CEO Comments Profit for the quarter lower than previous year - - PDF document

Gunnebo interim report January-Septem ber 2 0 1 2

25 October 2012, page 2

• Profit for the quarter lower than previous year
• Quarter burdened by non-recurring items
• f MSEK 46
• Continued strong growth in Asia
• India: 47%
• Good development of sales in Americas
• Canada and acquired business in Brazil and US
• Weak development on most European markets
• General trend: Postponed investment decisions
• Continued cost-savings in Europe during Q4
• Strategic activity: Acquisition of US

Hamilton Safe

• Continued strong financial position,

equity ratio 39%

CEO Comments

25 October 2012, page 3

Third Quarter 2012

• Order intake amounted to MSEK 1,084 (1,175), in

constant currency rates it decreased by 1% . Acquired units contributed MSEK 79.

• Net sales increased to MSEK 1,280 (1,247), in

constant currency rates they increased by 8% . Acquired units contributed MSEK 107.

• Operating profit amounted to MSEK 17 (61) and the
• perating margin to 1.3% (4.9% ). Acquired units had

a positive effect on operating profit of MSEK 21.

• Excluding non-recurring items of MSEK 46, operating

profit amounted to MSEK 63 (74) and operating margin to 4.9% (5.9).

• Profit after tax for the period totalled MSEK 1 (44).
• Earnings per share were SEK -0.02 (0.58).
• Acquisition of US’s Hamilton Safe on August 8

25 October 2012, page 4

January-September 2012

• Order intake increased to MSEK 3,933 (3,868), in

constant currency rates it increased by 3% . Acquired units contributed MSEK 155.

• Net sales increased to MSEK 3,719 (3,645), in

constant currency rates they increased by 4% . Acquired units contributed MSEK 158.

• Operating profit amounted to MSEK 69 (158) and the
• perating margin to 1.9% (4.3% ). Acquired units had

a positive effect on operating profit of MSEK 24.

• Excluding non-recurring items of MSEK 58, operating

profit amounted to MSEK 127 (179) and operating margin to 3.4% (4.9).

• Profit after tax for the period totalled MSEK 22 (77).
• Earnings per share were SEK 0.26 (1.02).

25 October 2012, page 5

Market Developm ent

• Continued strong development in Asia, especially India
• Good development in South Africa, Canada and Brazil during Q3
• In Europe, development has been good in France, the

Netherlands, Denmark and Belgium

• Weaker development on other markets in Europe
• Order intake and sales for the full period: + 6% *

Profit analysis

During the third quarter, acquired operations made a positive contribution of some MSEK 19 to the quarter’s operating profit. Furthermore, the weak development on markets in Europe and Africa was compensated by the strong development of

• perating profit on other markets.

% of Group sales: 44% Business Area Bank Security & Cash Handling

MSEK 2012 2011 2012 2011 2011 2010 Order intake 513 525 1,718 1,661 2,215 2,477 Net sales 602 534 1,652 1,586 2,276 2,427 Operating profit/loss excl. non-recurring items 46 28 92 86 167 199 Operating margin excl. non-recurring items, % 7.6 5.2 5.6 5.4 7.3 8.2 Non-recurring items

• 4.0
• 1.0
• 4.0
• 3.0
• 20.0
• 33.0

Operating profit/loss 42 27 88 83 147 166 July-Sept Full year Jan-Sept

* Growth in constant currency rates

25 October 2012, page 6

8 August: Gunnebo Acquires Hamilton Safe W hy has Gunnebo acquired Ham ilton Safe?

• A quality company and a profitable business –

will improve Gunnebo’s overall EBIT

• Perfect strategic fit
• Product portfolio (UL-graded/ rated)
• Customers: Bank and Government
• Covers up a ”white spot” on the map for Gunnebo
• Solid platform for expansion of selected Gunnebo

solutions into the US

Profitable business w ith opportunity to introduce Gunnebo solutions into the US m arket!

25 October 2012, page 7

Hamilton Safe Companies: Background

• Started manufacturing of

bank security equipment in 1967

• Based in Cincinnati, Ohio, USA
• Majority of sales made in

the US and Canada

• 7 business units of which

5 production facilities

• Sales through a + 80

dealer network

25 October 2012, page 8

Company Overview

• Banking, 70% of sales
• Government etc., 30% of sales
• Annual sales: MUSD 70 (2011)
• Employees: 220
• Profitability: Well above Group targets

25 October 2012, page 9

Market Developm ent

• Good development of order intake and net sales
• Order intake for the full period: + 9% *
• Net sales for the full period: + 11% *
• Strong growth in Asia – distributor based sales
• Good development in UK, France, Belgium, Spain
• Weaker development on other markets, especially during Q3

Profit analysis

Both operating profit and the operating margin strengthened during the year, mainly due to a more favourable market and product mix

% of Group sales: 16% Business Area Secure Storage

MSEK 2012 2011 2012 2011 2011 2010 Order intake 182 199 589 545 736 748 Net sales 196 196 581 531 731 750 Operating profit/loss excl. non-recurring items 4 2 17 10 16 48 Operating margin excl. non-recurring items, % 2.0 1.0 2.9 1.9 2.2 6.4 Non-recurring items 0.0 0.0 0.0 0.0

• 1.0
• 10.0

Operating profit/loss 4 2 17 10 15 38 Full year July-Sept Jan-Sept

* Growth in constant currency rates

25 October 2012, page 10

Market Developm ent

• Good development of order intake during the full period
• Order intake for the full period: + 3% *
• Sales of contract-based service continue to increase
• Markets in Asia, Americas, UK and Italy has developed

very well

Profit analysis

Operating margin for the full period is lower than the same period last year. During the third quarter, operating profit has also been burdened by costs for making the service delivery process more efficient.

% of Group sales: 23% Business Area Global Services

MSEK 2012 2011 2012 2011 2011 2010 Order intake 192 208 914 899 1,144 1,120 Net sales 271 272 841 819 1,120 1,120 Operating profit/loss excl. non-recurring items 26 34 73 98 138 107 Operating margin excl. non-recurring items, % 9.6 12.5 8.7 12.0 12.3 9.6 Non-recurring items

• 6.0

0.0

• 6.0

0.0

• 17.0
• 16.0

Operating profit/loss 20 34 67 98 121 91 Jan-Sept Full year July-Sept

* Growth in constant currency rates

25 October 2012, page 11

Market Developm ent

• Order intake has strengthened throughout the year
• Order intake Q3: Unchanged*
• Order intake full period: -6% *
• Good development in China, Germany, Middle East,

Americas and Eastern Europe

Profit analysis

The result during the quarter is in line with that of the previous

• year. It has been negatively impacted by MSEK 22 related to an

arbitration award, whereby Gunnebo was ordered to pay compensation to a former commercial agent, as well as by MSEK 5 related to costs for moving of operations.

% of Group sales: 12% Business Area Entrance Control

MSEK 2012 2011 2012 2011 2011 2010 Order intake 163 173 502 538 713 654 Net sales 158 180 466 511 720 691 Operating profit/loss excl. non-recurring items 9 10 11 26 51 35 Operating margin excl. non-recurring items, % 5.7 5.6 2.4 5.1 7.1 5.1 Non-recurring items

• 27.0

0.0

• 28.0

0.0

• 15.0
• 36.0

Operating profit/loss

• 18

10

• 17

26 36

• 1

July-Sept Full year Jan-Sept

* Development in constant currency rates

25 October 2012, page 12

SafePay

• Good order intake on the Northern European markets,

weaker in Southern Europe. In Q3 order intake has been weak in general due to postponed investment decisions

• Operating profit/ loss continues to be affected by market

investments and continued work on quality improvements

Gatew ay

• Stable development of order intake in Q3. This is mainly

explained by the prevailing economic uncertainty on several large markets in Europe, which has resulted in a lower rate

• f investment in the retail sector.
• The full period’s lower operating profit is explained by lower

sales volumes and negative currency effects.

% of Group sales: 5% Developing Businesses

MSEK 2012 2011 2012 2011 2011 2010 Order intake 34 70 210 225 283 272 Net sales 53 65 179 198 290 275 Operating profit/loss excl. non-recurring items

• 13
• 3
• 38
• 26
• 35
• 32

Operating margin excl. non-recurring items, %

• 24.5
• 4.6
• 21.2
• 13.1
• 12.1
• 11.6

Non-recurring items 0.0 0.0 0.0 0.0 0.0

• 5.0

Operating profit/loss

• 13
• 3
• 38
• 26
• 35
• 37

July-Sept Jan-Sept Full year

25 October 2012, page 13

MSEK 2012 2011 2012 2011 2011 2010 Net sales 1,280 1,247 3,719 3,645 5,137 5,263 Cost of goods sold

• 900
• 875
• 2,614
• 2,546
• 3,572
• 3,723

Gross profit 380 372 1,105 1,099 1,565 1,540 Other operating costs, net

• 363
• 311
• 1,036
• 941
• 1,241
• 1,343

Operating profit/loss 17 61 69 158 324 197 Net financial items

• 6
• 5
• 14
• 19
• 26
• 75

Profit/loss after financial items 11 56 55 139 298 122 Taxes

• 10
• 17
• 33
• 49
• 52
• 41

Profit/loss for the period from continuing operations 1 39 22 90 246 81 Profit/loss for the period from discontinued operations

• 5
• 13
• 16

97 Profit/loss for the period 1 44 22 77 230 178 Whereof attributable to: Parent company shareholders

• 1

44 20 77 228 178 Holdings without controlling influence 2

• 2
• 2
• 1

44 22 77 230 178

Summary group income statement

July-Sept Full year Jan-Sept

25 October 2012, page 14

MSEK 2012 2011 2011 2010 Goodwill 1,365 997 1,104 952 Other intangible assets 97 89 111 96 Property, plant and equipment 312 298 316 367 Financial assets 124 191 139 94 Deferred tax assets 258 267 253 241 Inventories 629 591 564 543 Current receivables 1,203 1,203 1,239 1,253 Liquid funds 263 214 239 189 Total assets 4,251 3,850 3,965 3,735 Equity 1,665 1,630 1,776 1,606 Long-term liabilities 1,249 788 800 639 Current liabilities 1,337 1,432 1,389 1,490 Total equity and liabilities 4,251 3,850 3,965 3,735

Summary group balance sheet

31 December 30 September

25 October 2012, page 15

Loan Frame: September 2012

• During the third quarter

Gunnebo agreed on 18 months of acquisition financing in the form of a new credit framework amounting to MUSD 35, with the aim of part-funding the acquisition of Hamilton Safe.

• Furthermore, the Group

extended its former borrowing facility by 12 months up to and including June 2015.

• The Group’s guaranteed

credit framework amounted to MSEK 1,428 on September 30, 2012.

25 October 2012, page 16

Group Liquid Funds and Financial Position

• The Group’s liquid funds at the end of the

period amounted to MSEK 263 (214)

• Equity totalled MSEK 1,665

(1,630), giving an equity ratio

• f 39% (42)
• Net debt amounted to MSEK 955 (501).

Excluding pension commitments it amounted to MSEK 763 (196).

• Debt/ equity ratio amounted to 0.6 (0.3)

25 October 2012, page 17

Equity Ratio

25 October 2012, page 18

Return On Capital Employed

25 October 2012, page 19

Gunnebo’s Strategic Focus

Entrance Control Secure Storage Global Services Bank Security & Cash Handling Pioneering fire and burglary protection State-of-the-art control over the flow of people Innovation along the whole cash chain Services which deliver performance

25 October 2012, page 20

Phase 5: Delivery!

• Phase 1
• 1995 – 2005
• > 40 acquisitions
• Growth and entrepreneurship
• Phase 2
• 2006 – 2008
• Consolidation
• Phase 3
• 2009 – 2010
• Get I t Right!
• Focus on BUSI NESS
• Phase 4
• 2011 – 2012
• Strategy execution

Phase 5 : Delivery

• 2 0 1 3 –

25 October 2012, page 21

The Route to Phase 5: Delivering

Cost Reductions Rationalisations, LCM Business Developm ent Acquisitions Market-Driven Product Developm ent 2 0 0 9 EBI T Margin 3 % Focused Business Geographical Expansion

2 0 1 4 EBI T Margin > 7 %

25 October 2012, page 22

Key Success Factors Going Forward

• Management
• Drive, support and control
• Don’t compromise on people
• Execution, execution, execution
• Move point of gravity from Europe to

Asia/ Africa/ ME/ Americas

• Boost growth opportunities
• Business development
• Allocate resources
• Increase LCM and sourcing
• Growth
• Acquisitions
• Strengthen core business
• Geographical expansion
• Services

25 October 2012, page 23

Gunnebo General Assumptions 2013: Delivery

• Unstable situation, still uncertainties: political and governmental

problems have been known for some time… and crises seems to spread to new countries.

• The global econom y w ill continue to expand, though risks from Europe

and the Persian Gulf could slow expansion considerably. IMF predicts 3.5% growth in world GDP this year, 4.1% next year. Both years have been revised upward since the autumn 2011 forecast.

• Asia w ill grow , especially the emerging countries (which include China, India

and Indonesia). The advanced economies (the largest of which are Japan and Australia) are expected to grow moderately.

• The Group is now well positioned in Americas and there is increased

business confidence in the US, however uncertainty and election hangover in play.

• Huge negative im pact on several European m arkets. Will ECB and the

Eurozone build market confidence or will the South European virus spread north?

• Still a “mixed bag” and the European markets are in different shape.

Opportunities will occur and focus, flexibility and strength will be a winning concept.

25 October 2012, page 24

Financial Calendar

Year-end release January 30, 2013 Annual General Meeting 2013 April 9, 2013 Interim Report January-March 2013 April 25, 2013 Interim Report January-June 2013 July 17, 2013 Interim Report January-September 2013 October 24, 2013

Financial Calendar

25 October 2012, page 25

THE LEADI NG GLOBAL PROVI DER OF A SAFER FUTURE