assa abloy · public organic sales growth of 1% –good growth in scandinavia, germany and south...

Public

ASSA ABLOYQ4 Report 2019

Public

Organic sales development

– Strong growth in Americas

– Good growth in Global Technologies

– Stable growth in EMEA and Entrance Systems

– Negative growth in APAC

Strong EBIT growth of 8%

– Unchanged margin – higher M&A and R&D offset by mix, efficiencies and lower raw material costs

Strong cash flow of SEK 5.2 bn

Provision for manufacturing footprint program of MSEK 312

2

Stable growth and strong EBIT in Q4 2019

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Q4 2019 figures in summary

Sales SEK 24,946 M +8%

– 1% organic

– 3% acquired

– 4% currency

EBITA-margin* 16.8% (16.7%)

EBIT-margin* 16.2% (16.2%)

EBIT* SEK 4,047 M +8%

EPS SEK 2.49 +7%

3 746

4 047

3 000

3 200

3 400

3 600

3 800

4 000

4 200

4 400

4 600

17 000

18 000

19 000

20 000

21 000

22 000

23 000

24 000

25 000

26 000

Q4 18 Q4 19

Sales, MSEK EBIT, MSEK

3

Sales +8%

EBIT* +8%

*) Excluding restructuring items.

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Full year 2019 figures in summary

Sales SEK 94,029 M +12%

– 3% organic

– 3% acquired

– 6% currency

EBITA-margin* 16.4% (16.3%)

EBIT-margin* 15.9% (15.8%)

EBIT* SEK 14,920 M +12%

Cash flow SEK 14,442 M +27%

EPS SEK 9.22 +14%

Proposed dividend 3.85 SEK +10%

13 309

14 920

9 000

10 000

11 000

12 000

13 000

14 000

15 000

16 000

17 000

60 000

65 000

70 000

75 000

80 000

85 000

90 000

95 000

100 000

2018* 2019

Sales, MSEK EBIT, MSEK

4

Sales +12%

EBIT* +12%

*) Excluding China write-downs and restructuring items.

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Sales by regionOct – Dec 2019

5

ASSA ABLOY 100 +4 +1

Emerging markets 18 -2 -4

Emerging markets comprise follows IMF’s definition as per 2018-12-31

43 +8 +4

3 +16 +15

37 +1 +0

1 -15 -19

12 -7 -8

4 +38 +3

Share of sales, %Change in local currencies

QTD 2019 vs. QTD 2018, %Organic change

QTD 2019 vs. QTD 2018, %

Market highlights

6

• Strong project wins

• Argentina Selects HID goID to Provide Citizens with World’s First

Mobile National ID Program

• US large retailer selects Entrance Systems loading dock

solutions

• New products in our mechanical core

• Korea launched waterproof floor hinges

• Global launch of new padlocks range

• Strong recognition for our innovative products

• 4 products in top door locks of 2019 in Consumer reports in the US

• Several HID awards, e.g. China Intelligent Architecture Brand Award

• Global Solutions wins HotelTechAwards, best mobile key solution

Public

CES Highlights

• New product launches

• August: August Wi-Fi Smart Lock

• Yale • Liftmaster Lock, Linus Smart Lock and Smart

Cabinet Lock

• Smart Storage Line - & Smart Safe, Smart Delivery Box and Yale Access

• Yale and Samsung reveal concept UWB lock for automatic unlock

• Nine product awards at the CES 2020

7

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Sales growth

8

50 000

55 000

60 000

65 000

70 000

75 000

80 000

85 000

90 000

95 000

100 000

0

2

4

6

8

10

12

14

16

18

20

2014 2015 2016 2017 2018 2019

Organic growth, % Acquired growth, % Sales in fixed currencies, MSEK

MSEK%

27 Quarters with

positive OG

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Operating margin

9


13

14

15

16

17

18

13

14

15

16

17

18

2014 2015 2016 2017 2018 2019

Quarter EBIT Rolling 12-months EBITA** Rolling 12-months

Run rate: EBIT-margin 15.9% (15.8%*)

% %

Long term target range (average)

**) Operating margin before amortization of intangible assets recognized in business combinations.

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0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

2014 2015 2016 2017 2018 2019

Quarter Rolling 12-months

MSEK, 12 monthsMSEK

Operating profit

10

+61%in

5 years


+8%vs

Q4 LY

+12%vs FY

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Fully active pipeline

– 3 acquisitions completed in Q4 and 12 in 2019

– Acquired annualized sales of MSEK 2,500

Additional acquisitions to be closed

– agta record

Sales of MEUR 378 and EBITA-margin of 12%* in 2018

Expected to close early 2020

– AM Group

Sales of MSEK 800

Expected to close in Q1

11

Acquisitions

* Adjusted for extraordinary personnel expenses of MEUR 8.9

Public

Sales of MSEK 800 with 425 employees

Industrial door company within Entrance Automation

Complements product offering and geographic coverage

Accretive to EPS from start

12

AM Group, Australia

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Organic sales growth of 1%

– Good growth in Scandinavia, Germany and South Europe

– Stable growth in France and East Europe

– Negative growth in Finland, UK, Middle East & Africa, and Benelux

Operating margin 16.0% (16.6%)*

– Negative volume leverage -50bps on low growth and higher R&D costs

– FX –30bps and acquisitions +20bps

12%

13%

14%

15%

16%

17%

18%

19%

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

Sales, MSEK Operating margin, %

13

Opening Solutions EMEA

22% of Group sales

Excluding restructuring items.

Public


– Very strong growth for Electromechanical Solutions and Perimeter Security

– Strong growth for Residential Group, Canada, Security Doors and Architectural Hardware

– Good growth in Latin America and Access & High Security

– Negative growth in US Smart Residential


– Strong volume leverage (40 bps) driven by strong growth, operational efficiencies and raw material tailwind

– FX 10bps and M&A -40bps16%

17%

18%

19%

20%

21%

22%

23%

24%

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000

6 500

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19


14

Opening Solutions Americas

24% of Group sales


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Organic sales growth of -10%

– Good growth in South Asia and Pacific

– Negative growth in China, India and South Korea

– Negative intra group sales


– Negative leverage of -120bps, due to negative organic growth and weak performance in South Korea

– FX -10bps and M&A -10bps

– China business plan according to plan

Stabilizing performance

Consolidation of sales and operations is ongoing

Headcount reduced by 10% in 20190%

5%

10%

15%

20%

1 000

1 500

2 000

2 500

3 000

Q4 17 Q1 18 *Q2

18

Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

Sales, MSEK Operating margin, %*

15

Opening Solutions Asia Pacific

10% of Group sales

*) Excluding restructuring items and China write downs MSEK 400 in Q2 2018.

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– Very strong growth in Extended Access

– Strong growth in Physical Access Control and Global Solutions

– Stable growth in Identity & Access Solutions

– Negative growth in Identification Technology, Secure Issuance and Citizen ID


– Strong volume leverage (140bps) driven by operational efficiencies, raw material tailwind and mix

– FX +20bps and M&A -320bps

High acquisition costs for closing De La Rue and Placard 12%

14%

16%

18%

20%

22%

24%

1 500

2 000

2 500

3 000

3 500

4 000

4 500

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19


16

Global Technologies 17% of Group sales


Public


– Strong growth in Pedestrian Doors

– Good growth in Logistics solutions

– Stable growth in High Performance Doors

– Negative growth in Industrial Doors, EU Residential Doors, US Residential Doors and Door components

– Good growth in service


– Strong volume leverage (130 bps) due to operational efficiencies, strong raw material tailwind, good growth in service and other positive mix

– FX -10 bps and M&A flat

New organizational structure from Q1 2020

11%

12%

13%

14%

15%

16%

17%

18%

4 000

4 500

5 000

5 500

6 000

6 500

7 000

7 500

Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19


17

Entrance Systems 27% of Group sales


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Financial summary, Q4 2019

18

October-December January-December

SEK M 2018 2019 Change 2018 2019 Change

Sales 23,167 24,946 8% 84,048 94,029 12%

- Organic growth 1,281 147 1% 3,901 2,652 3%

- Acquired net growth 714 760 3% 1,793 3,063 3%

- FX-differences 1,063 872 4% 2,217 4,265 6%

Operating income (EBIT)* 3,746 4,047 8% 13,309 14,920 12%

EBITA-margin* 16.7% 16.8% 0.1pts 16.3% 16.4% 0.1 pts

EBIT-margin* 16.2% 16.2% 0.0 pts 15.8% 15.9% 0.1 pts

Income before tax** 3,515 3,779 8% 12,110 13,883 15%

Net income** 2,588 2,767 7% 8,984 10,243 14%

EPS**, SEK 2.33 2.49 7% 8.09 9.22 14%

Operating cash flow 4,923 5,235 6% 11,357 14,442 27%

ROCE 18% 17% -1.0 pts 16% 17% 1.0 pts

*) Excluding China write down of MSEK 400 in Q2 2018 **) Excluding the impairment in China of goodwill and other intangible assets

FX & acquisition ‘run-rate’ effects in Q1 2020(31 Dec 2019):SALESFX: +1% Acq: +2%

Public

Bridge analysis – Q4 2019

19

SEK M Q4 2018 Organic Currency Acq/Div Q4 2019

Growth 1% 4% 3% 8%

Sales 23,167 147 872 760 24,946

Operating profit* 3,746 163 137 2 4,047

Operating margin, %* 16.2% 110.7% 15.7% 0.3% 16.2%

Dilution/accretion 0.6 pts -0.1 pts -0.5 pts

Sales up MSEK 1,779

Price +1% and volume +0%

Driven by Americas and Global Technologies

EBIT up MSEK 302

Strong contribution from Americas and Entrance Systems

Margin

Accretion in Entrance Systems and Americas

Acquisitions and integration costs of above MSEK 60


Public

Cost breakdown as % of salesOct-Dec

20

% QTD 2018*QTD 2019

excl. acquisitions* Δ QTD 2019*

Direct material -37.0% -36.1% +0.9 pts -36.1%

Conversion cost -23.6% -23.7% -0.1 pts -23.9%

Gross margin 39.4% 40.2% +0.8 pts 40.0%

S, G & A -23.2% -23.5% -0.3 pts -23.8%

EBIT 16.2% 16.7% +0.5 pts 16.2%

• Direct Material – lower raw material costs and mix

• Conversion cost – low growth and IT investments

• SG&A – continued investments in R&D and sales


Manufacturing Footprint Program

21

Initiatives in MFP7

Payback time of <3 years

Closure of ~15 factories and >30 offices

Restructuring cost for the full program MSEK 1,530

MSEK 1,218 in Q4 2018

MSEK 312 in Q4 2019

Annual savings of approximately MSEK 800 by 2021

Status of all MFPs in 2019

Five factories closed

1,367 FTEs left the Group

MSEK 778 provisions remain for all MFPs

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Operating cash flow, MSEK

22

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

0

1 000

2 000

3 000

4 000

5 000

6 000

2014 2015 2016 2017 2018 2019

Quarter, MSEK Cash rolling 12 months, MSEK EBT rolling 12 months, MSEK

12 months cash flow / EBT = 104%

Quarter12 months

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Gearing % and net debt, MSEK

23

0

15

30

45

60

75

90

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2014 2015 2016 2017 2018 2019*

Net debt, MSEK Gearing, %

Net debt Gearing

Debt/Equity 56%* (56%)

*) IFRS 16 effect on net debt SEK 3.7 bn.

Net debt/EBITDA1.8 (1.9)

Public

Earnings per share, SEK

24

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

0,50

0,75

1,00

1,25

1,50

1,75

2,00

2,25

2,50

2014 2015 2016 2017 2018 2019

Quarter, SEK Rolling 12 months, SEK

Quarter 12 months

YTD EPS +14%*

* Excluding restructuring items and impairment of intangible assets in China. Chart is restated for Stock split 3:1 2015.

Public

Q4

– Stable organic sales growth of 1%

– Strong EBIT growth of 8%*

– Cash flow of MSEK 5,235

Full year

– Good organic growth of 3%

– Strong EBIT growth of 12%*

– Record cash flow of MSEK 14,442

Proposed dividend of SEK 3.85/share

Welcoming new heads of HID and Entrance Systems

25

Conclusions


Public

Q&A

Public

Appendix

Public

Cost breakdown as % of sales

% QTD 2018*

QTD 2019excl.

acquisitions* Δ QTD 2019* YTD 2018**

YTD 2019excl.

acquisitions Δ YTD 2019*

Direct material -37.0% -36.1% 0.9 pts -36.1% -36.2% -36.1% 0.1 pts -36.0%

Conversion cost -23.6% -23.7% 0.1 pts -23.9% -24.2% -24.0% 0.2 pts -23.9%

Gross margin 39.4% 40.2% 0.8 pts 40.0% 39.6% 39.9% 0.3 pts 40.1%

S, G & A -23.2% -23.5% -0.3 pts -23.8% -23.8% -23.8% 0.0 pts -24.2%

EBIT 16.2% 16.7% 0.5 pts 16.2% 15.8% 16.1% 0.3 pts 15.9%

*) Excluding restructuring items. **) Excluding restructuring items and China write down in Q2 2018.

28

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Opening Solutions EMEA’s bridge

29

MSEK Q4 2018 Organic Currency Acq/Div Q4 2019

Growth 1% 2% -2% 1%

Sales 5,485 32 148 -141 5,525

Operating income 911 -25 11 -13 884

Operating margin, % 16.6% -77.0% 7.7% 9.3% 16.0%

Dilution/accretion -0.5 pts -0.3 pts 0.2 pts

12 months figures

Sales 20,201 21,144

EBIT 3,256 3,396

Operating cash flow before paid interest

2,819 3,515

Cash flow/EBIT 87% 103%

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Opening Solutions Americas’ bridge

30


Growth 5% 5% 4% 14%

Sales 5,173 269 248 210 5,900

Operating income 1,027 78 58 19 1,182

Operating margin, % 19.9% 28.8% 23.6% 9.0% 20.0%

Dilution/accretion 0.4 pts 0.1 pts -0.4 pts

12 months figures

Sales 19,817 23,172

EBIT 3,941 4,673


3,903 5,263


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Opening Solutions Asia Pacific’s bridge

31


Growth -10% 3% 4% -3%

Sales 2,756 -279 85 115 2,676

Operating income* 264 -57 7 6 220

Operating margin, %* 9.6% 20.5% 7.8% 5.3% 8.2%

Dilution/accretion -1.2 pts -0.1 pts -0.1 pts

12 months figures

Sales 9,949 10,689

EBIT* 892 879


811 622


*) Excluding China write downs in Q2 2018.

Public

Global Technologies’ bridge

32


Growth 2% 6% 14% 22%

Sales 3,602 69 165 541 4,377

Operating income 716 71 35 -23 800

Operating margin, % 19.9% 102.4% 21.3% -4.2% 18.3%

Dilution/accretion 1.4 pts 0.2 pts -3.2 pts

12 months figures

Sales 11,951 15,423

EBIT 2,387 2,890


2,463 3,183


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Entrance Systems’ bridge

33


Growth 0% 4% 0% 4%

Sales 6,616 8 241 27 6,893

Operating income 998 94 28 4 1,125

Operating margin, % 15.1% 1129.6% 11.6% 15.9 16.3%

Dilution/accretion 1.3 pts -0.1 pts 0.0 pts

12 months figures

Sales 23,762 25,553

EBIT 3,358 3,652


2,772 3,655


Public

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