Fourth quarter
* Sales increased during the quarter by a full 22%, including 4% organic
growth, and totaled SEK 11,744 M (9 648).
* Strong growth in Asia, Africa, Global Technologies and Entrance Systems,
while the markets in Europe and North America were stable.
* Acquisitions of Albany Door Systems and Securistyle were completed and
agreement signed for the acquisition of Dynaco. The combined annualized
sales from these companies is SEK 1,850 M representing 5% growth.
* Operating income (EBIT) amounted to SEK 1,881 M[1] (1,606), an increase of
17%. The operating margin was 16.0%[1] (16.6).
* Net income amounted to SEK 118 M[2] (1,071).
* Earnings per share rose by 20% to SEK 3.43[3] (2.86).
* The restructuring program was expensed with SEK 1,420 M.
* Operating cash flow reached a record high SEK 2,794 M (2,085).
Full year
* Sales increased by 13%, including 4% organic growth, and totaled SEK 41,786
M (36,823).
* Operating income (EBIT) amounted to SEK 6,624 M[1] (6,046), representing an
increase of 10%. The operating margin was 15.9%[1] (16.4).
* Net income amounted to SEK 3,869 M[2] (4,080).
* Earnings per share rose by 13% to SEK 12.30[3] (10.89).
* Strong operating cash flow amounted to SEK 6,080 M (6,285).
* The Board of Directors proposes a dividend of SEK 4.50 per share (4.00).
[1] Excluding restructuring costs in 2011 amounting to SEK -1,420 M for the
quarter and for the year.
[2] If restructuring and one-time items are excluded, net income in 2011 was SEK
1,285 M for the quarter and SEK 4,605 M for the year.
[3] Excluding restructuring and one-time items in 2011 amounting to SEK -1,167 M
for the quarter and SEK -736 M for the year.
SALES AND INCOME
Fourth quarter Full year
------------------------------------
2010 2011 Change 2010 2011 Change
--------------------------------------------------------------------------
Sales, SEK M 9,648 11,744 +22% 36,823 41,786 +13%
of which,
Organic growth +4% +4%
Acquisitions +20% +17%
Exchange-rate effects -385 -195 -2% -1,626 -2 309 -8%
Operating income (EBIT), SEK M[1] 1,606 1,881 +17% 6,046 6,624 +10%
Operating margin (EBIT), %[1] 16.6 16.0 16.4 15.9
Income before tax, SEK M[1] 1,405 1,723 +23% 5,366 5,979 +11%
Net income, SEK M[2] 1,071 118 - 4,080 3,869 -
Operating cash flow, SEK M 2,085 2,794 +34% 6,285 6,080 -3%
Earnings per share (EPS), SEK[2] 2.86 3.43 +20% 10.89 12.30 +13%
[1] Excluding restructuring costs in 2011 amounting to SEK -1,420 M for the
quarter and for the year.
[2] If restructuring and one-time items are excluded, net income in 2011 was SEK
1,285 M for the quarterand SEK 4,605 M for the year.
COMMENTS BY THE PRESIDENT AND CEO
"It is with great satisfaction that I can report that the fourth quarter set new
records in both sales and earnings," says Johan Molin, President and CEO. "Sales
increased by a full 22%, while operating income increased by 17%. It was
particularly pleasing that the Group's increasing exposure on the emerging
markets meant that total organic growth amounted to a good 4% despite a weak
demand on the mature markets.
"A number of innovative new products in both the mechanical and
electromechanical areas were launched during the year, and the share of sales
coming from new products rose to over 20%, almost a doubling compared to earlier
figures. In addition, the acquisitions of ActivIdentity and LaserCard during the
year mean that the Group now can offer complete systems for advanced public ID
solutions. The strategic acquisition of Crawford meant that ASSA ABLOY took a
leading position in the growing field of entrance automation.
"Operating income for the full year increased by a good 10%, supported by
efficiency improvements and the continuing relocation of production to low-cost
countries. Operating cash flow continued strong and exceeded 100% of pre-tax
profit.
"Acquisition activity was high throughout the year, and 18 acquisitions with a
combined annualized sales of SEK 6,800 M were completed, representing 18%
growth. The largest transaction during the year was the acquisition of Cardo and
the subsequent divestments of Cardo Flow Solutions and Lorentzen & Wettre.
During January the acquisitions of Albany Door Systems in America and
Securistyle in Britain were completed. An agreement has also been signed for the
acquisition of Dynaco in Belgium. This means that for 2012 the strategic target
of 5% annual acquired growth has already been achieved.
"Looking forward into 2012, continued good growth on the emerging markets is
expected, but at a lower level than last year. On the mature markets a stable
development is expected with an unchanged or slightly positive sales trend. The
underlying business cycle continues to be affected by the uncertainty on the
financial markets and budget restrictions in many countries, which primarily
impacts the market segments that are dependent on public financing."
FOURTH QUARTER
All figures for earnings exclude one-time items amounting to SEK -1,420 M on the
operating result (EBIT) and SEK -1,167 M on the net income.
The Group's sales totaled SEK 11,744 M (9,648), an increase of 22% compared with
2010. Organic growth for comparable units was 4% (6). Acquired units contributed
20% (9). Exchange-rate effects had a negative impact of SEK 195 M on sales, that
is -2% (-5).
Operating income before depreciation, EBITDA, amounted to SEK 2,151 M (1,851).
The corresponding EBITDA margin was 18.3% (19.2). The Group's operating income,
EBIT, amounted to SEK 1,881 M (1,606), an increase of 17%. The operating margin
was 16.0% (16.6).
Net financial items amounted to SEK -158 M (-201). The Group's income before tax
amounted to SEK 1,723 M (1,405), an improvement of 23% compared with the
previous year. Exchange-rate effects had a negative impact of SEK 399 M on the
Group's income before tax. The profit margin was 14.7% (14.6). The underlying
estimated effective tax rate on an annual basis amounted to 23%. Earnings per
share amounted to SEK 3.43 (2.86), an increase of 20%.
FULL YEAR
All figures for earnings exclude one-time items amounting to SEK -1,420 M on the
operating result (EBIT) and SEK -736 M on the net income.
Sales for 2011 totaled SEK 41,786 M (36,823), representing an increase of 13%
compared with 2010. Organic growth was 4% (3). Acquired units contributed 17%
(8). Exchange-rate effects affected sales negatively by SEK 2 309 M.
Operating income before depreciation, EBITDA, amounted to SEK 7,646 M (7,041).
The corresponding margin was 18.3% (19.1). The Group's operating income, EBIT,
amounted to SEK 6,624 M (6,046), an increase of 10%. The corresponding operating
margin (EBIT) was 15.9% (16.4).
Earnings per share increased to SEK 12.30 (10.89) Operating cash flow amounted
to SEK 6,080 M (6,285).
RESTRUCTURING MEASURES
During the quarter the new restructuring program announced during the fall of
2011 began. A total of 17 production units will be shut down and a number of
others will change from full production to final assembly. The cost to be set
against earnings was SEK 1,420 M gross and SEK 1,016 M net after the capital
gain from the Cardo transaction. Payback time is estimated at just over three
years.
Payments related to all restructuring programs amounted to SEK 183 M in the
quarter.
All restructuring programs proceeded according to plan and have led to a
reduction in personnel of 145 people during the quarter and 5,894 people since
the projects began.
A further 1,644 people will leave by the end of 2014.
At the end of the quarter provisions of SEK 1,665 M remained in the balance
sheet for carrying out the programs.
COMMENTS BY DIVISION
EMEA
Sales for the quarter in EMEA division totaled SEK 3,524 M (3,364), with organic
growth of 1% (2). The market situation improved to some extent during the
quarter with growth in Scandinavia, Finland, Germany, the UK and Eastern Europe.
Sales in France and Belgium were stable while the trend in southern Europe,
mainly Spain and Italy, was negative. Acquired growth amounted to 5%. Operating
income totaled SEK 640 M (604), which represents an operating margin (EBIT) of
18.2% (18.0), the highest-ever figure for the division. Return on capital
employed amounted to 25.4% (26.3). Operating cash flow before interest paid
totaled SEK 851 M (858).
AMERICAS
Sales for the quarter in Americas division totaled SEK 2,228 M (2,291), with
organic growth of 0% (6). New construction in the institutional segment was more
stable than earlier in the year and the sales trends for high-security products
and electromechanics were good. Sales on the Residential market showed good
growth. At the same time the trends for Security Doors and Latin America were
weak. Acquired growth was less than 1%. Operating income totaled SEK 450 M (459)
and the operating margin was 20.2% (20.1). Return on capital employed amounted
to 21.9% (21.0). Operating cash flow before interest paid totaled SEK 525 M
(492).
ASIA PACIFIC
Sales for the quarter in Asia Pacific division totaled SEK 1,990 M (1,766), with
organic growth of 9% (12). Growth was good in China, Korea, South-East Asia and
India. Australia was affected negatively by falling demand from the commercial
segment, and New Zealand showed a continuing negative trend resulting from the
earthquakes. Acquired growth amounted to 4%. Operating income totaled SEK 280 M
(246), representing an operating margin (EBIT) of 14.1% (13.9). The quarter's
return on capital employed amounted to 26.0% (27.3). Operating cash flow before
interest paid totaled SEK 617 M (561).
GLOBAL TECHNOLOGIES
Sales for the quarter in Global Technologies division totaled SEK 1,510 M
(1,325), with organic growth amounting to 7% (18). HID had strong growth in
access control, logical access and secure issuing of smart cards, but e-
government and identification technology showed a more restrained trend during
the quarter. Large project orders at low margins were delivered to authorities
in countries including Indonesia and Romania. Hospitality continued to record
strong growth despite low activity in new construction on the hotel market.
Demand for NFC locks was very strong and more than 70% of new sales were in this
category. Acquired growth amounted to 9%. The division's operating income
amounted to SEK 237 M (224), giving an operating margin (EBIT) of 15.7% (16.9).
The operating margin was affected by 1.2 percentage points by dilution from
negative exchange-rate effects and the acquisition of LaserCard and
ActivIdentity. Return on capital employed amounted to 14.7% (15.4). Operating
cash flow before interest paid totaled SEK 430 M (359).
ENTRANCE SYSTEMS
Sales for the quarter in Entrance Systems division totaled SEK 2,704 M (1,118),
with organic growth amounting to 7% (-2). Growth was good for Besam, Crawford
and FlexiForce and generally in the service sector too. Ditec was affected by
the negative trends in southern Europe and Normstahl by reduced demand on the
residential market. Acquired growth amounted to 141%. Operating income totaled
SEK 449 M (198), giving an operating margin of 16.6% (17.7). The operating
margin was affected by 1.2 percentage points by dilution from negative exchange-
rate effects and the acquisition of Crawford (Cardo). Return on capital employed
amounted to 15.6% (18.0). Operating cash flow before interest paid totaled SEK
713 M (141).
ACQUISITIONS
During the quarter Metalind in Croatia and a number of minor acquisitions were
consolidated. This means that a total of 18 companies were acquired and
consolidated during the year. The combined acquisition price for these 18
companies, excluding disposal groups, amounted to SEK 7,096 M, and preliminary
acquisition analyses indicate that goodwill and other intangible assets with
indefinite useful life amount to SEK 5,985 M. The acquisition price is adjusted
for acquired net debt and estimated earn-outs. Estimated earn-outs at the
acquisition dates amount to SEK 446 M.
On 11 January it was announced that ASSA ABLOY had completed the acquisition of
the American company Albany Door Systems, one of the global leaders in
industrial automatic high-speed doors. The company has about 700 employees and
its sales in 2012 are expected to reach SEK 1,300 M.
On 23 January it was announced that ASSA ABLOY had signed an agreement for the
acquisition of the Belgian company Dynaco, a leading manufacturer of automatic
high-speed doors specializing in sales to a global network of distributors. The
company has 140 employees and its sales in 2012 are expected to reach SEK 450 M.
On 27 January it was announced that ASSA ABLOY had acquired the British company
Securistyle. Securistyle is active in window fittings and its product offering
includes high-quality hinges, handles and window locks. The company has 205
employees and its sales in 2012 are expected to reach SEK 225 M.
SUSTAINABLE DEVELOPMENT
ASSA ABLOY Hospitality, which produces locks and safes for the hotel industry,
has phased out all brass in its highest-volume product. The plated brass has
been replaced by stainless steel with the same appearance as before. Stainless
steel is a far more environmentally friendly product than plated brass, partly
through eliminating the whole plating process. It is also significantly cheaper
and requires less transporting and reduced stockholding. It is estimated that
the change to stainless steel has led to a reduction of 72 tons in brass
consumption.
The 2011 Sustainability Report, reporting on the Group's targets and giving
other information about sustainable development, will be published at the time
of the Annual General Meeting in April 2012.
PARENT COMPANY
'Other operating income' for the Parent company ASSA ABLOY AB totaled SEK 1,808
M (1,623) for the full year. Income before tax amounted to SEK 2,297 M (954).
Investments in tangible and intangible assets totaled SEK 116 M (11), of which
acquired assets accounted for SEK 114 M (-). Liquidity is good and the equity
ratio was 39.3% (52.9).
DIVIDEND AND ANNUAL GENERAL MEETING
The Board of Directors proposes a dividend of SEK 4.50 (4.00) per share for the
2011 financial year. The Annual General Meeting will be held on 25 April 2012.
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 86-91 of the 2010 Annual Report. From 2011 ASSA ABLOY is
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.
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'.
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 2010 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 28 October 2011:
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, 10 February 2012
Johan Molin
President and CEO
FINANCIAL INFORMATION
The Quarterly Report for the first quarter will be published on 24 April 2012.
The Annual General Meeting will be held on 25 April 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
Tomas Eliasson, Chief Financial Officer, Tel: +46 8 506 485 72
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 www.assaabloy.com.
It is possible to submit questions by telephone on:
+46 8 5052 0270, +44 207 509 5139 or +1 718 354 1226
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 10 February.
[HUG#1584543]
ASSA ABLOY: A strong quarter with record sales and earnings
| Source: ASSA ABLOY AB
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