High profitability at ASSA ABLOY, and stabilization on markets
outside the USA
(Thomson Reuters ONE) - * Sales totaled SEK 8,425 M (8,722), a fall of 3%, comprising -13% organic growth, 2% acquired growth and exchange-rate effects of 8%. * Asia returned to growth during the quarter and the downturn in Europe was less negative. The North American market continued to weaken. * Continuing major efficiency benefits from restructuring programs and capacity adjustments throughout the Group contributed to good earnings and a very strong cash flow. * Operating income (EBIT) amounted to SEK 1,346 M (1,435), a fall of 6%, representing a margin of 16.0% (16.5). * A new revision of the remaining production units has begun. The total cost is estimated at SEK 800 M (see details below). * Net income amounted to SEK 888 M (709). * Earnings per share amounted to SEK 2.36 (2.38), a decrease of 1%.SALES AND INCOME Third quarter January to September 2008 2009 Change 2008 2009 ChangeSales, SEK M 8,722 8,425 -3% 25,451 26,228 +3% of which, Organic growth -13% -13% Acquisitions +2% +3% Exchange-rate effects -133 783 +8% -794 3,676 +13%Operating income (EBIT),SEK M 1,435* 1,346 -6% 4,056* 4,014* -1%Operating margin (EBIT), % 16.5* 16.0 15.9* 15.3%*Income before tax, SEK M 1,227* 1,187 -3% 3,470* 3,486* 0%Net income, SEK M 709 888 - 2,346 2,458 -Operating cash flow, SEK M 1,189 2,125 +179% 2,852 4,547 +159%Earnings per share (EPS),SEK 2.38* 2.36 -1% 6.76* 6.81* +1%* Excluding restructuring costs amounting to SEK 247 M in Q3 2008 andto SEK 109 M in Q1 2009.COMMENTS BY THE PRESIDENT AND CEO "Positive trends during the quarter were that Asia returned togrowth and that the downturn in Europe was less negative. However,the North American market continued to weaken as a result of fallingnon-residential construction activity," said Johan Molin, Presidentand CEO."Especially pleasing are the sustained high level of profit and theextremely strong cash flow, which are the fruits of the rapidstreamlining of production, working capital and our highly successfulrestructuring program."To exploit the power of rapid change and strengthen the Group'sfuture competitiveness,I have initiated a new review of the production base this quarter,which will involve the reorganization or closing of a further 15units."I am also very pleased that we have succeeded in carrying throughthe strategic acquisition of the Chinese company Pan Pan, which givesus a very good position for growth on the strongly expanding Chinesemarket."Our expectation remains that the fourth quarter of 2009 will bechallenging for both sales and earnings, especially because theimportant US market is predicted to weaken further."THIRD QUARTERThe Group's sales totaled SEK 8,425 M (8,722), a fall of 3% comparedwith 2008. Organic growth for comparable units was -13% (1), whileacquired units contributed 2% (6). Exchange-rate effects had apositive impact of SEK 783 M on sales, i.e. 8% (-2).Operating income before depreciation, EBITDA, excluding restructuringcosts, amounted to SEK 1,584 M (1,669). The corresponding EBITDAmargin was 18.8% (19.1). The Group's operating income, EBIT, amountedto SEK 1,346 M (1,435), a fall of 6%. The operating margin, excludingrestructuring costs, was 16.0% (16.5).Net financial items amounted to SEK 159 M (207), which corresponds toan average net interest rate of 4%. The Group's income before tax,excluding restructuring costs, amounted to SEK 1,187 M (1,227),representing a fall of 3%. Exchange-rate effects had a positiveimpact of SEK 187 M on the Group's income before tax. The profitmargin, excluding restructuring costs, was 15.4% (14.1). The Group'stax charge totaled SEK 300 M (271). Earnings per share, excludingrestructuring costs, amounted to SEK 2.36 (2.38), a decrease of 1%.THE PERIOD JANUARY TO SEPTEMBERSales for the period totaled SEK 26,228 M (25,451), which representsan increase of 3% compared with 2008. Organic growth was -13% (2).Acquired units contributed 3% (4). Exchange-rate effects affectedsales positively by SEK 3,676 M, i.e. 13%, compared with 2008.Operating income before depreciation, EBITDA, excluding restructuringcosts, amounted to SEK 4,779 M (4,744). The corresponding margin was18.2% (18.6). The Group's operating income, EBIT, excludingrestructuring costs, amounted to SEK 4,014 M (4,056). Thecorresponding operating margin (EBIT) was 15.3% (15.9).Earnings per share, excluding restructuring costs, amounted to SEK6.81 (6.76). Operating cash flow amounted to SEK 4,547 M (2,852).RESTRUCTURING MEASURESPayments related to the two restructuring programs amounted to SEK147 M in the quarter.Progress of the 2006 and 2008 restructuring programsThe two restructuring programs launched in 2006 and 2008 havesurpassed the expected cost savings and have led to reductions inpersonnel of respectively 2,583 and 1,657 people since the projectsbegan, a total of 4,240 people. A further 925 people will leave bythe end of 2010. A sum of SEK 955 M has been set aside in the balancesheet to cover the whole remainder of the program.The forthcoming 2009 restructuring to exploit positive momentumThe two restructuring programs of 2006 and 2008 have been highlysuccessful and have resulted in substantial savings. A new revisionof the Group's remaining units has been initiated. Its aim is toconvert the remaining production units in the Group to assembly or todispose of them completely. The preliminary estimate of the totalcost is SEK 800 M and 15 plants will be involved. Half of these willbe closed and the rest converted to final assembly plants. Theprogram is expected to start during the fourth quarter of 2009 and toachieve a reduction of 1,100 employees in high-cost countries. Thecost is expected to be expensed in its entirety during the fourthquarter of 2009.Total personnel reductionsThe world economy began to weaken towards the end of 2007 andadjustments of the workforce were initiated at that time. From thefourth quarter of 2007 through the third quarter of 2009 a total of7,692 people (including 3,415 people during the first three quartersof 2009) - that is, 24% of the total number of employees - left theGroup as a result of the capacity changes made and the restructuringprograms carried out. Of the 7,692, 3,205 arose from therestructuring programs described above and 4,487 from otherefficiency programs and ongoing capacity changes.COMMENTS BY DIVISIONEMEASales in EMEA division during the quarter totaled SEK 3,169 M(3,308), with organic growth of -11%. The recession slowed on themost important markets in north and central Europe but continued inItaly, Spain and eastern Europe. Acquired growth amounted to 1%.Operating income amounted to SEK 476 M (552), which represents anoperating margin (EBIT) of 15.0% (16.7). The effects of therestructuring programs and other efficiency measures compensated formany of the effects of the falling sales volume. Return on capitalemployed, excluding restructuring and non-recurring costs, amountedto 16.5% (19.6). The return was impacted chiefly by the lower income.Operating cash flow before interest paid totaled SEK 779 M (543).AMERICASThe quarter's sales in Americas division totaled SEK 2,418 M (2,737),with -22% organic growth. All units were impacted by the downturn inthe economy and the reduced activity in the construction sector.Canada, Mexico and South America were affected to a lesser extentthan the units in the USA. Acquired growth amounted to 1%. By meansof restructuring and capacity changes, the operating margin wasmaintained at a very strong level and amounted to 19.7% (20.6).Operating income amounted to SEK 475 M (563). Return on capitalemployed, excluding restructuring costs, amounted to 21.7% (26.7).Operating cash flow before interest paid totaled SEK 789 M (593).ASIA PACIFICSales for the quarter totaled SEK 1,023 M (892), with 0% organicgrowth. The market units in Australia and New Zealand showedstabilization, while there was positive growth on the Chinese market.Production for export to Europe and North America decreasedsignificantly. Acquired growth amounted to 3%. Operating incometotaledSEK 139 M (107), which represents an operating margin (EBIT) of 13.6%(12.0). The quarter's return on capital employed, excludingrestructuring costs, amounted to 19.6% (16.4). Operating cash flowbefore interest paid totaled SEK 124 M (141).GLOBAL TECHNOLOGIESSales for the quarter totaled SEK 1,117 M (1,254), with organicgrowth of -19%. The division was affected to an increasing extent bythe downturn in construction on the North American market, and allunits reported negative growth. The net effect of acquisitions anddisposals amounted to 0%. The division's operating income amounted toSEK 187 M (208), giving an operating margin (EBIT) of 16.7% (16.6).Return on capital employed, excluding restructuring costs, amountedto 12.8% (15.7). Operating cash flow before interest paid totaledSEK 321 M (173).ENTRANCE SYSTEMSEntrance Systems division reported sales of SEK 896 M (766) for thequarter, representing organic growth of -2%. Continued good sales onthe service side compensated for much of the reduction in new-productsales. Acquired growth amounted to 12%. Operating income amounted toSEK 135 M (110), giving an operating margin (EBIT) of 15.0% (14.3).Return on capital employed, excluding restructuring costs, amountedto 14.6% (13.5). Operating cash flow before interest paid totaled SEK101 M (61).ACQUISITIONSDuring the first nine months of the year five acquisitions wereconsolidated and payment was made for the last minority shares iniRevo in Korea. The combined acquisition price for these acquisitionsamounts to nearly SEK 900 M, and preliminary acquisition analysesindicate that goodwill and other intangible assets with indefiniteuseful life amount to SEK 600 M. The acquisition price is adjustedfor acquired net debt and estimated earn-outs.A contract has been signed for the acquisition of the Chinese companyPan Pan - see separate release. Pan Pan is expected to have sales ofSEK 1,200 M in 2009 and has more than 4,000 employees. Theacquisition will be completed during the fourth quarter of 2009.SUSTAINABLE DEVELOPMENTASSA ABLOY's US subsidiary CURRIES in Iowa has won the 2008Governor's Environmental Excellence Award in special recognition ofits energy efficiency and use of renewable energy.The Governor's Environmental Excellence Awards are Iowa's highestenvironmental honor and are given to organizations, companies andindividuals who have shown leadership, innovation and environmentalawareness in using natural resources responsibly.CURRIES has introduced a new process for drying door panels thatachieves a 33 percent reduction in the plant's annual consumption ofnatural gas. As a result, 349 tons less carbon dioxide are nowemitted each year.PARENT COMPANY'Other operating income' for the Parent company ASSA ABLOY AB totaledSEK 834 M (1,231) for the nine-month period. Income before taxamounted to SEK 1,209 M (1,361). Investments in tangible andintangible assets totaled SEK 1 M (0). Liquidity is good and theequity ratio was 58.3% (47.1).ORGANIZATIONDuring the quarter Jonas Persson was appointed Executive VicePresident and Head of Asia Pacific division and a member of theExecutive Team. Jonas moves from the Swedish company Scancoin and hiscareer includes posts at Nolato and Alfa Laval.ACCOUNTING PRINCIPLESASSA ABLOY applies International Financial Reporting Standards (IFRS)as endorsed bythe European Union. Significant accounting and valuation principlesare detailed on pages 56-60 of the 2008 Annual Report. ASSA ABLOY hasimplemented the revised International Accounting Standard IAS 1,which came into force on 1 January 2009. The change means thatadditional items are now included in total income in the Group'sincome statement. These items were previously reported in changes toshareholders' equity. ASSA ABLOY has also implemented IFRS 8, whichcontains rules about segment reporting. ASSA ABLOY reports the sameoperating segments as before. The Group's Interim Reports areprepared in accordance with IAS 34. The Parent company appliesRFR 2.2.TRANSACTIONS WITH RELATED PARTIESNo transactions that significantly affected the company's positionand income have taken place between ASSA ABLOY and related parties.RISKS AND UNCERTAINTY FACTORSAs an international Group with a wide geographic spread, ASSA ABLOYis exposed to a number of business and financial risks. The businessrisks can be divided into strategic, operational and legal risks. Thefinancial risks are related to such factors as exchange rates,interest rates, liquidity, the giving of credit, raw materials andfinancial instruments. Risk management in ASSA ABLOY aims toidentify, control and reduce risks. This work begins with anassessment of the probability of risks occurring and their potentialeffect on the Group. For a more detailed description of risks andrisk management, see pages 41-43 of the 2008 Annual Report. Nosignificant risks other than the risks described there are judged tohave occurred.OUTLOOKLong-term outlookLong term, ASSA ABLOY expects an increase in security-driven demand.Focus on end-user value and innovation as well as leverage on ASSAABLOY's strong position will accelerate growth and increaseprofitability.Organic sales growth is expected to continue at a good rate. Theoperating margin (EBIT) and operating cash flow are expected todevelop well.Outlook for the year2009 will be a challenging year since the financial crisis has had astrongly negative effect on investments in construction, and negativeorganic growth for the year is therefore expected for ASSA ABLOY.Stockholm, 28 October 2009Johan MolinPresident and CEOAUDITThis Report has not been reviewed by the Company's Auditor.FINANCIAL INFORMATIONASSA ABLOY is holding a capital markets day in London on 24 November2009. See invitation on the Company's website www.assaabloy.com.The Year-end Report and Quarterly Report for the fourth quarter willbe published on 12 February 2010. An analysts' meeting will be heldon the same day at ASSA ABLOY's head office in Stockholm.FURTHER INFORMATION CAN BE OBTAINED FROM:Johan Molin, President and CEO, Tel: +46 8 506 485 42Tomas Eliasson, CFO and Executive Vice President, Tel: +46 8 506 48572 ASSA ABLOY is holding an analysts' meeting at 10.00 today at Klarabergsviadukten 90 in Stockholm. The analysts' meeting can also be followed on the Internet at www.assaabloy.com. It is possible to submit questions by telephone on: +46 8 5052 0270, +44 208 817 9301 or +1 718 354 1226This information is that which ASSA ABLOY is required to discloseunder the Swedish Securities Exchange and Clearing Operations Actand/or the Swedish Financial Instruments Trading Act. The informationis released for publication at 08.30 on 28 October.http://hugin.info/1014/R/1350651/326045.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 28.10.2009 - 08:30 Uhr
Sprache: Deutsch
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