Q3 Report 2011 Johan Molin 1 Financial highlights Q3 2011 Good - - PDF document

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Q3 Report 2011 Johan Molin 1 Financial highlights Q3 2011 Good - - PDF document

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President & CEO Q3 Report 2011 Johan Molin 1 Financial highlights Q3 2011 Good perform ance in a w eak m arket Continued strong growth in Asia Stable but slow development in mature markets South America slowing New

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1

Q3 Report 2011

Johan Molin President & CEO

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Financial highlights Q3 2011

Good perform ance in a w eak m arket

– Continued strong growth in Asia – Stable but slow development in mature markets – South America slowing – New footprint program with closure of 17 sites

Sales 1 0 ,8 4 1 MSEK + 1 4 %

+ 2% organic, + 18% acquired growth, -6% currency

EBI T 1 ,7 5 1 MSEK + 7 %

Currency effect -112 MSEK

EPS 3 .3 0 SEK * ) + 1 3 %

Tax rate reduced to 22%

* ) Excluding one-off gain of 424 MSEK

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Financial highlights Jan-Sept 2011

Good developm ent in a w eak construction m arket Sales 3 0 ,0 4 2 MSEK + 1 1 %

+ 4% organic, + 16% acquired growth, -9% currency

EBI T 4 ,7 4 3 MSEK + 7 %

Currency effect -388 MSEK

EPS 8 .8 6 SEK * ) + 1 0 %

Reduced tax rate to 22%

* ) Excluding one-off gain of 424 MSEK

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Market highlights

  • Big potential for HID access control from new US

government PIV standard

  • Yale Real Living – New high end digital door lock

launched for home automation

  • Good progress from specification work in US and

Europe

  • 1st price in categories Integrated Security Product

and Access Control Product of the Year for Aperio and CLIQ Remote at IFSEC (Europe)

  • 1st price for best innovation

with Secure Element Access Control at ASIS (America)

  • Blackberry delivered with

ASSA ABLOY access control

Blackberry Yale Real Living Reader w ith integrated PI V

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5

Hardware manufacturers adapt technology

Blackberry release NFC phones, Dell embedd readers in laptops

Dell Latitude and Precision Laptops

  • ffer contactless smart card reader
  • ptions embedded in the laptop

BlackBerry smartphones are NFC- enabled and can be activated with iCLASS digital credentials

Contactless smart card reader embedded in laptop

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Group sales in local currencies Jan-Sep 2011

2 + 8 2 9 + 9 4 7 + 3 0 1 5 + 2 8 5

  • 2

2

  • 1

Share of Group sales 2 0 1 1 YTD, % Year-to-date vs previous year, %

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SLIDE 7

Organic growth index

Recovery from recession

Group -4 %

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Division I ndex EMEA

  • 9 %

Am ericas

  • 1 7 %

Asia Pacific + 2 6 % Global Tech + 9 % Entrance

  • 2 %
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SLIDE 8
  • 16
  • 14
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 8 10 12 14 16 18 20

22 000 24 000 26 000 28 000 30 000 32 000 34 000 36 000 38 000 40 000 2005 2006 2007 2008 2009 2010 2011 Grow th % Sales, MSEK

Organic Growth Acquired Growth Sales in Fixed Currencies

Sales growth Q3 2011 - Currency adjusted

8

2 0 1 1 Q3 + 2 0 % Organic + 2 % Acquired + 1 8 %

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SLIDE 9

Operating income (EBIT), MSEK

3 600 3 800 4 000 4 200 4 400 4 600 4 800 5 000 5 200 5 400 5 600 5 800 6 000 6 200 6 400 600 700 800 900 1 000 1 100 1 200 1 300 1 400 1 500 1 600 1 700 1 800 2005 2006 2007 2008 2009 2010 2011

Quarter Rolling 12-months

Quarter 12-months

Run rate 6 ,3 4 9 MSEK ( 5 ,8 3 8 ) , + 9 %

9

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SLIDE 10

Operating margin (EBIT), %

12,0 13,0 14,0 15,0 16,0 17,0 EBI T %

Quarter Rolling 12-months

Run rate 2 0 1 1 1 6 .0 % ( 1 6 .2 )

Long term target range ( average)

2011 Group Dilution Addition of Cardo -0.6% Other acquisitions -0.4%

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New manufacturing footprint program

17 additional factories to be closed

– Further consolidation potential within the ASSA ABLOY Group – Synergies larger than expected with Crawford – Net cost 900 MSEK (after 424 MSEK Cardo capital gain) – Cost planned to be booked in Q4, payback 3.1 years

Status current manufacturing footprint program:

– 41 factories closed to date, 10 to go – 46 factories converted to assembly, 7 to go – 21 offices closed, 4 to go

Personnel reduction Q3 -181p, tot 5,753p 621 in further planned reductions 688 MSEK of the provision remains

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Margin highlights Q3 2011

EBI T m argin 1 6 .2 % ( 1 7 .2 ) + Volume increase 0% , price 2% Margin expansion 0.3% + Manufacturing footprint & efficiency improvements

  • Geographical mix
  • Dilution from acquisitions by -1.0%
  • Negative currency effect –0.3%

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Acquisitions Jan-Oct 2011

  • Fully active on acquisitions

– Good pipeline targeting 5% growth

  • 1 6 acquisitions

Jan-Oct 2 0 1 1 Annualized 7 ,8 0 0 MSEK, + 2 1 %

  • Major acquisitions Jan-Oct:

Cardo Swesafe Lasercard FlexiForce Portafeu Angel Metal Albany

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Albany, US

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SLIDE 15

Albany Door Systems

Market leader in high speed doors Strong presence in Europe and US Sales and service has good fit with Crawford and Besam (direct channel) Total sales 180 MUSD with 700 employees Accretive to EPS from start

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SLIDE 16

Angel Metal, Korea

Market leader in locks and hardware in Korea Sales 2011 expected to reach 180 MSEK with 54 employees Strong market share in Korea Serving both residential and commercial segments Strong specification presence and innovation capability Accretive to EPS from start

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Division - EMEA

  • Slow but stable in most parts
  • Growth in Scandinavia, Finland and East Europe
  • France, Belgium, Germany and UK stable
  • Southern Europe with Spain and Italy in strong decline
  • Several large orders from specification with new products
  • EBIT margin maintained
  • Operating margin (EBIT)
  • Volume + 0%
  • Material cost
  • Acquisition dilution by 0.3%

+ Restructuring savings

SALES share of Group total %

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17 13 14 15 16 17 18 19 2007 2008 2009 2010 2011 EBI T %

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Division - Americas

  • Weak institutional construction continues to affect US
  • Brazil, Mexico and Latin America declining
  • Good development of residential and elmech
  • Stable high margin sustained through efficiency gains
  • Investment in R&D and sales maintained
  • Operating margin (EBIT)
  • Volume -1%
  • Material cost

+ Efficiency improvement and price

SALES share of Group total %

22

19 18 19 20 21 22 2007 2008 2009 2010 2011 EBI T %

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Division - Asia Pacific

  • Strong growth in Asia, especially South East Asia

including India

  • Australia in decline due to end of government stimuli
  • Earth quakes in New Zeeland hampers demand
  • Very good evolution from digital door locks (DDL)
  • Negative mix due to Pacific and China doors
  • Operating margin (EBIT)

= Volume + 7%

  • Raw material & price
  • Sales mix

SALES share of Group total %

14

21 5 7 9 11 13 15 17 2007 2008 2009 2010 2011

EBI T %

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Division - Global Technologies

  • HID

– Access control and secure issuance in good growth – Strong demand from e-Government with LaserCard – Identification Technology declining but improved profit

  • Hospitality

– Good demand for NFC locks, > 70% of all new locks – Large hotel chains planning for NFC upgrades – Aftermarket in good growth due to patented keyways

  • Operating margin (EBIT)

+ Volume + 5% (26), good leverage

  • Dilution from LaserCard and ActivIdentity

with -2.0%

  • Dilution from currency

SALES share of Group total %

14

23 13 14 15 16 17 18 19 2007 2008 2009 2010 2011 EBI T %

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Division - Entrance Systems

  • Good development of automatic doors and Ditec
  • Crawford and FlexiForce experiences good industrial

demand

  • Service contract sales in steady growth
  • Synergies from Crawford and Normstahl larger than

expected

  • Sales and EBIT more than doubled
  • Operating margin (EBIT)

+ Volume + 5%

  • Dilution from acquisitions -2.0%
  • Increased R&D and sales costs

SALES share of Group total %

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25 12 13 14 15 16 17 18 19 2007 2008 2009 2010 2011 EBI T %

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ASSA ABLOY Entrance System s

0 .9 BSEK 3 .3 BSEK 0 .6 BSEK 1 .0 BSEK I n addition, 3 8 % of Agta Record, Sales SEK 2 .0 B

Direct sales 7 7 % Distribution sales 2 3 %

The new ASSA ABLOY Entrance Systems

Sales SEK 1 0 .4 B EBI T > 1 2 %

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3 .5 BSEK 1 .1 BSEK

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28

Q3 Report 2011

Tomas Eliasson CFO

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Financial highlights Q3 2011

MSEK 2010 2011 Change 2010 2011 Change

Sales 9,474 10,841 +14% 27,175 30,042 +11% Whereof Organic growth +2% +4% Acquired growth +18% +16% FX-differences

  • 491
  • 6%
  • 2,113
  • 9%

Operating income (EBIT) 1,630 1,751 +7% 4,440 4,743 +7% EBIT-margin (%) 17.2 16.2 16.3 15.8 Operating cash flow 1,890 1,528

  • 19%

4,200 3,286

  • 22%

EPS (SEK) 2.93 3.30 +13% 8.03 8.86 +10%

3rd Quarter Nine months

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Bridge Analysis – Jul-Sep 2011

MSEK

2010 Jul-Sep Acq/ Div Currency Organic 2011 Jul-Sep

18%

  • 6%

2% 14%

Revenues

9,474 1,650

  • 491

208 10,481

EBIT

1,630 176

  • 112

57 1,751

%

17.2% 10.7% 22.8% 27.5% 16.2%

Dilution / Accretion

  • 100 bp
  • 30 bp

+ 30 bp

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P&L – Components as % of sales

Direct material 35.0% 36.3% 34.4% Conversion costs 24.4% 23.6% 26.3% Gross Margin 40.6% 40.1% 39.3% S, G & A 23.4% 22.9% 23.1% EBIT 17.2% 17.2% 16.2% 2 0 1 1

Q3 excluding acquisitions

2 0 1 0

Q3

2 0 1 1

Q3

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Operating cash flow, MSEK

3 000 3 500 4 000 4 500 5 000 5 500 6 000 6 500 7 000 7 500 500 1 000 1 500 2 000 12-months Quarter

Quarter Cash Rolling 12-months EBT Rolling 12 months

Recession starts Back to grow th

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Gearing % and net debt MSEK

20 40 60 80 100 120 5 000 10 000 15 000 20 000 25 000 30 000 Gearing Net Debt

Net debt Gearing

Debt/ Equity 5 1 ( 5 7 ) Debt/ Equity 6 9 ( 5 5 ) Net debt/ EBI TDA 2 .2

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Gross debt distribution

Excluding pension liabilities, derivatives and cash assets

Private placem ents 4 .3 BSEK

1 -9 yrs

Com m ercial papers 6 .3 BSEK

< 1 yr

Bonds 3 .3 BSEK

2 -7 yrs

Banks 2 .5 BSEK

Rolling Gross debt 1 6 .4 BSEK Net debt 1 6 .2 BSEK

Backup facility 1 0 .0 BSEK untouched

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Maturities private placements and bonds

Strategy not to have in excess of 2 BSEK per annum

0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Private placem ents 4 .3 BSEK

1 -9 yrs

Com m ercial papers 6 .3 BSEK

< 1 yr

Bonds 3 .3 BSEK

2 -7 yrs

Banks 2 .5 BSEK

Rolling

Backup facility 1 0 .0 BSEK untouched

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Q3 Report 2011

Johan Molin President & CEO

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Conclusions Q3 2011

  • 20% underlying growth with 2% organic
  • Strong growth in Asia
  • Stable but slow development in mature markets
  • Good evolution in acquired companies
  • Exciting addition of Albany
  • New manufacturing footprint with 17 closures
  • Strong profit and cash flow

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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

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Q&A