ASSA ABLOY Q3 report 2 0 1 9 Strong perform ance in Q3 2 0 1 9 - - PowerPoint PPT Presentation

ASSA ABLOY Q3 report 2 0 1 9

• Good organic sales developm ent
• Strong growth in Americas and Global Technologies
• Good growth in EMEA and Entrance Systems
• Negative growth in APAC
• Electrom echanical products up 1 6 %
• Strong EBI T grow th of 1 4 %
• Stable margin – despite MSEK 55 in M&A costs in

Entrance Systems

• Very strong operating cash flow , up 4 7 %

Strong perform ance in Q3 2 0 1 9

2

• Sales SEK 2 4 ,0 3 4 M

+ 1 3 %

• 4% organic
• 4% acquired
• 5% currency
• EBI TA-m argin 1 6 .7 % ( 1 6 .6 % )
• EBI T-m argin 1 6 .2 % ( 1 6 .2 % )
• EBI T SEK 3 ,8 9 4 M

+ 1 4 %

• EPS

SEK 2 .4 3 + 1 3 %

Q3 2 0 1 9 figures in sum m ary

3 4 2 4 3 8 9 4 3 0 0 0 3 2 0 0 3 4 0 0 3 6 0 0 3 8 0 0 4 0 0 0 4 2 0 0 4 4 0 0 4 6 0 0 1 7 0 0 0 1 8 0 0 0 1 9 0 0 0 2 0 0 0 0 2 1 0 0 0 2 2 0 0 0 2 3 0 0 0 2 4 0 0 0 2 5 0 0 0 Q3 18 Q3 19 Sales, MSEK EBI T, MSEK

Sales + 1 3 % EBI T + 1 4 %

3

Sales by region

Jul – Sep 2019

ASSA ABLOY 1 0 0 + 7 + 4 Emerging markets 1 8 + 4 + 2 4 6 + 9 + 5 2 + 8 + 8 3 4 + 4 + 2 1 + 7 + 6 1 3 + 5 + 2 4 + 2 7 + 3

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

Share of sales, % Change in local currencies QTD 2 0 1 9 vs. QTD 2 0 1 8 , % Organic change QTD 2 0 1 9 vs. QTD 2 0 1 8 , %

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Market highlights

• Strong project w ins
• Specification initiatives in EMEA with strong momentum
• HID technology and ASSA ABLOY electronic locks are helping

Clemson University students

• FiRa Consortium
• Ultra-Wideband (UWB) ecosystem will provide new use cases,

setting a new standard in seamless user experiences

• Several Sm art Residential launches
• Yale access ecosystem in EMEA, following APAC launch in Q2
• New Yale Pro Series in US with smaller product footprint
• New smart interior door lock in South Korea (Gateman)

5

Riyadh Metro Project

Sales grow th

50 000 55 000 60 000 65 000 70 000 75 000 80 000 85 000 90 000 95 000 100 000 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 %

2 6 Quarters w ith positive OG

6

Operating m argin

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

Long term target range ( average)

Run rate: EBI T-m argin 1 5 .8 % ( 1 6 .0 % )

%

* ) Excluding China write-downs and restructuring items.

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

7 %

Operating profit

2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 2014 2015 2016 2017 2018 2019 Quarter Rolling 12-months

+ 6 7 % in 5 years

MSEK, 12 months MSEK

* ) Excluding China write-downs and restructuring items.

+ 1 4 % vs Q3 LY

8

Acquisitions

• Fully active pipeline
• 4 acquisitions completed in Q3 and 10 year-to-date
• Acquired annualized sales of MSEK 2,400
• Additional acquisitions to be closed
• agta record
• Sales of MEUR 378 and EBI TA-margin of 12% * in 2018
• Expected to close early 2020
• LUX-I Dent
• Sales of MSEK 180

* Adjusted for extraordinary personnel expenses of MEUR 8.9

9

LifeSafety Pow er, USA

• Sales of MSEK 2 9 0 w ith 6 5 em ployees
• Supplier of sm art access control pow er solutions
• Com plem ent to access control portfolio
• Accretive to EPS from start

10

Placard, Australia

• Sales of MSEK 4 2 0 w ith 1 7 0 em ployees
• Secure card m anufacturer
• Enhances position in sm art card m arket
• Accretive to EPS from start

11

LUX-I Dent, Czech Republic

• Sales of MSEK 1 8 0 w ith 1 4 5 em ployees
• RFI D com ponent provider
• Enhances offering w ithin RFI D com ponents
• Optim izes ASSA ABLOY’s operations
• Neutral to EPS from start

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PRELAMINATED INLAYS HF & NFC INLAYS UHF INLAYS GLASS TRANSPONDERS

Opening Solutions EMEA

• Organic sales grow th of 3 %
• Very strong growth in Middle East
• Strong growth in East Europe
• Good growth in Benelux, Scandinavia and Germany
• Stable growth in France and Africa
• Negative growth in Finland, UK and South Europe
• Operating m argin 1 6 .1 % ( 1 5 .9 % )
• Good volume leverage (40bps) driven by operational

efficiencies

• FX –40bps and acquisitions + 20bps

2 1 %

• f Group

sales 12% 13% 14% 15% 16% 17% 18% 19% 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Sales, MSEK Operating margin, %

Excluding restructuring items.

13

16% 18% 20% 22% 24% 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000 6 500 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Sales, MSEK Operating margin, %

Opening Solutions Am ericas

• Organic sales grow th of 6 %
• Very strong growth for US Smart Residential and

Architectural Hardware

• Strong growth for Residential Group, Access & High

Security, Electromechanical Solutions and Security Doors

• Good growth in Canada and stable in Latin America
• Negative growth in Perimeter Security
• Operating m argin 2 0 .5 % ( 2 0 .1 % )
• Strong volume leverage (50 bps) driven by growth, raw

material tailwind and operational efficiencies

• FX flat and M&A -10bps

2 5 %

• f Group

sales

Excluding restructuring items.

14

Opening Solutions Asia Pacific

• Organic sales grow th of -1 %
• Strong growth in South Asia
• Stable growth in Pacific
• Negative growth in China, I ndia, South Korea and Japan
• Operating m argin 9 .5 % ( 9 .2 % )
• Leverage of 10bps despite negative organic growth
• FX + 10bps and M&A 10bps
• China business plan being implemented

1 1 %

• f Group

sales

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

0% 5% 10% 15% 20% 1 000 1 500 2 000 2 500 3 000 Q3 17 Q4 17 Q1 18 * Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Sales, MSEK Operating margin, % *

15

Global Technologies

• Organic sales grow th of 6 %
• Very strong growth in Secure I ssuance and Global

Solutions

• Stable growth for Physical Access Control and Citizen I D
• Negative growth in Extended Access, I dentify & Access

Solutions and I dentification Technology

• Operating m argin 2 0 .3 % ( 2 1 .4 % )
• Negative volume leverage (-20bps) due to investments in

R&D and new verticals in Global Solutions

• FX + 30bps and M&A -120bps

1 5 %

• f Group

sales

Excluding restructuring items.

15% 17% 19% 21% 23% 25% 1 500 2 000 2 500 3 000 3 500 4 000 4 500 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Sales, MSEK Operating margin, %

16

10% 11% 12% 13% 14% 15% 16% 17% 18% 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000 6 500 7 000 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Sales, MSEK Operating margin, %

Entrance System s

• Organic sales grow th of 3 %
• Strong growth in Pedestrian Doors and High Performance

Doors

• Good growth in I ndustrial Doors and Logistic solutions
• Stable growth in Door components and US Residential

Doors

• Negative growth in EU Residential Doors
• Strong growth in service
• Operating m argin 1 3 .6 % ( 1 4 .1 % )
• Strong volume leverage (60 bps) due to strong growth in

service and operational efficiencies

• FX -30 bps and M&A -80 bps due to acquisition cost of

MSEK 55 for agta record

2 7 %

• f Group

sales

Excluding restructuring items.

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Financial sum m ary, Q3 2 0 1 9

July-Septem ber January-Septem ber SEK M 2 0 1 8 2 0 1 9 Change 2 0 1 8 2 0 1 9 Change Sales 2 1 ,1 9 1 2 4 ,0 3 4 1 3 % 6 0 ,8 8 1 6 9 ,0 8 2 1 3 %

• Organic growth

960 807 4% 2,620 2,505 4%

• Acquired net growth

466 825 4% 1,079 2,303 4%

• FX-differences

1,286 1,211 5% 1,154 3,393 5% Operating incom e ( EBI T) * 3 ,4 2 4 3 8 9 4 1 4 % 9 ,5 6 4 1 0 ,8 7 3 1 4 % EBITA-margin* 16.6% 16.7% 0.1pts 16.2% 16.2% 0.0 pts EBIT-margin* 16.2% 16.2% 0.0 pts 15.7% 16.2% 0.5 pts Income before tax* * 3,221 3,645 13% 8,595 10,104 18% Net income* * 2,384 2,696 13% 6,396 7,477 17% EPS* * , SEK 2 .1 5 2 .4 3 1 3 % 5 .7 6 6 .7 3 1 7 % Operating cash flow 3 ,0 0 4 4 ,4 0 1 4 7 % 6 ,4 3 5 9 ,2 0 8 4 3 % ROCE 1 7 % 1 7 % 0 .0 pts 1 5 % 1 6 % 1 .0 pts

* ) Excluding China write down of MSEK 400 in Q2 2018 * * ) Excluding the impairment in China of goodwill and other intangible assets 18 FX & acquisition ‘run-rate’ effects in Q4 2 0 1 9 ( 3 0 Sep 2 0 1 9) : SALES FX: + 5% Acq: + 3%

Bridge analysis – Q3 2 0 1 9

SEK M Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth 4% 5% 4% 13% Sales 21,191 807 1,211 825 24,034 Operating profit 3,424 197 192 82 3,894 Operating margin, % 16.2% 24.4% 15.8% 9.9% 16.2% Dilution/ accretion 0 .3 pts

• 0 .1 pts
• 0 .2 pts

Sales up MSEK 2 ,8 4 3

• Price + 1% and volume + 3%
• Growth driven by Americas and Global Technologies

EBI T up MSEK 4 7 0

• Strong contribution from Americas and Global Technologies
• Acquisition cost of MSEK 55 in Entrance Systems for agta record

Margin

• Accretion from Americas and EMEA

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Cost breakdow n as % of sales

Jul-Sep

• Direct Material – raw material costs overcompensated
• Conversion cost – improvement from operational efficiencies
• MFP efficiencies of MSEK 200 in Q3
• SG&A – flat despite higher investments in R&D

% QTD 2 0 1 8 QTD 2 0 1 9

• excl. acquisitions

Δ QTD 2 0 1 9 Direct material

• 36.7%
• 36.6%

+ 0.1 pts

• 36.5%

Conversion cost

• 23.7%
• 23.6%

+ 0.1 pts

• 23.5%

Gross margin 39.6% 39.8% + 0.2 pts 40.0% S, G & A

• 23.4%
• 23.4%

+ 0.0 pts

• 23.8%

EBIT* 16.2% 16.4% + 0.2 pts 16.2%

20

Operating cash flow , MSEK

2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 20 000 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 Quarter 12 months

1 2 m onths cash flow / EBT = 1 0 4 %

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Gearing % and net debt, MSEK

15 30 45 60 75 90 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 6 4 % ( 6 3 % ) *

* ) I FRS 16 effect on net debt SEK 3.7 bn.

Net debt/ EBI TDA 2 .1 ( 2 .1 )

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Earnings per share, SEK

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 + 2 0 % *

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

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• Good organic sales developm ent
• Strong growth in Americas and Global Technologies
• Good growth in EMEA and Entrance Systems
• Negative growth in APAC
• Electrom echanical products up 1 6 %
• Strong EBI T grow th of 1 4 %
• Very strong operating cash flow , up 4 7 %
• Capital Markets Day on 1 3 May 2 0 2 0 in London

Conclusions

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25

Appendix

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Cost breakdow n as % of sales

% QTD 2 0 1 8 QTD 2 0 1 9 excl. acquisitions Δ QTD 2 0 1 9 YTD 2 0 1 8 YTD 2 0 1 9 excl. acquisitions Δ YTD 2 0 1 9 Direct material

• 36.7%
• 36.6%

0.1 pts

• 36.5%
• 35.9%
• 36.1%
• 0.2 pts
• 36.0%

Conversion cost

• 23.7%
• 23.6%

0.1 pts

• 23.5%
• 24.5%
• 24.0%

0.5 pts

• 23.9%

Gross margin 39.6% 39.8% 0.2 pts 40.0% 39.6% 39.9% 0.3 pts 40.1% S, G & A

• 23.4%
• 23.4%

0.0 pts

• 23.8%
• 23.9%
• 24.0%
• 0.1 pts
• 24.4%

EBIT* 16.2% 16.4% 0.2 pts 16.2% 15.7% 15.9% 0.2 pts 15.7%

* ) Excluding China write downs in Q2 2018.

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Opening Solutions EMEA’s bridge

MSEK Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth 3% 3%

• 1%

5% Sales 4,872 169 132

• 52

5,120 Operating income 774 44 2 2 822 Operating margin, % 15.9% 26.3% 1.3%

• 3.5%

16.1% Dilution/ accretion 0.4 pts

• 0.4 pts

0.2 pts 1 2 m onths figures Sales 19,585 21,105 EBIT 3,187 3,423 Operating cash flow before paid interest 2,985 3,109 Cash flow/ EBIT 94% 91%

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Opening Solutions Am ericas’ bridge

MSEK Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth 6% 9% 2% 17% Sales 5,211 324 442 122 6,099 Operating income 1,046 95 90 17 1,249 Operating margin, % 20.1% 29.3% 20.4% 14.0% 20.5% Dilution/ accretion 0.5 pts 0.0 pts

• 0.1 pts

1 2 m onths figures Sales 18,887 22,445 EBIT 3,760 4,519 Operating cash flow before paid interest 3,774 4,865 Cash flow/ EBIT 100% 108%

29

Opening Solutions Asia Pacific’s bridge

MSEK Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth

• 1%

4% 6% 9% Sales 2,627

• 34

125 156 2,874 Operating income* 242 13 19 274 Operating margin, % * 9.2% 0.6% 10.5% 12.0% 9.5% Dilution/ accretion 0.1 pts 0.1 pts 0.1 pts 1 2 m onths figures Sales 9,594 10,768 EBIT* 860 924 Operating cash flow before paid interest 948 1,081 Cash flow/ EBIT 110% 117%

* ) Excluding China write downs in Q2 2018.

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Global Technologies’ bridge

MSEK Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth 6% 9% 18% 33% Sales 3,001 197 202 591 3,991 Operating income 641 32 56 81 810 Operating margin, % 21.4% 16.1% 27.7% 13.6% 20.3% Dilution/ accretion

• 0.2 pts

0.3 pts

• 1.2 pts

1 2 m onths figures Sales 11,183 14,648 EBIT 2,279 2,806 Operating cash flow before paid interest 2,308 3,046 Cash flow/ EBIT 101% 109%

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Entrance System s’ bridge

MSEK Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth 3% 6% 0% 9% Sales 5,909 188 329 6,427 Operating income 831 60 34

• 52

873 Operating margin, % 14.1% 32.1% 10.4% N/ A 13.6% Dilution/ accretion 0.6 pts

• 0.3 pts
• 0.8 pts

1 2 m onths figures Sales 23,217 25,276 EBIT 3,326 3,525 Operating cash flow before paid interest 2,723 3,792 Cash flow/ EBIT 82% 108%

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Group vision

To be the leader in providing innovative access solutions that help people feel safe and secure so that they can experience a more open world

w w w .assaabloy.com