Fourth quarter
* Sales increased by 8% to SEK 8,721 M (8,059), with 6% organic
growth, 5% acquired growth and exchange-rate effects of -2%.
* Operating income (EBIT) increased by 13% to SEK 1,440 M (1,274*),
representing a margin of 16.5% (15.8*).
* Net income, including non-recurring financial expenses of SEK 54
M after tax, amounted to SEK 859 M (388**).
* Earnings per share, including non-recurring financial expenses of
SEK 54 M after tax, increased by 7% to SEK 2.30 (2.14*).
Excluding the non-recurring financial expenses earnings per share
increased by 14% to SEK 2.44.
* Operating cash flow reached a record high, rising by 46% to SEK
1,740 M (1,189).
* Proposed dividend 3.60 SEK per share (3.25).
Full year
* Sales increased by 8% to SEK 33,550 M (31,137), with 7% organic
growth, 5% acquired growth and exchange-rate effects of -4%.
* Operating income (EBIT) increased by 14% to SEK 5,458 M (4,771*),
representing a margin of 16.3% (15.3*).
* Net income, including non-recurring financial expenses of SEK 54
M after tax, amounted to SEK 3,368 M (1,756**).
* Earnings per share, including non-recurring financial expenses of
SEK 54 M after tax, increased by 13% to SEK 9.02 (7.99*).
Excluding the non-recurring financial expenses earnings per share
increased by 15% to SEK 9.16.
* Operating cash flow was strong, rising by 36% to SEK 4,808 M
(3,528).
SALES AND INCOME
Fourth quarter Full year
2007 2006 Change 2007 2006 Change
Sales, SEK M 8,721 8,059 +8% 33,550 31,137 +8%
of which,
Organic growth +6% +7%
Acquisitions +5% +5%
Exchange-rate effects -188 -2% -1,131 -4%
Operating income
(EBIT),
SEK M 1,440 1,274* +13% 5,458 4,771* +14%
Operating margin
(EBIT), % 16.5 15.8* 16.3 15.3*
Income before tax, SEK
M 1,168 1,086* +8% 4,609 4,100* +12%
Net income, SEK M 859 388** +121% 3,368 1,756** +92%
Operating cash flow,
SEK M 1,740 1,189 +46% 4,808 3,528 +36%
Earnings per share
(EPS), SEK 2.30 2.14* +7% 9.02 7.99* +13%
* Excluding restructuring costs for 2006 amounting to SEK 517 M
for the quarter and SEK 1,474 M for the year.
** Excluding restructuring costs, net income in 2006 was SEK 794 M
for the quarter and
SEK 2,988 M for the year.
COMMENTS BY THE PRESIDENT AND CEO"ASSA ABLOY made strong progress during the quarter and in 2007 as a
whole. All divisions showed growth, increased profitability,
increased return and strong cash flow. Measures to increase market
coverage and the development and launch of new products give us a
very strong base for good long-term advancement, even though the pace
of growth on markets in Europe and North America slowed to some
extent towards the end of the year. It was particularly gratifying
that acquisition activities continued at a high level this quarter
and contributed to increased growth in both mature and new markets as
well as in the fast-growing electromechanical field," said Johan
Molin, President and CEO.
FOURTH QUARTER
The Group's sales totaled SEK 8,721 M (8,059), an increase of 8%
compared with 2006. In local currencies the increase amounted to 11%
(14), of which organic growth for comparable units contributed 6% (9)
while acquired units accounted for 5% (5) of the increase in volume.
Exchange-rate effects had a negative impact of SEK 188 M on sales,
i.e. 2%.
Operating income before depreciation, EBITDA, amounted to SEK 1,670 M
(1,494), an increase of 12% compared with 2006. The EBITDA margin was
19.1% (18.5). The Group's operating income, EBIT, amounted to
SEK 1,440 M (1,274), an increase of 13%, after negative currency
effects of SEK 37 M. The operating margin was 16.5% (15.8).
Net financial items amounted to SEK 271 M (188) after non-recurring
expenses of
SEK 75 M, which corresponds to an average interest rate of about
5.5%. The Group's income before tax amounted to SEK 1,168 M (1,086),
which represents an increase of 8% on the previous year. After
translation of subsidiaries' income statements, exchange-rate effects
had a negative impact of SEK 31 M on the Group's income before tax.
The profit margin was 13.4% (13.5). The Group's tax charge totaled
SEK 309 M (181), corresponding to an effective tax rate of 26.5% for
the quarter. Earnings per share amounted to
SEK 2.30 (2.14), which represents an increase of 7%.
FULL YEAR
Sales for 2007 totaled SEK 33,550 M (31,137), which represents an
increase of 8% compared with 2006. Organic growth was 7% (9).
Acquired companies contributed 5% (3). Exchange-rate effects affected
sales negatively by SEK 1,131 M, i.e. 4%, compared with the
equivalent period in 2006.
Operating income before depreciation, EBITDA, amounted to SEK 6,366 M
(5,669). The corresponding margin was 19.0% (18.2). The Group's
operating income, EBIT, amounted to SEK 5,458 M (4,771) an increase
of 14%, after negative exchange-rate effects of
SEK 203 M. The corresponding operating margin (EBIT) was 16.3%
(15.3).
Earnings per share increased by 13% to SEK 9.02 (7.99). Operating
cash flow amounted to SEK 4,808 M (3,528).
RESTRUCTURING MEASURES
The comprehensive restructuring program initiated in April 2006 is
proceeding according to plan. The program includes some 50 individual
restructuring measures. The roles of a large number of production
units will be changed to focus mainly on final assembly, and some
units will be closed. The cost of the program is assessed at SEK
1,274 M and it is expected to generate cost savings of about SEK 600
M a year once the whole program is completed in 2009. The full cost
of the program was expensed in 2006.
Payments related to the restructuring program amounted to SEK 209 M
during the quarter and SEK 424 M for the year. Savings during the
quarter resulting from measures carried out are assessed at SEK 55 M
compared with the same period last year. The quarterly rate of
savings from the start of the program now amounts to SEK 90 M. So far
1,316 out of the total of 2,000 employees affected by the
restructuring program have left the Group.
COMMENTS BY DIVISION
EMEA
Sales in EMEA division increased but at a slower rate during the
fourth quarter and totaled SEK 3,519 M (3,287), with an organic
growth of 4%. Acquired growth amounted to 1%. Operating income grew
very positively and amounted to SEK 602 M (531), which represents an
operating margin (EBIT) of 17.1% (16.2). Return on capital employed
also improved and amounted to 22.4% (20.7). Operating cash flow
before interest paid totaled SEK 829 M (650) and exceeded operating
income.
AMERICAS
Sales in Americas division increased during the quarter with a stable
good growth in the commercial segment and the sales trend in the
residential segment was negative. Total sales amounted to SEK 2,383 M
(2,388), with 5% organic growth. Acquired growth contributed 3%.
Operating income continued to improve from an already good level and
amounted to SEK 460 M (457), which represents an operating margin
(EBIT) of 19.3% (19.1). Return on capital employed amounted to 21.6%
(20.9). Operating cash flow before interest paid was strong and
totaled SEK 717 M (492).
ASIA PACIFIC
Sales in Asia Pacific division grew strongly in all markets in the
region and totaled
SEK 895 M (584), with 15% organic growth. The new acquisitions,
Baodean and iRevo, were consolidated from the fourth quarter and as a
result acquired growth increased to 41%. Operating income improved in
response to compensated raw-material costs and a growth in volume and
amounted to SEK 115 M (70), which represents an operating margin
(EBIT) of 12.8% (12.0) in spite of dilution from the new acquisitions
of 0.8 of a percentage point. The quarter's return on capital
employed rose further to 19.6% (13.7). Operating cash flow before
interest paid totaled SEK 90 M (48).
GLOBAL TECHNOLOGIES
Global Technologies division reported continued strong growth with
sales of SEK 1,328 M (1,227) in the fourth quarter, of which organic
growth accounted for 10%. A number of new products from HID and Fargo
contributed to the good performance. Acquired growth amounted to 3%.
The operation to merge HID and ITG proceeded according to plan and
will in time yield good effects on both sales and production.
Operating income amounted to SEK 219 M (194), giving an operating
margin (EBIT) of 16.5% (15.8). Return on capital employed amounted to
16.9% (15.2). Operating cash flow before interest paid amounted to
SEK 293 M (195).
ENTRANCE SYSTEMS
Entrance Systems division reported sales of SEK 823 M (765) in the
fourth quarter, representing organic growth of 3%. During the quarter
growth slowed in Europe and North America but remained very strong in
the division's newly established operations in Asia. Acquired growth
amounted to 4%. Operating income amounted to SEK 130 M (120), giving
an operating margin (EBIT) of 15.7% (15.7). Return on capital
employed amounted to 16.3% (15.3). Operating cash flow before
interest paid amounted to SEK 177 M (108).
ACQUISITIONS
The acquired companies Baodean, iRevo, Powershield and Advance Door
were consolidated during the fourth quarter. The total acquisition
price for all companies consolidated during the year amounts to
SEK 1,675 M and preliminary acquisition analyses indicate that
goodwill and other intangible assets with indefinite useful life
amount to SEK 1,200 M. The acquisition price is adjusted for acquired
interest-bearing liabilities including estimated earn-outs.
On 18 January it was announced that ASSA ABLOY's EMEA division has
signed an agreement to acquire Valli&Valli, a leading Italian
producer of design handles. The company is based near Milan and has
200 employees. Valli&Valli is expected to achieve sales of SEK 300 M
in 2008. The acquisition is expected to be completed in the second
quarter.
On 31 January it was announced that ASSA ABLOY's Global Technologies
division has signed an agreement to acquire the German company
SimonsVoss Technologies AG, a leader in the fast-growing segment for
digital access control systems. The company is based in Munich, has
225 employees and is expected to achieve sales of SEK 400 M in 2008.
The acquisition is expected to be approved by the relevant
authorities in the second quarter.
SUSTAINABILITY
During the quarter ASSA ABLOY continued work to implement its
declared 20-point program of sustainable development. The Group's
2007 Sustainability Report will be published in good time for the
forthcoming Annual General Meeting. One of the year's major successes
was the phasing-out of chlorinated solvents, which progressed very
well. Consumption was reduced by 40% during 2007, and the remainder
will be phased out during 2008. Current information about sustainable
development is published on the Group's website.
OTHER EVENTS
Non-recurring costs of SEK 75 M relate to a write-down in Net
financial items for an external development project in which ASSA
ABLOY took part as one of several sources of finance. The financing
took the form of a convertible loan and ASSA ABLOY's receivable is
now entirely written off. The reason for the write-down is that the
market potential of the product developed was judged to be lower than
planned.
PARENT COMPANY
'Other operating income' for the Parent company ASSA ABLOY AB
totaled SEK 1,641 M (945) for the full year. Income before tax
amounted to SEK 2,351 M (1,047). The improved income is chiefly due
to royalty income as well as to non-recurring expenses which burdened
last year's figures. Investments in tangible and intangible assets
totaled SEK 496 M (402). Liquidity is good and the equity ratio was
47.1% (44.9).
DIVIDEND AND ANNUAL GENERAL MEETING
The Board of Directors proposes a dividend of SEK 3.60 (3.25) per
share for the 2007 financial year. The Annual General Meeting will be
held on 24 April 2008.
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 58-62 of the 2006 Annual
Report. New or revised IFRS effective after 31 December 2006 have had
no material effect on the consolidated income statements or balance
sheets. The Group's Interim Reports are prepared in accordance with
IAS 34 (Interim Financial Reporting) under the guidelines given in RR
31 issued by the Swedish Financial Accounting Standards Council. The
Parent company applies RR 32:06.
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 refer to the 2006 Annual Report. No significant risks
other than the risks described there are judged to have occurred.
OUTLOOK*
Organic sales growth is expected to continue at a good rate. The
operating margin (EBIT) and operating cash flow are expected to
develop well.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.
Sales growth and profitability during the first quarter will be
affected negatively by the Easter effect. This is expected to be
recovered during the first quarter.
*The outlook is unchanged except the addition regarding the Easter
effect in the first quarter.
Stockholm, 13 February 2008
Johan Molin
President and CEO
The Year-end Report has not been reviewed by the Company's Auditor.
Financial information
The Interim Report for the first quarter will be published on 23
April 2008. The Annual General Meeting will be held on 24 April at
the Modern Museum (Moderna Museet) in Stockholm.
Further information can be obtained from:
Johan Molin, President and CEO, Tel: +46 8 506 485 42
Tomas Eliasson, Chief Financial Officer, Tel: +46 8 506 485 72
ASSA ABLOY is holding an analysts' meeting at 12.00 today
at Klarabergsviadukten 90 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 5052 0270, +44 208 817 9301 or +1 718 354 1226.
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 13
February.
Strong end to the year for ASSA ABLOY - growth, improved profits and record cash flow in all divisions
| Source: ASSA ABLOY AB
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