TIDM77BL
RNS Number : 3573O
ASSA ABLOY AB (publ)
08 February 2016
8 February 2016
No. 1/16
A strong end to the year for ASSA ABLOY
Fourth quarter
-- Net sales increased by 15% in the quarter to SEK 18,301 M
(15,847). Organic growth was 5% (3).
-- Strong growth in Americas, Global Technologies, Entrance Systems and EMEA.
-- Negative growth in Asia Pacific due to continued weak demand in China.
-- Agreements have been signed for the acquisition of six
companies, including CEDES in Switzerland, with combined expected
annual sales of about SEK 1,100 M.
-- Operating income (EBIT) for the quarter increased by 13% to
SEK 3,038 M (2,681). The operating margin was 16.6% (16.9).
-- Net income amounted to SEK 2,120 M (1,889).
-- Earnings per share rose by 12% and amounted to SEK 1.91 (1.70).
-- Operating cash flow increased by 33% to SEK 4,625 M (3,469).
Full year
-- Net sales increased by 20% to SEK 68,099 M (56,843). Organic growth was 4% (3).
-- 16 acquisitions with total annual sales of about SEK 2,500 M have been consolidated.
-- Operating income (EBIT) increased by 20% to SEK 11,079 M
(9,257). The operating margin was 16.3% (16.3).
-- Net income amounted to SEK 7,693 M (6,436).
-- Earnings per share rose by 20% to SEK 6.93 (5.79).
-- Operating cash flow increased by 21% to SEK 9,952 M (8,238).
-- The Board of Directors proposes a dividend of SEK 2.65 per share (2.17).
SALES AND INCOME
Fourth quarter Full year
------------------------- --------------------------
2014 2015 Change 2014 2015 Change
----------------------- ------- ------- ------- -------- ------- -------
Sales, SEK M 15,847 18,301 +15% 56,843 68,099 +20%
of which,
Organic growth +5% +4%
Acquisitions +4% +3%
Exchange-rate effects +1,129 +983 +6% +2,138 +6,544 +13%
Operating income
(EBIT), SEK M 2,681 3,038 +13% 9,257 11,079 +20%
Operating margin
(EBIT), % 16.9 16.6 16.3 16.3
Income before tax,
SEK M 2,552 2,851 +12% 8,698 10,382 +19%
Net income, SEK
M 1,889 2,120 +12% 6,436 7,693 +20%
Operating cash flow,
SEK M 3,469 4,625 +33% 8,238 9,952 +21%
Earnings per share
(EPS), SEK(1) 1.70 1.91 +12% 5.79 6.93 +20%
1) Earnings per share has been recalculated for all historical
periods reflecting the stock split (3:1) in 2015.
COMMENTS BY THE PRESIDENT AND CEO
"The final quarter of the year continued strongly for ASSA
ABLOY, with a rise in sales of 15% for the quarter and totaling 20%
for the year," says Johan Molin, President and CEO. "Operating
income also grew very satisfactorily by a full 13% for the quarter
and a total of 20% for the full year.
"Organic growth was strong, at a full 5% for the quarter. The
strong sales trend in the USA, Europe and the Pacific region
continued unchanged. The sales trend in the developing countries
remained good except in China, where sales continued to fall.
However, a weaker demand picture can be perceived in many
developing markets, linked to a shortage of financing for major
projects. This principally affected Global Technologies.
"The strong development of electromechanical products continued
during the year as our customers are converting from mechanical
locks to an ever-increasing extent. It is clear that ASSA ABLOY has
established a leadership in this area for both commercial and
residential applications. Particularly striking during the year was
the strong demand for digital door-locks for so-called home
automation in the USA, and for the Cliq system based on the new
cloud technology.
"During the quarter CEDES was acquired - an interesting
technology company that adds intelligence to connected doors,
mainly in Entrance Systems. Another technology acquisition was made
in HID through the purchase of IAI, which is a leader in advanced
printers mainly for the Government sector and banks. Three
acquisitions were also made in Brazil, where ASSA ABLOY has built a
market-leading position over a short period.
"Operating income increased by a full 13% during the quarter.
The organic growth of 5% resulted in a good underlying growth in
the operating margin, to which continued efficiency improvements
contributed strongly. Operating margin remained on virtually the
same level as in the fourth quarter of 2014 despite higher negative
impacts from exchange-rate effects and dilution from acquisitions
as a consequence of the many acquisitions made at the end of the
year.
"My judgment is that the global economic trend remains weak.
Although America is showing a positive trend, Europe and many of
the Emerging Markets are stagnating. However, our strategy of
expanding in the Emerging Markets remains unchanged,
since they are expected to achieve very good economic growth
long term. We are also continuing our investments in new products,
especially in the growth area of electromechanics."
FOURTH QUARTER
The Group's net sales totaled SEK 18,301 M (15,847), an increase
of 15% compared with the fourth quarter of 2014. Organic growth for
comparable units was 5% (3). Acquired units contributed 4% (8).
Positive exchange-rate effects had an impact of SEK 983 M (1,129)
on sales, that is 6% (9).
Operating income before depreciation and amortization, EBITDA,
amounted to SEK 3,406 M (2,990). The corresponding EBITDA margin
was 18.6% (18.9). The Group's operating income, EBIT, amounted to
SEK 3,038 M (2,681), an increase of 13%. The operating margin was
16.6% (16.9). Operating income was affected negatively by
provisions made for feared credit losses of SEK 250 M in China. The
generally weak demand in the Emerging Markets has also meant that
SEK 245 M of performance-based deferred acquisition payments,
so-called earn-outs, have been recognized as income because the
payments are not expected to happen.
Net financial items amounted to SEK -187 M (-129). The Group's
income before tax amounted to SEK 2,851 M (2,552), an improvement
of 12% compared with the previous year. Exchange-rate effects had
an positive impact of SEK 73 M (196) on the Group's income before
tax. The profit margin was 15.6% (16.1). The effective tax rate on
an annual basis amounted to 26% (26). Earnings per share increased
by 12% to SEK 1.91 (1.70). Operating cash flow was SEK 4,625 M
(3,469), an increase of 33%.
FULL YEAR
Net sales for the full year 2015 increased by 20% to SEK 68,099
M (56,843). Organic growth was 4% (3). Acquired units contributed
3% (9). Exchange-rate effects affected sales positively by SEK
6,544 M (2,138), representing 13% (5), compared with 2014.
Operating income before depreciation and amortization, EBITDA,
for the full year amounted to SEK 12,512 M (10,419) and the EBITDA
margin to 18.4% (18.3). The Group's operating income, EBIT,
increased by 20% to SEK 11,079 M (9,257). The corresponding
operating margin was 16.3% (16.3). Earnings per share for the full
year increased by 20% to SEK 6.93 (5.79). Operating cash flow
totaled SEK 9,952 M (8,238), an increase of 21%.
RESTRUCTURING MEASURES
Payments related to all existing restructuring programs amounted
to SEK 145 M in the quarter and SEK 375 M for the full year. The
restructuring programs proceeded according to plan and led to a
reduction in personnel of 481 people during the quarter and 10,750
people since the projects began.
At the end of the year, provisions of SEK 551 M remained on the
balance sheet for carrying out the programs.
COMMENTS BY DIVISION
EMEA
Sales for the quarter in EMEA division totaled SEK 4,411 M
(3,979), with organic growth
of 5% (2). The markets in Scandinavia, Finland, Benelux, Iberia
and central and eastern Europe showed strong growth. Britain,
Germany and Israel produced good growth, while sales in Africa were
stable. Growth was weakly negative in France and Italy. Acquired
growth amounted to 5% (6). Operating income totaled SEK 705 M (694)
and the corresponding operating margin (EBIT) was 16.0% (17.5).
Return on capital employed amounted to 20.3% (22.2). Operating cash
flow before interest paid totaled SEK 1,408 M (1,011).
AMERICAS
Sales for the quarter in Americas division totaled SEK 3,984 M
(3,283), with organic growth of 8% (8). Growth was strong for
traditional lock products, electromechanical products, and in
Canada, Mexico and South America. The private residential
market
and the door segment had good growth. High-security products
showed a stable sales trend. Acquired growth amounted to 1% (5).
Operating income totaled SEK 838 M (690) and the corresponding
operating margin (EBIT) was 21.0% (21.0). Return on capital
employed amounted to 24.1% (23.0). Operating cash flow before
interest paid totaled SEK 1,162 M (795).
ASIA PACIFIC
Sales for the quarter in Asia Pacific division totaled SEK 2,580
M (2,327), with organic growth of -4% (-7). Australia and
South-East Asia showed strong growth. New Zealand and South Korea
showed a good sales trend. China continued to show a weak sales
trend due to low domestic demand. Acquired growth amounted to 8%
(8). Operating income totaled SEK 381 M (340), and the
corresponding operating margin (EBIT) was 14.8% (14.6). Return on
capital employed amounted to 12.3% (14.5). Operating cash flow
before interest paid totaled SEK 869 M (553).
GLOBAL TECHNOLOGIES
February 08, 2016 03:26 ET (08:26 GMT)
Sales for the quarter in Global Technologies division totaled
SEK 2,504 M (2,076), with organic growth of 8% (5). AdvanIDe,
Identification Technology (IDT) and Quantum Secure showed strong
growth. Sales were stable for Access Control and Logical Access
(IAM), while Government ID and Biometrics showed negative growth.
Hospitality showed continued strong growth and rising income driven
by new innovative products. Acquired growth amounted to 2% (5). The
division's operating income amounted to SEK 460 M (415), and the
corresponding operating margin (EBIT) was 18.4% (20.0). Return on
capital employed amounted to 18.5% (21.2). Operating cash flow
before interest paid totaled SEK 706 M (554).
ENTRANCE SYSTEMS
Sales for the quarter in Entrance Systems division totaled SEK
5,097 M (4,440), with organic growth of 6% (4). Growth was strong
for High-speed Doors, Ditec, Amarr and 4Front. The sales level was
good for Door Automation and European industrial doors.
Sales increased for Components and for the private residential
market in Europe. Acquired growth amounted to 3% (12). Operating
income totaled SEK 770 M (685) and the corresponding operating
margin (EBIT) was 15.1% (15.4). Return on capital employed amounted
to 18.5% (16.7). Operating cash flow before interest paid totaled
SEK 981 M (805).
ACQUISITIONS
A total of eight acquisitions were consolidated during the
quarter, including Nergeco (France) and Papaiz/Udinese (Brazil).
The combined price for the 16 acquisition consolidated during the
year amounted to SEK 3,844 M, and preliminary acquisition analyses
indicate that goodwill and other intangible assets with indefinite
useful life amount to SEK 3,098 M. The acquisition price is
adjusted for acquired net debt and estimated earn--outs. Estimated
earn-outs amount to SEK 1,155 M. During the year, complementary
acquisitions of non-controlling interests were also made at a cost
of SEK 990 M.
On 21 December it was announced that ASSA ABLOY had signed an
agreement for the acquisition of the Swiss company CEDES, a leader
in sensor technology for the door, gate and lift industry. The
company has about 340 employees and its sales in 2016 are expected
to total SEK 510 M.
SUSTAINABLE DEVELOPMENT
The subsidiary Pan Pan in China has developed an environmentally
friendly production process for foaming the insulation for the
company's security doors. Previously, materials with high
greenhouse effects were used, which have now been replaced by a
water-based technology. The new production process has been
introduced at one of the subsidiary's plants, and more production
lines will be converted during 2016. The doors produced using the
new environmentally friendly technology will also have customer
benefits, such as better heat and sound insulation and greater
strength and resistance to external impact. The new production
technology will have great importance in reducing the subsidiary's
emissions of greenhouse gases.
The Sustainability Report for 2015 will be available from 23
March 2016 on the company's website, www.assaabloy.com.
STOCK SPLIT
The total number of shares in the company at 31 December 2015 is
1,112,576,334, of which 57,525,969 are A-shares with ten votes each
and 1,055,050,365 are B-shares with one vote each. The increase in
the numbers of shares and votes during the year is the result of
the stock split (3:1) that was decided upon at ASSA ABLOY AB's
Annual General Meeting on 7 May 2015.
Share-based key data have been recalculated for all historical
periods in this Report as a result of the stock split.
PARENT COMPANY
Other operating income for the Parent company ASSA ABLOY AB
totaled SEK 3,392 M (3,085) for the full year. Operating result
amounted to SEK 1,351 M (1,298). Investments in tangible and
intangible assets totaled SEK 41 M (11). Liquidity is good and the
equity ratio was 46.1% (46.4).
DIVIDEND AND ANNUAL GENERAL MEETING
The Board of Directors proposes a dividend of SEK 2.65 (2.17)
per share for the
2015 financial year, an increase of 22%. The Annual General
Meeting will be held on 27 April 2016. The Annual Report for 2015
will be available from 23 March 2016 on the company's website,
www.assaabloy.com.
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 90-95 of the 2014 Annual
Report.
This Year-end Report was prepared in accordance with IAS 34
'Interim Financial Reporting' and the Annual Accounts Act. The
Year-end Report for the Parent company was prepared in accordance
with the Annual Accounts Act and RFR 2 'Reporting by a Legal
Entity'.
The total amount in tables and statements might not always
summarize as there are rounding differences. The aim is to have
each line item corresponding to the source and it might therefore
be rounding differences in the total.
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, financial and tax-related
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 2014
Annual Report.
The Administrative courts in Sweden has decided not to allow tax
relief for interest costs relating to one of the Group's
subsidiaries for the years 2008-2012 on the grounds that the relief
is wrongly allocated. The decision will be appealed to the
Administrative court of appeal. The total exposure to tax amounts
to just over SEK 800 M.
The Finnish Tax Administration has decided not to allow tax
relief for interest costs in the Group's Finnish businesses for the
years 2008-2012. The decision will be appealed to a superior court.
The total exposure to tax amounts to about SEK 750 M.
ASSA ABLOY's judgment is that the decisions will not affect the
Group's income.
AUDIT
The Company's Auditors have not carried out any review of the
Report for the Fourth Quarter of 2015.
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 20 October 2015:
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.
Stockholm, 8 February 2016
Johan Molin
President and CEO
FINANCIAL INFORMATION
The Interim Report for the first quarter will be published on 27
April 2016. The Annual General Meeting will be held on 27 April
2016 at the Museum of Modern Art in Stockholm.
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
Operaterassen in Stockholm. 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.
Click on, or paste the following link into your web browser, to
view the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3573O_-2016-2-8.pdf
ASSA ABLOY discloses the information provided herein pursuant to
the Securities Markets Act and/or the Financial Instruments Trading
Act. The information was submitted for publication at 08.00 CET on
8 February.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GIGDDCBGBGLI
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February 08, 2016 03:26 ET (08:26 GMT)
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