REG - ASSA ABLOY AB - 1st Quarter Results

Assa Abloy ABAnnouncement

26/04/2018 08:35

2018-04-26T07:33:22.208Zreuters.comtag:reuters.com,2018-04-26:newsml_RSZ2060Ma:13TXT
This file is provided for EAP sample purposes only; it's structure and detail are subject to change, and should not be used as a definitive reference for actual development and processing.2018-04-26T07:33:22.208Z2018-04-26T07:33:22.208Z____UCDP:parsn_lse_10.54.4.69_1.2.37102:2019-05-26T07:33:22.208Z3RSZ2060MaREG - ASSA ABLOY AB  - 1st Quarter ResultsConstruction Supplies & Fixtures (NEC) (TRBC level 5)Homebuilding & Construction Supplies (TRBC level 3)Industrials (TRBC level 1)Industrial Goods (TRBC level 2)Machinery, Tools, Heavy Vehicles, Trains & Ships (TRBC level 3)Consumer Cyclicals (TRBC level 1)Cyclical Consumer Products (TRBC level 2)LEGACY: Industrials (TRBC)LEGACY: Industrial Goods (TRBC)LEGACY: Machinery, Equipment & Components (TRBC)Industrial Machinery & Equipment (TRBC level 4)Construction Supplies & Fixtures (TRBC level 4)LEGACY: Cyclical Consumer Goods & Services (TRBC)LEGACY: Cyclical Consumer Products (TRBC)ScandinaviaWestern EuropeSwedenUnited KingdomEuropeNordic StatesSuggested SourcesConsumer Products and ServicesConsumer ProductsNews AnnouncementsRegulatory Corporate News AnnouncementsCompany NewsEurope daily earnings hits & missesAssa Abloy AB








RNS Number : 2060M
ASSA ABLOY AB (publ)
26 April 2018
 











Organic growth




+4%
















Operating income




+2%
















Earnings per share




+2%










A good start to the year     
First quarter
●       Net sales increased by 2% to SEK 18,550 M (18,142), with organic growth of 4% (6) and acquired net growth of 2% (3)
●       Strong growth was shown by Global Technologies and Entrance Systems and good growth by Asia Pacific, EMEA and Americas
●       Operating income (EBIT) increased by 2% and amounted to SEK 2,829 M (2,787), corresponding to an operating margin of 15.3% (15.4)
●       Net income amounted to SEK 1,964 M (1,918)
●       Earnings per share amounted to SEK 1.77 (1.73)
●       Operating cash flow amounted to SEK 575 M (824).
 
 
Sales and income








Full year














First quarter


















































2016


2017






Δ






2017


2018


Δ




Sales, SEK M


71,293


76,137






7%






18,142


18,550


2%




Of which:




































Organic growth


1,428


2,834






4%






1,022


705


4%




Acquisitions and divestments


1,967


1,753






2%






448


268


2%




Exchange-rate effects


-201


257






1%






780


-565


-4%




Operating income1) (EBIT), SEK M


11,254


12,341






10%






2,787


2,829


2%




Operating margin1) (EBITA), %


16.1%


16.5%














15.6%


15.7%








Operating margin1) (EBIT), %


15.8%


16.2%














15.4%


15.3%








Income before tax1), SEK M


10,549


11,673






11%






2,593


2,654


2%




Net income1), SEK M


7,874 


8,635 






10%






1,918 


1,964


2%




Operating cash flow, SEK M


10,467


10,929






4%






824


575


-30%




Earnings per share1), SEK


7.09 


7.77 






10%






1.73 


1.77


2%




1) Excluding costs for a new restructuring program for the full year 2016, totaling 

SEK -1,597 M before tax, corresponding to SEK -1,221 M after tax.




Comments by the President and CEO

A good start to the year
The year took off with good organic growth of 4% in the first quarter, despite the negative calendar effect of two trading days less due to an early Easter. We achieved strong or good growth in all divisions. Global Technologies and Entrance Systems reported strong organic growth of 6% and 5% respectively. EMEA and Americas reported 3% organic growth and Asia Pacific reported 4%. Our new products contributed strongly, with high demand for electromechanical locks and for access control solutions.
The first quarter's operating income increased by 2% year-on-year and amounted to SEK 2,829 M, corresponding to an operating margin of 15.3%. The Group's underlying margin improved but was diluted by the acquisitions.  
Operating cash flow was seasonally low totaling SEK 575 M for the quarter. We are continuing to focus on cost-efficiency and to deliver on our current restructuring program and, as previously communicated, we expect to announce a new program by the end of 2018.
First impressions
I spent my first months at ASSA ABLOY on the move, visiting the different Group locations to meet our people, our partners and our customers as well as to get acquainted with the sites, the corporate culture and the business. So far, I have visited 18 of our main locations and I am impressed by the competence, the innovation capacity and the technology driven culture. There have been several changes in ASSA ABLOYs executive team over the last 12 months. I am convinced that we have a strong team in place, equipped with energy and ambition to continue the Group's successful journey. I am both eager and humble in taking on the mission to further develop ASSA ABLOY.
Strong market position
As the new CEO, it is very encouraging to see our strong market position. Product and innovation leadership, backed by the largest installed base of door opening solutions in the world, gives us a very strong platform to grow from. I am confident that we will create new business opportunities through our new products and solutions, and that we have seen only the initial phase of the market transition and technology shift from mechanical solutions to digital, connected products and services.
Strategic direction
ASSA ABLOY's strategy, with focus on market presence, product leadership and cost efficiency, has been very successful for many years. In combination with a strong acquisition agenda, this strategy has generated significant long-term value. I look forward to further developing this successful strategy together with my colleagues.
 
Stockholm, 26 April 2018
 
 
Nico Delvaux

President and CEO 




 
First quarter

The Group's sales increased by 2% to SEK 18,550 M (18,142). Organic growth amounted to 4% (6). Acquisitions and divestments were 2% (3), of which 3% (3) were acquisitions and -1% (0) were divestments. Exchange-rates affected sales by -4% (5).
The Group's operating income, EBIT amounted to SEK 2,829 M (2,787) an increase of 2%. The operating margin was 15.3% (15.4). Operating income before amortizations from acquisitions, EBITA amounted to SEK 2,921 M (2,839). The corresponding EBITA margin was 15.7% (15.6).
Net financial items amounted to SEK -175 M (-195). The Group's income

before tax was SEK 2,654 M (2,593), an increase of 2% compared with last year. Exchange-rates had an impact of SEK -80 M (126) on income before tax. The profit margin was 14.3% (14.3).
The estimated effective tax rate on an annual basis was 26% (26). Earnings per share amounted to SEK 1.77 (1.73), an increase of 2% compared to last year.
Restructuring measures
Payments related to all restructuring programs amounted to SEK 173 M (84)

in the quarter. The restructuring programs proceeded according to plan and

led to a reduction in personnel of 508 people during the quarter and 14,072 people since the projects began in 2006. At the end of the quarter provisions of SEK 795 M remained in the balance sheet for carrying out the programs.
The planning of a new restructuring program has begun. The launch is scheduled for the fourth quarter and the program is expected to take place over a period of three years. The cost of the restructuring is estimated to be in line with previous programs, with a payback time of around three years.
Organization
Lucas Boselli has been appointed Executive Vice President and Head of Americas Division with effect from 2 April 2018. He succeeds Thanasis Molokotos, who has decided to leave the group. Lucas Boselli has worked at ASSA ABLOY since 2010 and in recent years has held the position of Head of ASSA ABLOY Central and South America in the Americas Division. Lucas Boselli is an engineer and holds a degree from Virginia Polytechnic Institute and State University in the USA.
Comments by division
EMEA
Sales for the quarter in EMEA division totaled SEK 4,775 M (4,404), with organic growth of 3% (5). Growth was strong in the UK, France and Eastern Europe, and was good in Scandinavia and Germany. Finland, Southern Europe and Africa/ Middle East also showed growth while Benelux had negative sales development. Electromechanical products showed strong growth, and demand was especially strong for smart door locks for the private residential market. Acquired growth net was 3%. Operating income totaled SEK 764 M (718), which represents an operating margin (EBIT) of 16.0% (16.3).

Return on capital employed amounted to 20.0% (20.0). Operating cash flow before interest paid totaled SEK 262 M (387).
Americas
Sales for the quarter in Americas division totaled SEK 4,354 M (4,566), with organic growth of 3% (7). Growth was strong for Electromechanical and High-security products, the Private residential market in the USA and for Canada. Good growth was shown by Perimeter Security, Mexico and South America apart from Brazil and Colombia. Traditional lock products also showed growth while Security Doors, Brazil and Colombia had negative sales development. Acquired growth was 1%. Operating income totaled SEK 845 M (961), which represents an operating margin (EBIT) of 19.4% (21.0). Return on capital employed amounted to 21.0% (24.2). Operating cash flow before interest paid totaled SEK 241 M (197).
Asia Pacific
Sales for the quarter in Asia Pacific division totaled SEK 1,959 M (1,917), with organic growth of 4% (3). Strong growth was achieved in South Korea and Japan, and sales were stable in Pacific and South Asia. Sales in China showed growth for lock products while sales of doors continued to decrease. Smart door-locks grew strongly in the region. Acquired growth was 1%. Operating income totaled SEK 154 M (151), which represents an operating margin (EBIT) of 7.9% (7.9). Return on capital employed amounted to 4.9% (5.0). Operating cash flow before interest paid totaled SEK -158 M (-154).
Global Technologies
Sales for the quarter in Global Technologies division totaled SEK 2,477 M (2,481), with organic growth of 6% (9). Physical Access control and Identification technology had strong growth within HID Global, Secure issuance showed growth while Citizen ID and Logical access had negative sales development. Hospitality showed continued strong growth. Sales of mobile key solutions continued strongly. Acquired growth net was -1%. Operating income totaled SEK 466 M (422), which represents an operating margin (EBIT) of 18.8% (17.0). Return on capital employed amounted to 11.6% (14.6). Operating cash flow before interest paid totaled SEK 201 M (57).
Entrance Systems
Sales for the quarter in Entrance Systems division totaled SEK 5,322 M (5,087), with organic growth of 5% (7). High-speed doors, US Garage doors, Door components and Solutions for warehouses and logistics in the USA showed strong growth. Pedestrian doors had good growth and Industrial doors showed growth. EU residential doors showed negative sales growth. Acquired growth was 2%. Operating income totaled SEK 710 M (638), which represents an operating margin (EBIT) of 13.3% (12.5). Return on capital employed amounted to 14.5% (13.3). Operating cash flow before interest paid totaled SEK 379 M (660).
Acquisitions and divestments
A total of four acquisitions were consolidated during the quarter. The combined acquisition price for these companies, including adjustments from prior year acquisitions, amounted to SEK 1,156 M. The acquisition price for these companies on a cash and debt free basis amounted to SEK 1,050 M.







Preliminary acquisition analyses indicate that goodwill and other intangible assets with indefinite useful life amount to SEK 854 M. Estimated deferred considerations amounted to SEK 221 M.
Sustainable development
ASSA ABLOY's Sustainability Report for 2017 was published on 21 March 2018 and the report shows that key indicators continue to improve.
The increased focus on Health and Safety has led to a 20% decrease in the injury rate. The Group's total greenhouse-gas emissions fell by 6% during 2017, driven by new production technologies and efficiency improvements. Water consumption in relation to the activities of the business was reduced by 12% during the year. The number of entities covered by ISO 14001 or other certifiable environmental management systems increased from 124 to 131, which means that the system covers 79% of employees in the Group's factories. ASSA ABLOY had 276 Environmental Product Declarations verified and published by the end of 2017.
Parent company
Other operating income for the Parent company ASSA ABLOY AB totaled SEK 431 M (498) for the interim period. Operating income for the same period amounted to SEK -261 M (-91). Investments in tangible and intangible assets totaled SEK 12 M (5). Liquidity is good and the equity ratio is 41.5% (45.8).
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 2017 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 Group applies IFRS 9 Financial instruments and IFRS 15 Revenue from contracts with customers as of 1 January 2018.
IFRS 9 addresses classification, measurement and recognition of financial liabilities and assets and replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. With IFRS 9 a new impairment model is being implemented, based on expected credit losses rather than incurred losses. For the Group, the new model will entail a new procedure for measurement of credit losses, the standard will however have no material impact on the Group's performance and financial position.
IFRS 15 supersedes IAS 11 Construction contracts and IAS 18 Revenue and includes a new single model for revenue recognition related to customer contracts. The standard introduces a five-step model that requires revenue to be recognized when a performance obligation is met as control over goods and services are transferred to the customer. The goods or service is transferred as control over the asset is transferred to the customer, which is either over time or at a point in time. The Group's previous revenue recognition practices are essentially in accordance with IFRS 15 why the new standard will have no impact on the Group's performance and financial position, however additional information on disaggregated revenue has been disclosed in note 1.
Since IFRS 9 and IFRS 15 have no material impacts on the financial reports, no new opening balance is presented in 2018.
IFRS 16 will apply to the accounting year that begins on 1 January 2019. Earlier application is permitted but the Group has chosen not to take up this option.
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 16 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 2017 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 2017 Annual Report.
Review
The Company's Auditors have not carried out any review of this Report for the first quarter of 2018.
 
Stockholm, 26 April 2018
 
Nico Delvaux

President and CEO




Financial information
The Interim Report for the second quarter will be published on 18 July 2018.
The Interim Report for the third quarter will be published on 19 October 2018.
Further information can be obtained from: 
Nico Delvaux,

President and CEO, Tel: +46 8 506 485 82
Carolina Dybeck Happe,

Chief Financial Officer, Tel: +46 8 506 485 72
 
 
 
 
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 2018.
 
 


















ASSA ABLOY AB (publ)
Box 703 40
107 23 Stockholm
Visiting address
Klarabergsviadukten 90, Stockholm, Sweden
 
 


Tel +46 (0)8 506 485 00
Fax +46 (0)8 506 485 85
www.assaabloy.com
 
Corporate identity number: 556059-3575


 
 
 
 
                                                                                             No.07/2018








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