REG - ASSA ABLOY AB - 1st Quarter Results <Origin Href="QuoteRef">ASSAb.ST</Origin>

Assa Abloy ABAnnouncement

27/04/2016 09:45

RNS Number : 4976W
ASSA ABLOY AB (publ)
27 April 2016
Organic growth
+3%


Operating income
+4%


Earnings per share
+1%

A good start to the year for ASSA ABLOY
First quarter
 Net sales amounted to SEK 15,891 M (15,252), an increase of 4%, of which 3% (5) was organic growth and 3% (3) was acquired growth.
 Strong growth in Americas and good growth in EMEAand Entrance Systems.
 Growth in Global Technologies and continued negative growth in Asia Pacific because of China.
 Contracts have been signed for the acquisition of three companies with combined expected annual sales of about SEK750 M.A contract has also been signed for the divestment of the Group's Car Locks business, which has annual sales of about SEK 550 M.
 Operating income (EBIT) amounted to SEK 2,411 M (2,329). The operating margin was 15.2% (15.3).
 Net income amounted to SEK 1,638M (1,616).
 Earnings per share increased by 1% and amounted to SEK 1.47(1.45).
 Cash flow was normal for the season and amounted to SEK 498M (520).
Sales and income
1) Earnings per share has been recalculated for all historical periods as a result of the 3:1 stock split carried out in 2015.

Comments by the President and CEO
"The first quarter of the year showed stable demand for ASSA ABLOY, with increased sales of 4% during the quarter," says Johan Molin, President and CEO. "The operating income increased in line with sales and also improved by 4%.
"Organic growth was good, with a 3% increase for the quarter despite the negative effect of Easter falling in the first quarter this year. The strong sales trend on the US market continued, while Europe and Entrance Systems showed good growth. Sales by Global Technologies were weakly positive, but the downward trend in Asia Pacific continued because of the market situation in China. The emerging markets also remained weak, but with a few bright spots that included eastern Europe and Latin America.
"ASSA ABLOY has once again won recognition for its strength in innovation by winning no fewer than six first prizes for Best Product Innovations at one of the industry's most important exhibitions, ISC West in the USA. There is a clear market trend towards an ever more digitized world in which locks are to an increasing extent connected online. This change is occurring both on the commercial and residential markets. For ASSA ABLOY it is a very beneficial trend since we have consistently built up a technological leadership. 
"During the quarter Lighthouse and ADAEZ were acquired. The acquisition of Lighthouse was especially exciting as a first step in the strategic development of direct sales and service of industrial doors in the American market. Lighthouse is the basis for a new business unit in Entrance Systems which is expected to grow significantly. During the quarter, ADAEZ was also acquired and will be an excellent complement for our range of energy-efficient products directed towards the rapidly rising demand for 'net zero buildings'. 
Operating income for the quarter increased by 4%. The underlying marginal growth remained good as a result of organic growth of 3% together with lower raw-material costs, savings made and price compensation for exchange-rate effects. The operating margin remained at virtually the same level as in the first quarter of 2015 despite negative effects from both exchange-rate effects and dilution due to acquisitions.
"My judgment is that the global economic trend remains weak, with a positive trend in America but low growth in Europe. In addition many of the emerging markets are stagnating. However, our strategy of expanding on the emerging markets remains unchanged, since in the long term they are expected to achieve very good economic growth. We are also continuing our investments in new products, especially in the growth area of electromechanics."


First quarter
The Group's sales totaled SEK 15,891 M (15,252). Organic growth for comparable units was 3% (5). Acquired units contributed 3% (3). Exchange-rate effects had an impact of SEK -299 M (1,892) on sales, that is -2% (16). Operating income before depreciation and amortization, EBITDA, amounted to SEK 2,787 M (2,659). The corresponding EBITDA margin was 17.5% (17.4). The Group's operating income, EBIT, amounted to SEK2,411 M (2,329). The operating margin was 15.2% (15.3).
Net financial items amounted to SEK -201 M (-145). The Group's income before tax was SEK2,209 M (2,184), an improvement of 1% compared with last year. Exchange-rate effects had an impact of SEK-73M (226) on income before tax. The profit margin was 13.9% (14.3). The estimated underlying effective tax rate on an annual basis was 26% (26). Earnings per share amounted to SEK 1.47 (1.45).
Restructuring measures
Payments related to all existing restructuring programs amounted to SEK 95 M in the quarter. The restructuring programs proceeded according to plan and led to a reduction in personnel of 457 people during the quarter and 11,207 people since the projects began. 
At the end of the year, provisions of SEK 457 M remained in the balance sheet for carrying out the programs.
Comments by division
EMEA
Sales for the quarter in EMEA division totaled SEK 4,004 M (3,944), with organic growth of 3% (3). The markets in Scandinavia and eastern Europe showed strong growth. Finland, Benelux, France and Italy showed good growth. Germany and Israel showed growth while sales in Britain and Iberia were stable. Acquired growth amounted to 2% (2). Operating income totaled SEK634M (626) and the corresponding operating margin (EBIT) was 15.8% (15.9). Return on capital employed amounted to 18.6% (19.1). Operating cash flow before interest paid totaled SEK 188 M (217).
Americas
Sales for the quarter in Americas division totaled SEK 3,969 M (3,664), with organic growth of 6% (8). Growth was strong for traditional lock products, Electromechanical products, the residential market, Canada and Mexico. Security doors showed good development and High-security products showed growth. Acquired growth amounted to 3% (2). Operating income totaled SEK 824 M (772) and the operating margin (EBIT) was 20.8% (21.1). Return on capital employed amounted to 23.0% (22.1). Operating cash flow before interest paid totaled SEK271 M (156).
Asia Pacific
Sales for the quarter in Asia Pacific division totaled SEK1,758 M (1,847), with organic growth of -3% (-3). New Zealand and South-East Asia showed strong growth. Sales levels weakened in Australia and South Korea. China continued to show a negative sales trend due to low domestic demand. Acquired growth amounted to 2% (10). Operating incometotaled SEK174M (189), and the corresponding operating margin (EBIT) was 9.9% (10.2). Return on capital employed amounted to 5.7% (7.1). Operating cash flow before interest paid totaled SEK-221 M (-212).
Global Technologies
Sales for the quarter in Global Technologies division totaled SEK 2,147 M (2,071), with organic growth of 1% (12). Quantum Secure, AdvanIDe and Identification Technology (IDT) showed strong growth within HID Global. Access Control (PACS) showed growth while Government ID recorded weakening sales. Hospitality showed growth and continued good earnings performance. Acquired growth amounted to 4% (2). The division's operating income amounted to SEK363 M (360), with an operating margin (EBIT) of 16.9% (17.4). Return on capital employed amounted to 14.7% (16.3). Operating cash flow before interest paid totaled SEK110 M (130).
Entrance Systems
Sales for the quarter in Entrance Systems division totaled SEK 4,291 M (4,041), with organic growth of 3% (5). Sales for 4Front and Amarr increased strongly while growth for Door automation and High-speed doors was good. European industrial doors showed a stable sales level. Sales weakened for Ditec and for the residential market in Europe. Acquired growth amounted to 5% (0). Operating income totaled SEK529 M (486), with an operating margin (EBIT) was 12.3% (12.0). Return on capital employed amounted to 12.3% (11.6). Operating cash flow before interest paid totaled SEK403 M (462).
Acquisitions and disposals
A total of three acquisitions were consolidated during the quarter. The combined acquisition price for the companies acquired this year amounted to SEK 1,094 M, and preliminary acquisition analyses indicate that goodwill and other intangible assets with indefinite useful life amount to SEK785 M. The acquisition price is adjusted for acquired net debt and estimated deferred considerations. Estimated deferred considerations amount to SEK123 M. 


A decision has been taken to initiate the selling of the Group's Car Locks business. A contract for the sale was signed with the Japanese company Alpha Corporation in March. The transaction is expected to be completed in the second quarter of 2016 and is dependent on approval by the appropriate authorities. From 1 January the business has been reclassified under 'Assets held for sale' in accordance with IFRS 5. As a result of the reclassification, the quarter's sales fell by SEK 144 M compared with the corresponding quarter last year. 
Sustainable development
ASSA ABLOY's Sustainability Report for 2015 was published on 23 March 2016. The majority of the key indicators are continuing to move in a positive direction. During the year, the number of certified Environmental Product Declarations increased to 250. In relation to the size of the entire business, the energy and water consumption showed significant improvements compared with last year. The Group's total emissions of greenhouse gases fell by 13%, mostly related to the introduction of new production technology in China.
The number of units certified in accordance with ISO 14001 and equivalent environmental certification systems increased during the year to 119 (111). 890 sustainability reviews were carried out in low-cost countries during 2015. By the end of the year, 1,362 active suppliers had achieved minimum requirements in the areas of sustainability and quality and were classed as Approved. 
Parent company
Other operating income for the Parent company ASSA ABLOY AB totaled SEK401 M (244) for the first quarter. Operating income amounted to
SEK -116 M (-232). Investments in tangible and intangible assets totaled SEK
2 M (2). Liquidity is good and the equity ratio was 45.4% (45.2).
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 92-97 of the 2015 Annual Report.
This Interim Reportwas 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 total amount in tables and statements might not always summarize as there are rounding differences. The aim is to have each line item corresponding to the source and it might therefore be rounding differences in the total.
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 2015 Annual Report.
Review
The Company's Auditors have not carried out any review of this Report for the first quarter of 2016.
Stockholm, 27April 2016
Johan Molin
President and CEO


Financial information
The Interim Report for the second quarter will be published on 19 July 2016.
The Interim Report for the third quarter will be published on 21 October 2016.
A capital markets day will be held on 16 November 2016 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
ASSA ABLOY is holding an analysts' meeting at10.00 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 +1877 679 2993.
ASSA ABLOY discloses the information provided herein pursuant to the Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 08.00 CET on 27 April.



ASSA ABLOY AB (publ)
Box 703 40
107 23 Stockholm 
Visiting address
Klarabergsviadukten 90, Stockholm, Sweden
Tel +46 (0)8506485 00
Fax +46 (0)8506485 85
www.assaabloy.com
Corporate identity number: 556059-3575
No. 6/2016



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