2 Feb 2017

Solid underlying development in the fourth quarter

Fourth quarter

  • Sales increased by 6% to SEK 19,484 M (18,301), with organic growth of 1% (5). Acquisitions and divestments were 2%, with 3% acquisitions and -1% divestments
  • Good growth for Entrance Systems and EMEA and growth for Americas and Global Technologies
  • Negative growth for Asia Pacific, mainly due to weak demand in China
  • The previously announced restructuring program has been launched with an operating cost of SEK 1,597 M
  • Operating income(1) (EBIT) was SEK 2,913 M (3,038), corresponding to an operating margin of 15.0% (16.6)
    –   Adjusted operating income excluding a write down in China of SEK 300 M, was SEK 3,213 M (3,038) corresponding to a margin of 16.5% (16.6).
  • Net income(1) amounted to SEK 2,088 M (2,120)
  • Earnings per share(1) amounted to SEK 1.88 (1.91)
  • Operating cash flow remained strong and amounted to SEK 4,620 M (4,625)
  • The Board of Directors proposes a dividend of SEK 3.00 per share for 2016.

Sales and income

Fourth quarter January-December
2015 2016 Δ 2015 2016 Δ
Sales, SEK M 18,301 19,484 6% 68,099 71,293 5%
Of which:
Organic growth 827 120 1% 2,634 1,428 2%
Acquisitions and divestments 643 455 2% 2,078 1,967 3%
Exchange-rate effects 983 609 3% 6,544 -201 0%
Operating income(1) (EBIT), SEK M 3,038 2,913 -4% 11,079 11,254 2%
Operating margin(1) (EBIT), % 16.6% 15.0% 16.3% 15.8%
Income before tax(1), SEK M 2,851 2,767 -3% 10,382 10,549 2%
Net income(1), SEK M 2,120 2,088 -2% 7,693 7,874 2%
Operating cash flow, SEK M 4,625 4,620 0% 9,952 10,467 5%
Earnings per share(1), SEK 1.91 1.88 -2% 6.93 7.09 2%

1) Excluding costs for a new restructuring program for the fourth quarter and full year 2016, totaling SEK -1,597 M before tax, corresponding to SEK –1,221 M after tax. See also financial information on pages 9-16.

Comments by the President and CEO
”The fourth quarter of the year had, as expected, somewhat lower growth for ASSA ABLOY since sales in the previous year were very strong,” says Johan Molin, President and CEO. “In general, the mature markets had a good development, while many growth markets, especially China and the Middle East, had a weak demand.

”It was very positive that Entrance Systems maintained its strong performance in both Europe and the USA, supported by a number of new products and service concepts that have been launched in recent years. It was pleasing that the demand for electromechanical lock solutions remained strong in EMEA and that sales in Americas continued at a high level. At Global Technologies interest in virtual keys remained strong and many customers are rolling out SEOS solutions. Also, sales of solutions using mobile keys to hotels continue to be successful. The demand remained weak in China, as expected.

“Acquisitions during the quarter included Bluvision, a leading supplier of location-tracking systems in buildings. Bluvision complements our range of access-control products well. The industrial-door company Construction Specialties, a leading distributor and service company for industrial doors in Mexico, was also acquired. Another important step was taken in eastern Europe through the acquisition of LOB, the market leader for locks in Poland.

“A new restructuring program was launched at year-end. The program aims to further rationalize our business and should be viewed against the background that the Group has acquired around fifty companies since the previous program. The restructuring cost amounts to SEK 1,597 M.

“Excluding the cost of the restructuring program, operating income for the quarter amounted to SEK 2,913 M, with an operating margin of 15.0%. The underlying operating margin, excluding a write-down of operating assets in China totaling SEK 300 M, remained very good and reached 16.5% (16.6). Operating cash flow was seasonally very strong.-

“My judgment is that the global economic trend remains weak. On most markets in North and South America and in parts of Europe there is a positive trend, but on many markets 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.”

 
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 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 CET on 2 February 2017.