ASSA ABLOY Q4 Report 2019 Public Stable growth and strong EBIT in - PowerPoint PPT Presentation

ASSA ABLOY Q4 Report 2019 Public

Stable growth and strong EBIT in Q4 2019  Organic sales development – Strong growth in Americas – Good growth in Global Technologies – Stable growth in EMEA and Entrance Systems – Negative growth in APAC  Strong EBIT growth of 8% – Unchanged margin – higher M&A and R&D offset by mix, efficiencies and lower raw material costs  Strong cash flow of SEK 5.2 bn  Provision for manufacturing footprint program of MSEK 312 2 Public

Q4 2019 figures in summary  Sales SEK 24,946 M +8% Sales EBIT* – 1% organic 26 000 4 600 +8% +8% – 3% acquired 25 000 4 400 – 4% currency 24 000 4 200 4 047 23 000  EBITA-margin* 16.8% (16.7%) 4 000 22 000 3 746 3 800  EBIT-margin* 16.2% (16.2%) 21 000 3 600 20 000  EBIT* SEK 4,047 M +8% 3 400 19 000 3 200  EPS SEK 2.49 +7% 18 000 17 000 3 000 Q4 18 Q4 19 Sales, MSEK EBIT, MSEK *) Excluding restructuring items. 3 Public

Full year 2019 figures in summary  Sales SEK 94,029 M +12% Sales EBIT* – 3% organic 100 000 17 000 +12% +12% – 3% acquired 95 000 16 000 – 6% currency 14 920 90 000 15 000  EBITA-margin* 16.4% (16.3%) 85 000 14 000  EBIT-margin* 15.9% (15.8%) 13 309 80 000 13 000 75 000 12 000  EBIT* SEK 14,920 M +12% 70 000 11 000  Cash flow SEK 14,442 M +27% 65 000 10 000  EPS SEK 9.22 +14% 60 000 9 000 2018* 2019  Proposed dividend 3.85 SEK +10% Sales, MSEK EBIT, MSEK *) Excluding China write-downs and restructuring items. 4 Public

Sales by region ASSA ABLOY 100 +4 +1 Emerging markets 18 -2 -4 Oct – Dec 2019 37 +1 +0 43 +8 +4 12 -7 -8 1 -15 -19 3 +16 +15 4 +38 +3 Change in local currencies Organic change Share of sales, % QTD 2019 vs. QTD 2018, % QTD 2019 vs. QTD 2018, % Emerging markets comprise follows IMF’s definition as per 2018-12-31 5 Public

Market highlights Strong project wins • Argentina Selects HID goID to Provide Citizens with World’s First • Mobile National ID Program US large retailer selects Entrance Systems loading dock • solutions New products in our mechanical core • Korea launched waterproof floor hinges • Global launch of new padlocks range • Strong recognition for our innovative products • 4 products in top door locks of 2019 in Consumer reports in • the US Several HID awards, e.g. China Intelligent Architecture • Brand Award Global Solutions wins HotelTechAwards, best mobile key solution • 6

CES Highlights New product launches • August: August Wi-Fi Smart Lock • Yale • Liftmaster Lock, Linus Smart Lock and Smart • Cabinet Lock Smart Storage Line - & Smart Safe, Smart • Delivery Box and Yale Access Yale and Samsung reveal concept UWB lock • for automatic unlock Nine product awards at the CES 2020 • 7 Public

Sales growth 27 Quarters with positive OG % MSEK 20 100 000 18 95 000 16 90 000 14 85 000 12 80 000 10 75 000 8 70 000 6 65 000 4 60 000 2 55 000 0 50 000 2014 2015 2016 2017 2018 2019 Organic growth, % Acquired growth, % Sales in fixed currencies, MSEK 8 Public

Operating margin % % 18 18 Run rate: EBIT-margin 15.9% (15.8%*) 17 17 Long term target range (average) 16 16 15 15 14 14 13 13 2014 2015 2016 2017 2018 2019 Quarter EBIT Rolling 12-months EBITA** Rolling 12-months *) Excluding China write-downs and restructuring items. **) Operating margin before amortization of intangible assets recognized in business combinations. 9 Public

Operating profit MSEK MSEK, 12 months +8% +12% +61% 4 500 vs vs in 16 000 Q4 LY FY 5 years 4 000 14 000 3 500 12 000 3 000 10 000 2 500 8 000 2 000 6 000 1 500 4 000 1 000 2 000 500 0 0 2014 2015 2016 2017 2018 2019 Quarter Rolling 12-months *) Excluding China write-downs and restructuring items. 10 Public

Acquisitions  Fully active pipeline – 3 acquisitions completed in Q4 and 12 in 2019 – Acquired annualized sales of MSEK 2,500  Additional acquisitions to be closed – agta record Sales of MEUR 378 and EBITA-margin of 12%* in 2018  Expected to close early 2020  – AM Group Sales of MSEK 800  Expected to close in Q1  * Adjusted for extraordinary personnel expenses of MEUR 8.9 11 Public

AM Group, Australia  Sales of MSEK 800 with 425 employees  Industrial door company within Entrance Automation  Complements product offering and geographic coverage  Accretive to EPS from start 12 Public

Opening Solutions 22% EMEA of Group sales  Organic sales growth of 1% 6 000 19% – Good growth in Scandinavia, Germany and South Europe 5 500 18% – Stable growth in France and East Europe 5 000 17% – Negative growth in Finland, UK, Middle East & Africa, and Benelux 4 500 16% 4 000 15%  Operating margin 16.0% (16.6%)* 3 500 14% – Negative volume leverage -50bps on low growth and higher R&D costs 3 000 13% – FX – 30bps and acquisitions +20bps 2 500 12% Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Sales, MSEK Operating margin, % Excluding restructuring items. 13 Public

Opening Solutions 24% of Americas Group sales  Organic sales growth of 5% 6 500 24% – Very strong growth for Electromechanical Solutions and Perimeter Security 6 000 23% – Strong growth for Residential Group, Canada, Security Doors and Architectural Hardware 5 500 22% – Good growth in Latin America and Access & High 5 000 21% Security – Negative growth in US Smart Residential 4 500 20% 4 000 19%  Operating margin 20.0% (19.9%)* 3 500 18% – Strong volume leverage (40 bps) driven by strong growth, operational efficiencies and raw material 3 000 17% tailwind 2 500 16% – FX 10bps and M&A -40bps Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Sales, MSEK Operating margin, % Excluding restructuring items. 14 Public

Opening Solutions 10% Asia Pacific of Group sales  Organic sales growth of -10% 3 000 20% – Good growth in South Asia and Pacific – Negative growth in China, India and South Korea – Negative intra group sales 2 500 15%  Operating margin 8.2% (9.6%)* 2 000 10% – Negative leverage of -120bps, due to negative organic growth and weak performance in South Korea – FX -10bps and M&A -10bps 1 500 5% – China business plan according to plan Stabilizing performance  Consolidation of sales and operations is ongoing  1 000 0% Headcount reduced by 10% in 2019  Q4 17 Q1 18 *Q2 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 18 Sales, MSEK Operating margin, %* *) Excluding restructuring items and China write downs MSEK 400 in Q2 2018. 15 Public

Global Technologies 17% of Group sales  Organic sales growth of 2% 4 500 24% – Very strong growth in Extended Access – Strong growth in Physical Access Control and Global 4 000 22% Solutions – Stable growth in Identity & Access Solutions 3 500 20% – Negative growth in Identification Technology, Secure Issuance and Citizen ID 3 000 18%  Operating margin 18.3% (19.9%)* 2 500 16% – Strong volume leverage (140bps) driven by operational efficiencies, raw material tailwind and mix 2 000 14% – FX +20bps and M&A -320bps High acquisition costs for closing De La Rue and Placard 1 500 12%  Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Sales, MSEK Operating margin, % Excluding restructuring items. 16 Public

Entrance Systems 27% of Group sales  Organic sales growth of 0% 7 500 18% – Strong growth in Pedestrian Doors – Good growth in Logistics solutions 7 000 17% – Stable growth in High Performance Doors 6 500 16% – Negative growth in Industrial Doors, EU Residential Doors, US Residential Doors and Door components 6 000 15% – Good growth in service 5 500 14%  Operating margin 16.3% (15.1%)* 5 000 13% – Strong volume leverage (130 bps) due to operational efficiencies, strong raw material tailwind, good 4 500 12% growth in service and other positive mix – FX -10 bps and M&A flat 4 000 11% Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19  New organizational structure from Q1 2020 Sales, MSEK Operating margin, % Excluding restructuring items. 17 Public

Financial summary, Q4 2019 FX & acquisition ‘run - rate’ effects in Q1 2020 (31 Dec 2019): SALES FX: +1% Acq: +2% October-December January-December SEK M 2018 2019 Change 2018 2019 Change Sales 23,167 24,946 8% 84,048 94,029 12% - Organic growth 1,281 147 1% 3,901 2,652 3% - Acquired net growth 714 760 3% 1,793 3,063 3% - FX-differences 1,063 872 4% 2,217 4,265 6% Operating income (EBIT)* 3,746 4,047 8% 13,309 14,920 12% EBITA-margin* 16.7% 16.8% 0.1pts 16.3% 16.4% 0.1 pts EBIT-margin* 16.2% 16.2% 0.0 pts 15.8% 15.9% 0.1 pts Income before tax** 3,515 3,779 8% 12,110 13,883 15% Net income** 2,588 2,767 7% 8,984 10,243 14% EPS**, SEK 2.33 2.49 7% 8.09 9.22 14% Operating cash flow 4,923 5,235 6% 11,357 14,442 27% ROCE 18% 17% -1.0 pts 16% 17% 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 Public