017 <DELTA>
-------------------------- ------- ------- --------
Sales, SEK M 15,891 18,142 14%
Of which:
Organic growth(1) 400 1,022 6%
Acquisitions and
divestments 490 448 3%
Exchange rate effects(1) -251 780 5%
Operating income
(EBIT), SEK M 2,411 2,787 16%
Operating margin
(EBIT), % 15.2% 15.4%
Income before tax,
SEK M 2,209 2,593 17%
Net income, SEK
M 1,638 1,918 17%
Operating cash
flow, SEK M 498 824 65%
Earnings per share,
SEK 1.47 1.73 17%
(1) The sales components Organic growth and exchange rate
effects has
been restated for the first quarter 2016. No effect on sales
numbers.
Comments by the President and CEO
"2017 started well for ASSA ABLOY with a strong organic growth
of 6% and
with growth in all divisions," says Johan Molin, President and
CEO. The mature markets continued to achieve a good performance,
with strong growth in many of our key markets such as the USA,
Scandinavia, Britain and Germany. In China, where the trend has
been very negative, we saw a stabilization of demand. In the Middle
East and Brazil sales fell, however. It should be noted that the
quarter had two extra days as a result of the late Easter, which
contributed to the strong sales.
"We saw the strongest performance in Global Technologies with a
full 9% organic growth. Sales growth for electromechanical lock
solutions continues to be very good in all divisions and on nearly
all markets, which is very much due to our technological
leadership. We saw confirmation of this at ISC WEST, the USA's most
important security exhibition, where ASSA ABLOY won no fewer than
ten prizes for best innovations.
"The applications of virtual keys are continuing to develop
rapidly - both on the private residential market through so-called
Connected Home solutions using mobile apps and on the commercial
market in hotel locks, access control, virtual identities and
trusted transactions, for example.
"During the quarter contracts were signed for the acquisition of
seven companies, including Jerith. The company complements and
strengthens our market-leading position in Perimeter Control in the
USA. Jerith is a leading supplier of aluminum fencing for
residential, commercial and industrial applications.
"Operating income for the quarter increased by a full 16% and
amounted to SEK 2,787 M, with an operating margin of 15.4% (15.2).
The margin also moved upward in all divisions apart from Asia
Pacific in spite of greatly increased material prices. Normal price
adjustments have been made to compensate for these. Operating cash
flow improved by 65%, although the first quarter is seasonally
weak.
"My judgment is that the global economic trend has improved to
some degree. On most markets in North and South America and in
parts of Europe there is a positive trend, but on some markets,
chiefly in Asia and the Middle East, the trend is weak. However,
our strategy of expanding our market presence, even on the emerging
markets, remains unchanged. We are also continuing our investments
in new products, especially in the growth area of
electromechanics."
First quarter
The Group's sales increased by 14% to SEK 18,142 M (15,891).
Organic growth for comparable units amounted to 6% (3).
Acquisitions and divestments were 3%. Exchange-rate effects
affected sales by 5%. Operating income before depreciation, EBITDA,
amounted to SEK 3,208 M (2,787). The corresponding EBITDA margin
was 17.7% (17.5).
The Group's operating income, EBIT, amounted to SEK 2,787 M
(2,411), an increase of 16%. The operating margin was 15.4%
(15.2).
Net financial items amounted to SEK -195 M (-201). The Group's
income
before tax was SEK 2,593 M (2,209), an increase of 17% compared
with last year. Exchange-rate effects had an impact of SEK 126 M
(-73) on income before tax. The profit margin was 14.3% (13.9). The
underlying estimated effective
tax rate on an annual basis was 26% (26). Earnings per share
amounted to SEK 1.73 (1.47), an increase of 17% compared with last
year.
Restructuring measures
Payments related to all restructuring programs amounted to SEK
84 M (95)
in the quarter. The restructuring programs proceeded according
to plan and
led to a reduction in personnel of 157 people during the quarter
and 12,319 people since the projects began in 2006. At the end of
the quarter provisions
of SEK 1,484 M remained in the balance sheet for carrying out
the programs.
Comments by division
EMEA
Sales for the quarter in EMEA division totaled SEK 4,404 M
(4,004), with organic growth of 5% (3). Scandinavia, Finland,
Britain, Germany and southern Europe showed strong growth. France
and Eastern Europe had good growth while sales in Benelux were
unchanged. As expected, the Middle East had continued negative
sales development. The positive trend for electromechanical
products continued. Acquired growth was 3%. Exchange-rate effects
on sales were 2%. Operating income totaled SEK 718 M (634), which
represents an operating margin (EBIT) of 16.3% (15.8). Return on
capital employed amounted to 20.0% (18.6). Operating cash flow
before interest paid totaled SEK 387 M (188).
Americas
Sales for the quarter in Americas division totaled SEK 4,566 M
(3,969), with organic growth of 7% (6). Growth was strong for
Security doors, Security fencing and the Private residential market
in the USA, and in Mexico and South America apart from Brazil.
Sales growth was good for Traditional lock products and
High-security products in the USA and in Canada. Brazil continued
to show
a negative sales trend. The positive trend for electromechanical
products continued. Acquired growth was 0%. Exchange-rate effects
on sales were 8%. Operating income totaled SEK 961 M (824), which
represents an operating margin (EBIT) of 21.0% (20.8). Return on
capital employed amounted to 24.2% (23.0). Operating cash flow
before interest paid totaled SEK 197 M (271).
Asia Pacific
Sales for the quarter in Asia Pacific division totaled SEK 1,917
M (1,758), with organic growth of 3% (-5). There was strong growth
in Pacific, South Korea, South-East Asia and Japan and for digital
door locks, while sales in China were unchanged. Acquired growth
was 0%. Exchange-rate effects on sales were 6%. Operating income
totaled SEK 151 M (174), which represents an operating margin
(EBIT) of 7.9% (9.9). Return on capital employed amounted to 5.0%
(5.7). Operating cash flow before interest paid totaled SEK -154 M
(-221).
Global Technologies
Sales for the quarter in Global Technologies division totaled
SEK 2,481 M (2,147), with organic growth of 9% (1). Access control,
Logical access, Secure issuance and Government ID achieved strong
growth within HID Global. Project business AdvanIDe grew while
Identification technology had negative growth. Hospitality showed
strong growth. Acquired growth amounted to 1%. Exchange-rate
effects on sales were 6%. Operating income amounted to SEK 422 M
(363), which represents an operating margin (EBIT) of 17.0% (16.9).
Return on capital employed amounted to 14.6% (14.7). Operating cash
flow before interest paid totaled SEK 57 M (110).
Entrance Systems
Sales for the quarter in Entrance Systems division totaled SEK
5,087 M (4,291), with organic growth of 7% (3). Door automation,
High-speed doors, Door components and Industrial and garage doors
in the USA showed strong growth. Industrial doors in Europe showed
good growth. Acquired growth amounted
to 7%. Exchange-rate effects on sales were 5%. Operating income
totaled SEK 638 M (529), which represents an operating margin
(EBIT) of 12.5% (12.3). Return on capital employed amounted to
13.3% (12.3). Operating cash flow before interest paid totaled SEK
660 M (403).
Acquisitions and divestments
A total of five acquisitions were consolidated during the
quarter. The combined acquisition price for the companies acquired
during the year amounted to SEK 400 M, and preliminary acquisition
analyses indicate that goodwill and
other intangible assets with indefinite useful life amount to
SEK 317 M. The acquisition price is adjusted for acquired net debt
and estimated deferred considerations. Estimated deferred
considerations amount to SEK 103 M.
On 18 April it was announced that ASSA ABLOY had acquired Jerith
in the USA, a leading American supplier of aluminum fencing. The
company has 75 employees and its sales in 2017 are expected to
amount to about SEK 200 M.
Sustainable development
ASSA ABLOY's Sustainability Report for 2016 was published on 22
March 2017. The Report shows that the Group's key indicators are
continuing to move in
a positive direction. During 2016 its energy efficiency was
improved by 12%.
The Group's total emissions of greenhouse gases fell by 24% as a
result of the introduction of new production technology and the
improvement activities carried out. The number of units covered by
ISO 14001 certification or having other certifiable environmental
management systems increased from 121 to 124. This means that 76%
of the Group's factory workers now work in factories with
environmental management systems, compared with 73% in 2015.
The frequency of accidents was reduced by 22% in 2016. A new
Group-wide management system for Health and Safety was developed
during the year, and the introduction of the new management system
began in Q1 2017.
Parent company
Other operating income for the Parent company ASSA ABLOY AB
totaled SEK 498 M (401) for the first quarter. Operating income for
the same period amounted to SEK -91 M (-116). Investments in
tangible and intangible assets totaled SEK 5 M (2). Liquidity is
good and the equity ratio was 45.8% (45.4).
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 68-73 of the 2016
Annual Report. This 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'.
The new standards, IFRS 9 (Financial instruments) and IFRS 15
(Revenue from Contracts with Customers) are to be applied from the
financial year beginning
1 January 2018, while IFRS 16 (Leases) takes effect on 1 January
2019. Earlier application is allowed for all standards. During 2016
a major project was initiated relating to the implementation of
IFRS 15. Although the impact of the new standard as of 31 March
2017 has not yet been fully investigated, the Group's current
assessment is that the standard will not have a material impact on
the consolidated financial statements.
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 15 of
this Quarterly 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 2016 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 2016 Annual Report.
Review
The Company's Auditors have not carried out any review of this
Report for the first quarter of 2017.
Stockholm, 26 April 2017
Johan Molin
President and CEO
Financial information
The Interim Report for the second quarter of 2017 will be
published on 19 July 2017.
The Interim Report for the third quarter of 2017 will be
published on 20 October 2017.
A capital markets day will be held on 15 November 2017 in
Stockholm, Sweden.
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
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/3746D_-2017-4-26.pdf
ASSA ABLOY is holding an analysts' meeting at 10.00 today
at Operaterrassen in Stockholm, Sweden.
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 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 CEST on 26 April 2017.
ASSA ABLOY AB Tel +46 (0)8 506
(publ) 485 00
Box 703 40 Fax +46 (0)8 506
107 23 Stockholm 485 85
Visiting address www.assaabloy.com No. 07/2017
Klarabergsviadukten
90, Stockholm, Corporate identity
Sweden 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
Definitions of financial performance measures
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFOKADBOBKKCQB
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April 26, 2017 03:51 ET (07:51 GMT)
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