Interim Report January - September 1998

5 Nov 1998

 
SALES AND INCOME, JANUARY-SEPTEMBER, 1998
The sales of the ASSA ABLOY Group amounted to 6317 MSEK (4949), an increase of 28%. The organic growth for comparable units and in local currency amounted to 7%. The acquisitions made during 1998 have increased sales by 110 MSEK.
Exchange rate changes have effected sales by +91 MSEK.
The Group's result before tax amounted to 530 MSEK (366), corresponding to an increase of 45%. Translation of the foreign subsidiaries' results has incresed by 5 MSEK due to the change in exchange rates. Earnings per share increased to 5.05 SEK (3.73). The earnings per share have been calculated after full conversion and full tax as well as on the average number of shares.
 
Cash flow before tax and acquisitions amounted to 640 MSEK (534), which is in line with this year's expectations for a cash flow exceeding the result.
 
Development of the subsidiaries
The Swedish units showed a 5% growth for the first nine months compared to the same period last year. The construction activity increased in Sweden and continues to have a positive effect on the project sales. However, during the third quarter a decreasing demand from the door and window industry has been noted.
 
Finland shows an increase of 11% with stable development in the domestic market. Compared to last year the organic growth is falling somewhat due to the fact that Abloy's door closer program for the American market has been running successfully since more than a year. The sales to Russia ceased due to the financial crises during the period. The underlying demand for higher security remains.
 
The lock market in Norway shows organic growth of 6% in spite of a slowing down of the economy. An upgrade towards higher security compensates for the decrease in new construction. The result continues to grow faster than sales.
 
Denmark is back to normal organic growth during the third quarter, 7%, after the nation-wide strike last spring. Accumulated, the organic growth will amount to 3%.
 
In Germany, IKON focuses primarily on institutions and public authorities that for the moment show little growth. Their sales are in line with last year. The integration of Dörrenhaus is proceeding according to plan including the deletion of loss making products.
 
The Czech company FAB shows good volume and profit development and sales increased with 14%. The remaining minority shares (30%) in the Slovakian subsidiary have been acquired during the period.
 
UK also shows good volume and profit development. Sales growth amounts to 8%. Demand for high security locks and related products is increasing and contributes to the growth.
The French units show lower growth in the third quarter partly due to an increased focus on profitable products and customer segments. New construction is increasing although at a lower rate. The integration work continues with expected positive result.
 
The US units show an organic growth of 9%. No sign of a slow down has been noted so far. The rationalisation work proceeds with continued good result improvements in all units. The integration of Medeco is running well.
 
VingCard notes a continued good growth of 10%. The sales in Europe show particularly good growth. North America develops well, while Asia is decreasing as a result of the current economic situation. Following the recent year's strong growth a rationalisation program has been introduced that steadily improves profitability.
 
Acqisitions
The acquisition of Securitron Magnalock - USA's leading manufacturer of magnetic locks and panic devices was completed on October 22, 1998. The acquisition of Securitron is an important complement to the Group as it adds an important range of electro-mechanical lock products and opens new distribution channels for these products in general. The market for electro-mechanical lock products is one of the lock markets fastest growing segments, as these products are important components in all electronic security systems.
 
New England Lock & Hardware Co, USA, was acquired during the period. The company's products date back to the beginning of the century under the brand name Segal and are one of the most well known replacement lock ranges in the New York area. The acquisition reinforces the Medeco and Segal strong joint position and enables the group to expand into the residential market. The sales for 1998 are estimated to 2 MUSD. The acquisition will create an insignificant amount of goodwill.
 
Outlook for 1998
The expectation expressed earlier of a continued good result and volume development for ASSA ABLOY in 1998 remains unchanged.
 
Troyes, France, 5 November 1998
 
Carl-Henric Svanberg
President and CEO
 
ASSA ABLOY is the world's leading lock group with sales exceeding 8 000 MSEK. The number of employees is approx. 10 000. ASSA ABLOY develops, manufactures and markets mechanical, industrial, electromechanical and electronic locks and hotel locks. The group has market leading positions in Sweden, Finland, Norway, Denmark, Germany, France, Belgium, the Czech Republic, Romania, Mexico and in the United States as well as within the segment for hotel security world-wide.
 
For further information, please contact
Carl-Henric Svanberg, President & CEO, tel. +46-70-510 0551 or
Göran Jansson, CFO, tel. +46-70-748 8572
 
ASSA ABLOY AB (publ)
 
P.O. Box 70340, S-107 23 Stockholm
Tel: Int+46-8-698 85 70, Fax: Int +46-8-698 85 85
Visiting address: Klarabergsviadukten 90
 
http://www.assaabloy.se