President & CEO Q1 Report 2011 Johan Molin 1
Financial highlights Q1 2011 � Good start of the year – Strong growth in Asia and North & South America – Stable evolution in Europe – Slight decline in the Pacific – Continued margin expansion – Sale of Cardo Flow and acquisition of FlexiForce � Sales 8 ,6 9 9 MSEK + 4 % + 6% organic, + 7% acquired growth, -9% currency � EBI T 1 ,3 7 7 MSEK + 6 % Currency effect -113 MSEK � EPS 2 .5 3 SEK + 7 % Tax rate reduced to 22% 2
Market highlights � Rapid growth for digital door locks in China � Safezone automatic door closer meets strong Digital Door Lock customer demand � Launch of i-Class SE, platform independant Secure Identity Object (SIO) � Good penetration of Aperio within system integration � Introduction of Online Card Services, Identity on Demand (IOD) Safezone HDP 5 0 0 0 Aperio Card printer 3
Identity on Demand (IOD) � A scalable, secure, automated, on-line and high-quality system for provisioning a personalized smart card � Dedicated setup in Europe and USA
Group sales in local currencies Jan-Mar 2011 4 6 + 1 0 3 2 + 1 5 1 3 + 3 4 2 -2 2 + 1 5 5 -1 Share of Group sales 2 0 1 1 YTD, % Year-to-date vs previous year, % 5
Organic growth index Recovery from recession Group -5 % EMEA -1 1 % Am ericas -1 5 % APAC + 3 1 % GT + 7 % Entrance -3 %
Sales growth Q1 2011 - Currency adjusted Total sales 5 % 36 000 16 over 2 0 0 8 peak 14 35 000 12 34 000 10 33 000 8 32 000 6 31 000 4 Sales, MSEK 30 000 Grow th % 2 29 000 0 -2 28 000 -4 27 000 -6 26 000 2 0 1 1 Q1 + 1 3 % -8 25 000 Organic + 6 % -10 24 000 -12 Acquired + 7 % 2004 2005 2006 2007 2008 2009 2010 2011 23 000 -14 22 000 -16 Organic Growth Acquired Growth Sales in Fixed Currencies 7
Operating income (EBIT), MSEK 1 700 6 200 6 000 Run rate 6 ,1 2 6 MSEK ( 5 ,3 8 0 ) , + 1 4 % 1 600 5 800 1 500 5 600 1 400 5 400 1 300 5 200 1 200 5 000 4 800 1 100 4 600 1 000 4 400 900 4 200 800 4 000 700 3 800 600 3 600 2005 2006 2007 2008 2009 2010 2011 Quarter 12-months Quarter Rolling 12-months 8
Operating margin (EBIT), % 17,0 Long term target range ( average) 16,0 EBI T % 15,0 Run rate 2 0 1 1 1 6 .5 % ( 1 5 .6 ) 14,0 2011 Group Dilution 13,0 Addition of Cardo -0.6% Other acquisitions -0.4% 12,0 5 6 7 8 9 0 1 0 0 0 0 0 1 1 0 0 0 0 0 0 0 2 2 2 2 2 2 2 Quarter Rolling 12-months 9
Manufacturing footprint � Conversion to assembly or closures in high cost countries – 40 factories closed to date, 11 to go – 42 factories converted to assembly, 11 to go – 21 offices closed, 4 to go � Consolidation of core production to China and Eastern Europe � Personnel reduction 5,483p, + 13% to plan � 933 more to go � 873 MSEK remains at the end of the first quarter for all three programs 10
Margin highlights Q1 2011 EBI T m argin 1 5 .8 % ( 1 5 .5 ) + Volume increase 4% , price 2% + Manufacturing footprint & efficiency improvements - Increased gross margin despite material cost increases - Slightly lower S, G & A - Dilution from acquisitions by -0.5% -units - Negative currency effect –0.1% -units 11
Acquisitions Q1 2011 � Fully active on acquisitions – Good pipeline targeting 5% growth � 7 acquisitions com pleted Jan-Apr 2 0 1 1 � Annualized > 5 ,7 5 0 MSEK, + 1 6 % � Major acquisitions Jan-Apr: � Cardo � Swesafe � Lasercard � FlexiForce 12
FlexiForce European leader in industrial door hardware � Manufacturer of hardware for industrial doors � Sales 600 MSEK and 300 employees � Sales indirect to door producers and installers � Strongly complementary on products with Cardo and Ditec � LCC manufacturing in Poland and China � Accretive to EPS from start
Entrance systems division Organizational chart, sales and profit 2010 ASSA ABLOY Entrance System s Sales 9 .4 BSEK, EBI T 1 2 .7 % Direct sales Distribution sales 3 8 % of Agta Record, Sales BSEK 2 .0 14
Division - EMEA SALES � Slow development of EMEA due to austerity programs share of Group total % � Continued growth in Finland, Sweden, Germany and Eastern Europe 35 � Unrest in North Africa affects exports from Italy and Spain � Excellent efficiency improvements and price management � Operating margin (EBIT) EBIT % + Volume 0% 19 + Strong Elmech sales 18 17 + Excellent efficiency gains 16 15 - Raw materials increasing 14 13 16
Division - Americas SALES � All business units are growing share of Group total % � Particularly good in South America, Canada and electromechanical locks 25 � Solid development of doors, high security locks and residential � EBIT reached record level despite strong investments in R&D � Operating margin (EBIT) EBIT % 21 + Volume + 7% 20 + Price management and efficiency with 19 reinforced investment in R&D 18 - Raw materials increasing 17 18
Division - Asia Pacific SALES � All of Asia in strong growth share of Group total % � Digital door locks and China are doing particularly well 13 � Decline in NZ and weak Australia mainly due to natural disasters � Good margin expansion for Q1 � Operating margin (EBIT) EBIT % + Volume + 10% 16 + Efficiency improvements 14 12 + Currency gain of + 0.6% 10 8 - Raw materials and salaries increasing 6 20
Division - Global Technologies SALES � Strong evolution in HID share of Group total % – Solid development within physical access – Strong growth of IDS 15 – ActivIdentity and LaserCard added � Hospitality – Renovation market in very strong demand – New build still in decline – RFID lock upgrades and energy management are developing particularly well � Operating margin (EBIT) EBIT % 19 + Volume + 19% 18 17 - Mix towards IDS affects leverage 16 15 - Dilution from Active Identity & 14 13 Lasercard by -2.3% 12 - Dilution from currency by -0.9% 22
Division - Entrance Systems SALES share of � Growth is back with strong demand from retail Group total % � Continued strong evolution in service 13 � Strong margin improvement in Ditec � Integration of Cardo is progressing well � Dilution from Cardo by -0,4% EBIT % � Operating margin (EBIT) 18 � + Volume + 4% 16 + Efficiency gains & Ditec improvement 14 12 - Dilution from Cardo 24
CFO Q1 Report 2011 Tomas Eliasson 26
Financial highlights Q1 2011 1st Quarter Twelve months MSEK 2010 2011 Change 2009 2010 Change Sales 8,345 8,699 +4% 34,963 36,823 +5% Whereof Organic growth +6% +3% Acquired growth +7% +8% FX-differences -666 -9% -1,626 -6% Operating income (EBIT) 1,295 1,377 +6% 5,413* 6,046 +12% EBIT-margin (%) 15.5 15.8 15.5* 16.4 Operating cash flow 870 448 -49% 6,843 6,285 -8% EPS (SEK)* 2.36 2.53 +7% 9.22 10.89 +18% *Excluding restructuring and one off charges of 1,039 MSEK 27
Bridge Analysis – Jan-Mar 2011 2010 Acq/ Div Currency Organic 2011 MSEK Jan-Mar Jan-Mar 7% -9% 6% 4% Revenues 8,345 551 -666 469 8,699 EBIT 1,295 49 -113 146 1,377 % 15.5% 8.9% 17.0% 31.1% 15.8% Dilution / -50 bp -10 bp 90 bp Accretion 28
P&L – Components as % of sales 2 0 1 0 2 0 1 1 Q1 Q1 � Direct material 32.3% 32.9% � Conversion costs 27.4% 26.2% � Gross Margin 40.3% 40.9% � S, G & A 24.8% 25.1% * ) � EBIT 15.5% 15.8% * ) Currency effect -0.4% 29
Operating cash flow, MSEK 7 500 Back to grow th 7 000 2 000 6 500 6 000 1 500 12-months Recession 5 500 Quarter starts 5 000 1 000 4 500 4 000 500 3 500 0 3 000 Quarter Cash Rolling 12-months EBT Rolling 12 months 30
Gearing % and net debt MSEK Net debt 2 1 .6 BSEK 30 000 120 Sale of Cardo Flow and cash flow 2 0 1 1 w ill 25 000 100 reduce debt level 20 000 80 Net Debt Gearing 15 000 60 10 000 40 Debt/ Equity Debt/ Equity 1 0 3 ( 5 7 ) 5 1 ( 5 7 ) 5 000 20 0 0 Net debt Gearing 31
Q1 is short term = Additional debt in reduced interest rate 32 Net interest rate, % 6,00 5,50 5,00 4,50 4,00 3,50 3,00 Interest rate
President & CEO Q1 Report 2011 Johan Molin 33
Conclusions Q1 2011 � 13% total growth whereof 6% organic growth � Emerging markets and in particular Asia in strong growth � Margin expansion in all parts � Reduced tax rate by 2% to 22% � Exciting acquired growth ahead and sale of Cardo Flow 34
Outlook Long Term � Organic sales growth is expected to continue at a good rate � The operating margin (EBIT) and operating cash flow are expected to develop well 35
Q&A 36
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