ASSA ABLOY - Strong organic sales growth

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ASSA ABLOY

19 Oct, 2018, 06:30 GMT

STOCKHOLM, Oct. 19, 2018 /PRNewswire/ --

Third quarter

Net sales increased by 15% to SEK 21,191 M (18,499), with organic growth of 5% (3) and acquired net growth of 2% (2)
Strong sales growth in Global Technologies and Americas and good growth in Entrance Systems. Sales in EMEA and Asia Pacific were stable
Three acquisitions have been signed with combined expected annual sales of about SEK 1,200 M
Operating income (EBIT)amounted to SEK 3,424 M (3,080), with an operating margin of 16.2% (16.7)
Net income amounted to SEK 2,384 M (2,153)
Earnings per share amounted to SEK 2.15 (1.94)
Operating cash flow increased by 13% to SEK 3,004 M (2,654).

Sales and income

Third quarter

January-September

2017

2018

2017

2018

Sales, SEK M

18,499

21,191

15%

56,028

60,881

Of which:

Organic growth

590

960

1,956

2,620

Acquisitions and divestments

373

446

1,273

1,079

Exchange-rate effects

–488

1,286

990

1,154

Operating income (EBIT) [1], SEK M

3,080

3,424

11%

8,982

9,164

Operating margin (EBITA) [1], %

16.9%

16.6%

16.3%

15.5%

Operating margin (EBIT) [1], %

16.7%

16.2%

16.0%

15.1%

Income before tax [1], SEK M

2,910

3,221

11%

8,447

8,595

Net income [1], SEK M

2,153

2,384

11%

6,250

6,396

Operating cash flow, SEK M

2,654

3,004

13%

6,053

6,435

Earnings per share [1], SEK

1.94

2.15

11%

5.63

5.76

[1]Excluding impairment of goodwill and other intangible assets of SEK -5,595 M in the second quarter of 2018. The effect on net income from the impairment of intangible assets was SEK –5,268 M.

Comments by the President and CEO

Strong organic sales growth in the quarter
The third quarter continued with strong organic growth of 5%. Organic growth was very strong in Global Technologies (12%) and Americas (10%) and continued to be good in Entrance Systems (4%), while EMEA and Asia Pacific reported stable organic sales growth of 2% and 1% respectively.

Accelerated growth in Global Technologies and continued strong growth in Americas
The demand for our products continued to grow at a good level in most of our markets during the third quarter and in the Global Technologies and Americas divisions in particular. Following a strong start to the year for Global Technologies, the growth accelerated during the third quarter.

During the last five years ASSA ABLOY Hospitality's performance has been very impressive, with innovative new solutions, combined with a solid financial development. The business has expanded from offering solutions for hotels and marine cruise ships into solutions for other verticals such as elderly care, student accommodation and logistics. As a result of this transformation, the Hospitality organization will now evolve under a new name, ASSA ABLOY Global Solutions, where we will develop the existing business and look for new opportunities to build global solutions for our customers.

HID Global is also developing positively. Two years ago ASSA ABLOY set a target to double HID's revenue in five years' time through organic sales and acquisitions. With the recent announcement of the acquisition of Crossmatch, we are on track to reach this target. Crossmatch allows us to offer biometric identity in critical applications and complements our total offering.

In Americas the growth was mainly driven by the development in the US. It is very encouraging that both the commercial and residential markets grew well during the quarter. In both segments our electromechanical products are market leaders and we note a strong demand for our innovative new solutions.

Strong operating income and cash flow
The third quarter's operating income improved strongly by 11% year-on-year to SEK 3,424 M, corresponding to an operating margin of 16.2%. Due to higher raw material costs and negative currency effects the margin declined compared to last year, but we continue to work hard on further offsetting these material price increases.

Operating cash flow was strong in the third quarter and increased by 13% to SEK 3,004 M.

New CFO appointed
Last but not least, we have recently announced that Erik Pieder has been appointed as Chief Financial Officer. He will join ASSA ABLOY in January 2019.
I would like to thank Carolina Dybeck Happe for her invaluable contribution to ASSA ABLOY over the last 16 years and wish her great success in her new position.

Nico Delvaux
President and CEO

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 a telephone and web conference at 10.00 today which can be followed on the Internet at www.assaabloy.com.
It is possible to submit questions by telephone on:+46-8–566-193-53, +44-203-008-9806 or +1-855-831-5945

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 19 October 2018.