77BL Assa 30

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

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(END) Dow Jones Newswires

April 26, 2017 03:51 ET (07:51 GMT)