ASSA ABLOY: Quarterly Report Q1 2022

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27 Apr, 2022, 07:20 GMT

STOCKHOLM, April 27, 2022 /PRNewswire/ -- A strong start to the year

First quarter

Net sales increased by 22% to SEK 26,591 M (21,805), with organic growth of 14% (4) and acquired net growth of 0% (4)
Very strong organic sales growth in Americas, Entrance Systems and Global Technologies and strong growth in EMEIA, while organic sales declined in Asia Pacific
Three acquisitions with combined annual sales of about SEK 250 M were signed in the quarter
Operating income (EBIT) was SEK 4,001 M (3,187), corresponding to an operating margin of 15.0% (14.6)
Net income amounted to SEK 2,859 M (2,253)
Earnings per share increased to SEK 2.57 (2.03)
Operating cash flow amounted to SEK 912 M (2,636).

Sales and income

	Full year			First quarter
	2020	2021	Δ	2021	2022	Δ
Sales, SEK M	87,649	95,007	8%	21,805	26,591	22%
Of which:
Organic growth	–7,150	8,900	11%	827	3,287	14%
Acquisitions and divestments	3,328	1,975	2%	866	–52	0%
Exchange-rate effects	–2,558	–3,517	-5%	–2,060	1,551	8%
Operating income (EBIT)^[1], SEK M	11,916	14,181	19%	3,187	4,001	26%
Operating margin (EBITA)^[^1], %	14.3%	15.6%		15.3%	15.6%
Operating margin (EBIT)^[^1], %	13.6%	14.9%		14.6%	15.0%
Income before tax^[¹, SEK M	11,133	13,538	22%	3,045	3,811	25%
Net income^[^1], SEK M	8,375	10,901	30%	2,253	2,859	27%
Operating cash flow, SEK M	14,560	13,265	–9%	2,636	912	–65%
Earnings per share^[^1], SEK	7.54	9.81	30%	2.03	2.57	27%

^[1] Excluding costs before income tax for restructuring programs in the fourth quarter 2020, totaling SEK –1,366 M.
The corresponding costs after tax was SEK –1,112 M. Excluding non-cash operating income in third quarter 2020 from revaluation at fair value of 39% ownership in agta record, totaling SEK 1,909 M for the year. The operating income had no tax impact.

Comments by the President and CEO

A strong start to the year
We had a good start to 2022, with very strong organic sales growth and margin improvement. This was driven by robust demand and price adjustments. During the quarter we have addressed multiple operational challenges – these include higher material costs; supply-chain issues including semiconductor shortages; very high sick leave due to Omicron; and record high energy costs - but thanks to excellent operational execution we can report a solid improvement of the operating margin.

Our organic sales grew by 14%, accompanied by 8% positive currency effects and net-zero sales growth from acquisitions and divestments. Americas and Entrance Systems delivered exceptionally strong organic sales growth of 22% and 20% respectively. This was driven by positive underlying market conditions in the US, strong demand in the non-residential segments, and price realization. Global Technologies also grew very strongly by 11%, driven by a partial recovery of the travel related businesses and increased mobility. EMEIA reported strong organic growth of 7% with strong growth in the emerging markets, the Nordics and the DACH region. Organic sales in Asia Pacific declined by 2% as demand in China continued to be weak.

Operating income increased by 26% to SEK 4,001 M and the operating margin improved by 40 bps to 15.0%. As we continue to build-up inventory to safeguard deliveries and due also to the impact of material inflation on inventory, our cash flow was lower than last year, totaling SEK 912 M. We expect the cash conversion rate to gradually improve going forward.

Long-term growth drivers remain solid
While macro-economic and geopolitical uncertainties have increased, our business benefits from many long-term growth drivers. The basic need for safety and security is a fundamental driver. This is further supported by the increasing demand for flexible and convenient access solutions enabled by new technologies, urbanization and increased focus on sustainability. Specifically, the transition to electromechanical and mobile access solutions provides many opportunities. In the last few years, we have launched numerous partnerships with leading technology companies. One example is our collaboration with Apple, which was extended with the launch of employee badge in Apple Wallet at Silverstein Properties' high-profile 7 World Trade Center property in New York City during the first quarter. These partnerships will further accelerate our mobile credential business.

During the quarter, we signed three acquisitions and the activity level remains high.

It was with great sadness that we witnessed Russia's invasion of Ukraine and the humanitarian crisis that has followed. Our thoughts are with all the people who are affected by this conflict. Although our direct exposure to Russia and Ukraine is limited, it has indirect business effects. Nevertheless, with many positive long-term growth drivers and after a strong start to the year, we are confident that the Group is in a good position to continue its positive journey.

Stockholm, 27 April 2022

Nico Delvaux
President and CEO

Further information can be obtained from:
Nico Delvaux,
President and CEO, tel. no: +46 8 506 485 82

Erik Pieder,
Executive Vice President and CFO, tel.no: +46 8 506 485 72

ASSA ABLOY is holding a telephone and web conference at 09.30 on 27 April 2022 which can be followed online at www.assaabloy.com.

It is possible to submit questions by telephone on: 08–505 583 59, +44 333 300 9265 or +1 631 913 1422

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 27 April 2022.