27 Oct 2010
* Excluding restructuring costs
amounting to SEK 109 M in 2009.
** Excluding restructuring costs, net income in Jan-Sep 2009 was
SEK 2,567 M.
COMMENTS BY THE PRESIDENT
"Growth has now returned in all regions and the
quarter saw good organic growth of 6%," says Johan Molin, President
and CEO. "In addition, acquired units added a further 10% growth
this quarter. Especially pleasing was the sales development in Asia
and South America. North America was also positive through its
growth for the first time since 2008.
"The increases in sales and operating income,
which rose by 13% and 21% respectively, were extremely satisfying,
with strong contributions from volume growth and efficiency
improvements. The efficiency program for the production structure
and improvement in working capital combined with the profit growth
gave a very strong cash flow.
"Activity in the acquisition field remained high.
It is with great pleasure that I welcome the bid for the American
company ActivIdentity and the acquisition of a share in Agta
Record. These companies complement our strategic development of
secure identification within logical access and entrance
"Aftermarket activities, which represent
two-thirds of sales, continued to make strong advance during the
quarter, with particularly good progress in electromechanics.
However, it should be mentioned that the EMEA region reported
weaker sales development within new construction because of
reduction of governmental spending. Overall, therefore, our
forecast for organic growth for the full year remains slightly
The Group's sales totaled SEK 9,474 M (8,405), an
increase of 13% compared with 2009. Organic growth was 6% (-13).
Acquired units contributed 10% (2). Exchange-rate effects had a
negative impact of SEK 216 M on sales, that is -3% (8).
Operating income before depreciation, EBITDA,
amounted to SEK 1,875 M (1,584). The corresponding EBITDA margin
was 19.8% (18.8). The Group's operating income, EBIT, amounted to
SEK 1,630 M (1,346), a rise of 21%. The operating margin was
Net financial items amounted to SEK 190 M (159).
New rules for acquisition accounting had a negative effect of SEK
26 M on net financial items for the quarter. The Group's income
before tax amounted to SEK 1,440 M (1,187), an improvement of
21% compared with the previous year. Exchange-rate effects had a
negative impact of SEK 26 M on the Group's income before tax.
The profit margin was 15.2% (14.1). The Group's tax charge totaled
SEK 341 M (300). Earnings per share amounted to SEK 2.93
(2.36), an increase of 24%.
FIRST NINE MONTHS OF THE
Sales for the nine-month period totaled SEK 27,175
M (26,163), representing an increase of 4%. Organic growth was 2%
(-13). Acquired units contributed 7% (3). Exchange-rate effects
affected sales negatively by SEK 1,240 M, i.e. -3% (13).
Operating income before depreciation, EBITDA,
excluding restructuring costs, amounted to SEK 5,191 M (4,779). The
corresponding margin was 19.1% (18.3). The Group's operating
income, EBIT, excluding restructuring costs, amounted to
SEK 4,440 M (4,014), which was an increase of 11%. The
corresponding operating margin (EBIT) was 16.3% (15.3).
Earnings per share, excluding restructuring costs,
rose to SEK 8.03 (6.81). Operating cash flow amounted to SEK 4,200
Payments related to all restructuring programs
amounted to SEK 71 M in the quarter.
The restructuring programs continued according to
plan and have led to a reduction in personnel of 191 people during
the quarter and 5,179 people since the projects began.
A further 1,236 people will leave in the next few years.
At the end of the quarter, provisions of SEK 1,106
M were set aside in the balance sheet for carrying out the
remaining parts of the programs.
Sales for the quarter in EMEA division totaled
SEK 3,065 M (3,155), with organic growth of 1% (-11). The
market recovery continued, but at a slow pace. Finland, Germany,
Italy and Spain showed strong growth while Eastern Europe, France
and the Netherlands had a weaker quarter. Acquired growth amounted
to 2%. Operating income rose to SEK 520 M (476), which
represents an operating margin (EBIT) of 17.0% (15.1). Return on
capital employed amounted to 20.8% (16.5). Operating cash flow
before paid interest totaled SEK 704 M (779).
Sales for the quarter in Americas division totaled
SEK 2,537 M (2,416), with organic growth of 2% (-22). The recovery
on the North American market continued and all units except the
Door Group showed growth during the quarter. Mexico, Canada and in
particular South America showed good growth. Acquired growth
amounted to 3%. Operating income totaled SEK 515 M (475)
and the operating margin was 20.3% (19.7). Return on capital
employed amounted to 24.1% (21.7). Operating cash flow before paid
interest totaled SEK 614 M (789).
Sales for the quarter in Asia Pacific division
totaled SEK 1,735 M (1,023), with organic growth of 15% (0).
All units showed strong growth. Continued measures to stimulate the
economy benefited demand in Australia, while in China demand from
the growth regions in the interior increased strongly. On other
Asian markets performance was especially strong in Korea and India.
Acquired growth amounted to 51%. Operating income totaled
SEK 271 M (139), representing an operating margin (EBIT)
of 15.6% (13.6). The quarter's return on capital employed amounted
to 21.6% (19.6). Operating cash flow before paid interest totaled
SEK 300 M (124).
Sales for the quarter in Global Technologies
division totaled SEK 1,365 M (1,113), with organic growth of 26%
(-19). HID showed strong growth in both access control and
identification technology. Hospitality showed growth for the first
time since 2008. A strong recovery on the renovation market and
successful launches of RFID locks for hotels had a positive effect
on demand. The division's operating income amounted to SEK 247
M (187), giving an operating margin (EBIT) of 18.1% (16.8). Return
on capital employed amounted to 18.1% (12.8). Operating cash flow
before interest paid totaled SEK 186 M (321).
Sales for the quarter in Entrance Systems division
totaled SEK 987 M (896) for the quarter, with organic growth of -1%
(-2). The positive trend on the service side continued. On the
market for automatic doors, demand from the retailing segment rose
while demand from the healthcare segment fell as a result of
cutbacks in the health sector. Ditec's sales stabilized. Acquired
growth amounted to 15%. Operating income totaled SEK 152 M
(135), giving an operating margin of 15.4% (15.0). Return on
capital employed amounted to 14.3% (14.6). Operating cash flow
before interest paid totaled SEK 165 M (101).
Acquisitions consolidated during the quarter
comprised Paddock in the UK, after approval by the British
competition authority, Security Metal Products in the USA and one
smaller company. This means that a total of eleven acquisitions
were consolidated in the first nine months of the year. The
combined acquisition price for these acquisitions amounted to
SEK 3,918 M, and preliminary acquisition analyses indicate
that goodwill and other intangible assets with indefinite useful
life amount to SEK 3,049M. The acquisition price is adjusted
for acquired net debt and estimated earn‑outs. Estimated
earn-outs amount to SEK 1,905 M, of which SEK 1,732 M relates to
the largest single acquisition of the first half-year, the Chinese
company Pan Pan, and concerns the development of earnings over the
next three years.
On 12 October it was announced that an agreement
had been signed for the acquisition of the American company
ActivIdentity. ActivIdentity is active in systems for strong
authentication and credential management. It had sales of
USD 62 M in 2009 and has 223 employees. The acquisition
is expected to be completed in December 2010.
On 18 October it was announced that ASSA ABLOY had
acquired 32.95% of the Swiss company Agta Record. Agta Record is
active in entrance automation, has 1,700 employees and had sales of
EUR 222 M in 2009. ASSA ABLOY has initiated discussions with other
owners with the aim of acquiring the whole company.
Energy-saving activities are carried out in a
large number of facilities throughout the Group.
At Americas division's factory in Guadalajara,
Mexico, which employs 400 people, a well structured program has cut
energy costs by 30%. A large number of employees have been involved
in the work and an important part of the process has been to
continuously measure and record the energy consumption in different
parts of the factory. Internal energy audits have been a valuable
tool in sharing best practice on energy-efficient processes and
solutions. Special attention has been given to the control of
lighting, ventilation, air conditioning and the generation of
Other operating income for the Parent company ASSA
ABLOY AB totaled SEK 1,145 M (834) for the nine-month period.
Income before tax amounted to SEK 1,344 M (1,209). Investments in
tangible and intangible assets totaled SEK 9 M (1). Liquidity is
good and the equity ratio was 51.4% (58.3).
ASSA ABLOY applies International Financial
Reporting Standards (IFRS) as endorsed by the European Union.
Significant accounting and valuation principles are detailed on
pages 72‑77 of the 2009 Annual Report. ASSA ABLOY has
implemented the revised International Financial Reporting Standard
IFRS 3, which came into force on 1 July 2009. The change affects
the reporting of acquisition expenses, deferred considerations and
step acquisitions. All acquisition expenses relating to
acquisitions made in 2010 are reported on a current basis in the
income statement from 1 January 2010. ASSA ABLOY is also applying
the revised International Financial Reporting Standard IAS 27,
which came into force on 1 July 2009. IAS 27 affects the reporting
of non-controlling interest (previously minority interest) in
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 2.3 Reporting by a
TRANSACTIONS WITH RELATED
No transactions that significantly affected the
company's position and income have taken place between ASSA ABLOY
and related parties.
RISKS AND UNCERTAINTY
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 2009
Annual Report. No significant risks other than the risks described
there are judged to have occurred.
This Report has not been reviewed by the Company's
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
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 for 2010
Organic growth in 2010 is expected to be slightly
*) The outlook published on 28
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.
Organic growth in 2010 is expected to
be slightly positive.
The Year-end Report and Quarterly Report for the
fourth quarter will be published on 7 February 2011.
FURTHER INFORMATION CAN BE
Johan Molin, President and CEO, Tel: +46 8 506 485
Tomas Eliasson, Chief Financial Officer, Tel: +46 8 506 485 72
ASSA ABLOY is holding
an analysts' meeting at 10.00 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 5052 0270, +44 208 817 9301 or +1 718 354 1226
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 27 October.
English (United States)
The global leader in door opening solutions
© ASSA ABLOY 2013 | Legal | Cookies | Email: