* Sales increased by 14%, including 3% organic growth, and totaled SEK
11,997 M (10,502).
* Improved growth in North America and continued strong growth in Global
Technologies.
* Stable but weak development in Europe, while the emerging markets
showed improved performance.
* Acquisitions done of Helton, Guoqiang and Sanhe, whose combined annual
sales of SEK 1,140 M represent 2.7% growth. At the same time a sales
process was initiated to sell the jointly owned company Wangli with
annual sales of SEK 600 M.
* Operating income (EBIT) increased by 17% and amounted to SEK 1,885 M
(1,615). The operating margin was 15.7% (15.4).
* Net income amounted to SEK 1,295 M (1,156).
* Earnings per share rose by 15% to SEK 3.51 (3.05).
* Cash flow remained good and amounted to SEK 1,435 M (1,311).
SALES AND INCOME
Second quarter First half-year
——————————————-
2011 2012 Change 2011 2012 Change
———————————————————————-
Sales, SEK M 10,502 11,997 +14% 19,201 22,835 +19%
of which,
Organic growth +3% +3%
Acquisitions +6% +12%
Exchange-rate effects +504 +5% +653 +4%
Operating income (EBIT),
SEK M 1,615 1,885 +17% 2,992 3,540 +18%
Operating margin (EBIT), % 15.4 15.7 15.6 15.5
Income before tax, SEK M 1,460 1,677 +15% 2,675 3,158 +18%
Net income, SEK M 1,156 1,295 +12% 2,099 2,435 +16%
Operating cash flow, SEK M 1,311 1,435 +9% 1,758 1,918 +9%
Earnings per share (EPS),
SEK 3.05 3.51 +15% 5.57 6.61 +19%
COMMENTS BY THE PRESIDENT AND CEO
“I am very pleased that ASSA ABLOY’s good performance continued during the
second quarter of the year, with growth of a full 14% and a strong
improvement
in earnings,” says Johan Molin, President and CEO. “It was particularly
pleasing
that sales in Americas improved and that the good growth at Global
Technologies
continued. Our investments in Emerging Markets are also giving results, in
the
form of good organic growth of a full 9% in the region. However in Europe
the
situation weakened further, with sales at an unchanged level.
“Research and Development activity remained very high and many new products
were
launched during the period. Sales of new products are going exceptionally
well
and accounted for a full 22% of the quarter’s total sales. Examples of
exciting
new products include a new high-technology printer for the e-government
sector,
security doors for the social housing sector in China, and a completely new
series of advanced automatic door openers from Besam.
“Earnings improved by a good 17%, with the newly acquired companies making
especially strong advances during the quarter. The successful efficiency
and
restructuring measures also continued to make good contributions to the
profit
margin.
“Activities on the acquisition front continued at full speed and resulted
in the
acquisitions of Helton, Gouqiang and Sanhe – three acquisitions that add
2.7% to
our sales. Helton is particularly interesting since it is a first step for
Entrance Systems into the North American market for sectional doors. Our
expansion on the strategically important Chinese market continued through
the
acquisitions of Gouqiang and Sanhe. They complement in a very good way our
geographical presence in China.
“The world economy is forecast to remain weak for the rest of the year. On
the
mature markets stable economic development with unchanged weak growth is
expected, while economic growth on the new markets is expected to be less
strong
than last year.”
SECOND QUARTER
The Group’s sales totaled SEK 11,997 M (10,502), an increase of 14%
compared
with the second quarter of 2011. Organic growth for comparable units was 3%
(5).
Acquired units contributed 6% (20). Exchange-rate effects had a positive
impact
of SEK 504 M on sales, that is 5% (-13).
Operating income before depreciation, EBITDA, amounted to SEK 2,157 M
(1,863).
The corresponding EBITDA margin was 18.0% (17.7). The Group’s operating
income,
EBIT, amounted to SEK 1,885 M (1,615), an increase of 17%. The operating
margin
was 15.7% (15.4).
Net financial items amounted to SEK -208 M (-156). The Group’s income
before tax
amounted to SEK 1,677 M (1,460), an improvement of 15% compared with the
previous year. Exchange-rate effects had a positive impact of SEK 70 M on
the
Group’s income before tax. The profit margin was 14.0% (13.9). The
estimated
underlying effective tax rate on an annual basis amounted to 23%. Earnings
per
share amounted to SEK 3.51 (3.05), an increase of 15%.
FIRST HALF-YEAR
Sales for the first half of 2012 totaled SEK 22,835 M (19,201),
representing an
increase of 19%. Organic growth was 3% (5). Acquired units contributed 12%
(14).
Exchange-rate effects had a positive impact of SEK 653 M on sales, that is
4% (-
11), compared with the first half of 2011.
Operating income before depreciation, EBITDA, for the half-year amounted to
SEK
4,085 M (3,493). The corresponding margin was 17.9% (18.2). The Group’s
operating income, EBIT, amounted to SEK 3,540 M (2,992), which was an
increase
of 18%. The corresponding EBIT operating margin was 15.5% (15.6).
Earnings per share for the first half-year increased to SEK 6.61 (5.57), a
rise
of 19%. Operating cash flow for the half-year totaled SEK 1,918 M (1,758).
RESTRUCTURING MEASURES
Payments related to all restructuring programs amounted to SEK 86 M in the
quarter.
The restructuring programs proceeded according to plan and led to a
reduction in
personnel of 93 people during the quarter and 6,336 people since the
projects
began. A further 1,199 people will leave by the end of 2014.
At the end of the quarter provisions of SEK 1,449 M remained in the balance
sheet for carrying out the programs.
COMMENTS BY DIVISION
EMEA
Sales for the quarter in EMEA division totaled SEK 3,379 M (3,253), with
organic
growth of 0% (-3). The market situation remained weak during the quarter.
Growth
was strong in Africa, good growth in Scandinavia, Finland, the UK, eastern
Europe and Israel. Germany, Spain and the rest of central Europe achieved
stable
sales, while France, Benelux and Italy reported negative growth during the
quarter. Acquired growth amounted to 4%. The operating margin was affected
by
-0.3 of a percentage point by dilution from acquisitions. Operating income
totaled SEK 533 M (510), which represents an operating margin (EBIT) of
15.8%
(15.7). Return on capital employed amounted to 20.6% (20.6). Operating cash
flow
before interest paid totaled SEK 430 M (429).
AMERICAS
Sales for the quarter in Americas division totaled SEK 2,548 M (2,177),
with
organic growth of 5% (2). The sales trends for Mechanical Locks and
Security
Doors were stable, while the sales trend for High-Security and
Electromechanical
Products and on the private residential market were strong. Canada, Mexico
and
South America showed good growth in the quarter. Acquired growth was 1%.
Operating income totaled SEK 540 M (456) and the operating margin was 21.2%
(20.9). Return on capital employed amounted to 24.1% (23.6). Operating cash
flow
before interest paid totaled SEK 500 M (482).
ASIA PACIFIC
Sales for the quarter in Asia Pacific division totaled SEK 1,892 M (1,630),
with
organic growth of 5% (12). Growth was good in Korea and South-East Asia.
China
continued to show low growth due to lower new-building activity, while the
sales
trend in Australia remained negative. Acquired growth amounted to 1%.
Operating
income totaled SEK 271 M (232), representing an operating margin (EBIT) of
14.3% (14.3). The quarter’s return on capital employed amounted to 20.8%
(22.4).
Operating cash flow before interest paid totaled SEK 373 M (199).
GLOBAL TECHNOLOGIES
Sales for the quarter in Global Technologies division totaled SEK 1,701 M
(1,416), with organic growth amounting to 11% (17). HID had strong growth
in
access control, secure issuing of smart cards and identification
technology.
Government ID had negative growth. Hospitality showed strong growth with
good
profitability on all markets. Acquired growth amounted to 1%. The
division’s
operating income amounted to SEK 289 M (224), giving an operating margin
(EBIT)
of 17.0% (15.9). Return on capital employed amounted to 17.5% (15.0).
Operating
cash flow before interest paid totaled SEK 273 M (270).
ENTRANCE SYSTEMS
Sales for the quarter in Entrance Systems division totaled SEK 2,725 M
(2,235),
with organic growth amounting to -1% (5). Growth was weak for Besam,
Crawford
and Flexiforce in spite of a continuing positive sales trend in the service
sector. The sales trends for Ditec and the private residential market were
negative, affected by the weak economic trend in southern Europe. Acquired
growth amounted to 21%. Operating income totaled SEK 354 M (281), giving an
operating margin of 13.0% (12.6). Return on capital employed amounted to
10.8%
(10.6). Operating cash flow before interest paid totaled SEK 293 M (166).
ACQUISITIONS AND DIVESTMENTS
During the quarter Traka in the UK, Frameworks in the USA, Helton in Canada
and
Guoqiang (Golking) in China were consolidated. The combined acquisition
price
for the eight companies acquired this year amounts to SEK 3,880 M, and
preliminary acquisition analyses indicate that goodwill and other
intangible
assets with indefinite useful life amount to SEK 3,268 M. The acquisition
price
is adjusted for acquired net debt and estimated earn-outs. Estimated
earn-outs
amount to SEK 887 M.
On 2 May it was announced that ASSA ABLOY had signed a contract to acquire
the
Chinese company Sanhe Metal, a leading manufacturer of fire and security
doors.
The company has 260 employees and its sales in 2012 are expected to total
SEK
130 M.
The decision was taken during the quarter to initiate selling of the
jointly
owned Chinese company Wangli. Since June the business has been reclassified
under ‘Assets held for sale’ in accordance with IFRS 5. Sales during the
quarter
was reduced by SEK 76 M as a result of the reclassification. Wangli’s
annual
sales is SEK 600 M.
SUSTAINABLE DEVELOPMENT
ASSA ABLOY is developing and launching a new generation of energy-efficient
and
sustainable products for access control. One product in this field,
Sargent’s
Passport 1000 P1 Power over Ethernet lock product, won a ‘Green Solutions
Award’
in the new-products category at the Security Industry Association’s 2012
exhibition. The lock employs IP technology and uses the existing local data
network for both power supply and communication. Energy consumption both in
use
and on standby has been significantly reduced compared with traditional
access
control products.
PARENT COMPANY
Other operating income for the Parent company ASSA ABLOY AB totaled SEK 898
M
(877) for the half-year. Income before tax amounted to SEK 966 M (592), an
increase due primarily to higher dividends from subsidiaries compared with
last
year. Investments in tangible and intangible assets totaled SEK 9 M (2).
Liquidity is good and the equity ratio was 48.2% (36.2). The equity ratio
has
risen mainly because of amortization of interest-bearing loans and
conversion of
debenture loans.
ACCOUNTING PRINCIPLES
ASSA ABLOY applies International Financial Reporting Standards (IFRS) as
endorsed by the European Union. Significant accounting and valuation
principles
are detailed on pages 88-93 of the 2011 Annual Report. Since 2011 ASSA
ABLOY has
been implementing the International Financial Reporting Standard IFRS 5,
‘Non-current Assets Held for Sale and Discontinued Operations’. Non-current
assets
are classified as assets held for sale when their carrying amount will be
largely recovered in a sales transaction and a sale is viewed as being
highly
probable. They are reported at the lower of carrying amount and fair value
less
costs to sell if their carrying amount can be largely recovered in a sales
transaction and not through continuing use and it is highly probable that a
sale
will occur.
The agreed revision of IAS 19 Employee Benefits applies from 1 January 2013
with
retroactive effect during 2012. In this recalculation of comparative
information
for 2012, unrecognized expenses relating to service provided in previous
years
and unrecognized actuarial losses are accounted for as an adjustment of
opening
equity taking into account tax effects. The unrecognized balance sheet
items
totaled SEK 1,092 M as at 31 December 2011.
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
‘Reporting by a Legal Entity’.
TRANSACTIONS WITH RELATED PARTIES
No transactions that significantly affected the company’s position and
income
have taken place between ASSA ABLOY and related parties.
RISKS AND UNCERTAINTY FACTORS
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 2011 Annual
Report. No significant risks other than the risks described there are
judged to
have occurred.
OUTLOOK*
Long-term outlook
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.
* Outlook published on 24 April 2012:
Long-term outlook
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.
The Board of Directors and the President and CEO declare that this
half-year
report gives an accurate picture of the Parent company’s and the Group’s
operations, position and income and describes significant risks and
uncertainty
factors faced by the Parent company and the companies making up the Group.
Stockholm, 27 July 2012
Lars Renström Carl Douglas Birgitta Klasén
Chairman Vice Chairman Board member
Eva Lindqvist Johan Molin Sven-Christer Nilsson
Board member President and CEO Board member
Jan Svensson Ulrik Svensson Seppo Liimatainen
Board member Board member Employee representative
Mats Persson
Employee representative
REVIEW REPORT
Introduction
We have reviewed this Report for the period 1 January to 30 June 2012 for
ASSA
ABLOY AB (publ). The Board of Directors and the CEO are responsible for the
preparation and presentation of this Interim Report in accordance with IAS
34
and the Swedish Annual Accounts Act. Our responsibility is to express a
conclusion on this Interim Report based on our review.
Scope of Review
We have conducted our review in accordance with the Swedish Standard on
Review
Engagements SÖG 2410, ‘Review of Interim Report Performed by the
Independent
Auditor of the Entity’. A review consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in
scope
than an audit conducted in accordance with International Standards on
Auditing,
ISA, and other generally accepted auditing standards in Sweden. The
procedures
performed in a review do not enable us to obtain assurance that we would
become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe
that the Interim Report is not prepared, in all material respects, in
accordance
with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and
with
the Swedish Annual Accounts Act, regarding the Parent company.
Stockholm, 27 July 2012
PricewaterhouseCoopers AB
Peter Nyllinge
Authorized Public Accountant
Auditor in charge
FINANCIAL INFORMATION
The Quarterly Report for the third quarter will be published on 29 October
2012.
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
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 July.
Q2 2012:
http://hugin.info/1014/R/1629985/522225.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: ASSA ABLOY via Thomson Reuters ONE
[HUG#1629985]
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
