ASSA ABLOY Q3 report 2 0 1 9
Strong perform ance in Q3 2 0 1 9 • Good organic sales developm ent • Strong growth in Americas and Global Technologies • Good growth in EMEA and Entrance Systems • Negative growth in APAC • Electrom echanical products up 1 6 % • Strong EBI T grow th of 1 4 % • Stable margin – despite MSEK 55 in M&A costs in Entrance Systems • Very strong operating cash flow , up 4 7 % 2
Q3 2 0 1 9 figures in sum m ary • Sales SEK 2 4 ,0 3 4 M + 1 3 % 2 5 0 0 0 4 6 0 0 Sales EBI T + 1 3 % + 1 4 % • 4% organic 2 4 0 0 0 4 4 0 0 • 4% acquired 2 3 0 0 0 4 2 0 0 • 5% currency 2 2 0 0 0 4 0 0 0 3 8 9 4 • EBI TA-m argin 1 6 .7 % ( 1 6 .6 % ) 2 1 0 0 0 3 8 0 0 2 0 0 0 0 3 6 0 0 • EBI T-m argin 1 6 .2 % ( 1 6 .2 % ) 3 4 2 4 1 9 0 0 0 3 4 0 0 • EBI T SEK 3 ,8 9 4 M + 1 4 % 1 8 0 0 0 3 2 0 0 • EPS SEK 2 .4 3 + 1 3 % 1 7 0 0 0 3 0 0 0 Q3 18 Q3 19 Sales, MSEK EBI T, MSEK 3
ASSA ABLOY 1 0 0 + 7 + 4 Sales by region Emerging markets 1 8 + 4 + 2 Jul – Sep 2019 3 4 + 4 + 2 4 6 + 9 + 5 1 3 + 5 + 2 1 + 7 + 6 2 + 8 + 8 4 + 2 7 + 3 Change in local currencies Organic change Share of sales, % QTD 2 0 1 9 vs. QTD 2 0 1 8 , % QTD 2 0 1 9 vs. QTD 2 0 1 8 , % Emerging markets comprise follows IMF’s definition as per 2018-12-31 4
Market highlights Riyadh Metro Project • Strong project w ins • Specification initiatives in EMEA with strong momentum • HID technology and ASSA ABLOY electronic locks are helping Clemson University students • FiRa Consortium • Ultra-Wideband (UWB) ecosystem will provide new use cases, setting a new standard in seamless user experiences • Several Sm art Residential launches • Yale access ecosystem in EMEA, following APAC launch in Q2 • New Yale Pro Series in US with smaller product footprint • New smart interior door lock in South Korea (Gateman) 5
Sales grow th 2 6 Quarters w ith 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 6
Operating m argin % % 18 18 Run rate: EBI T-m argin 1 5 .8 % ( 1 6 .0 % ) 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. 7
Operating profit + 1 4 % + 6 7 % vs in Q3 LY 5 years MSEK, MSEK 12 months 4 000 16 000 3 500 14 000 3 000 12 000 2 500 10 000 2 000 8 000 1 500 6 000 1 000 4 000 500 2 000 0 0 2014 2015 2016 2017 2018 2019 Quarter Rolling 12-months * ) Excluding China write-downs and restructuring items. 8
Acquisitions • Fully active pipeline • 4 acquisitions completed in Q3 and 10 year-to-date • Acquired annualized sales of MSEK 2,400 • Additional acquisitions to be closed • agta record • Sales of MEUR 378 and EBI TA-margin of 12% * in 2018 • Expected to close early 2020 • LUX-I Dent • Sales of MSEK 180 * Adjusted for extraordinary personnel expenses of MEUR 8.9 9
LifeSafety Pow er, USA • Sales of MSEK 2 9 0 w ith 6 5 em ployees • Supplier of sm art access control pow er solutions • Com plem ent to access control portfolio • Accretive to EPS from start 10
Placard, Australia • Sales of MSEK 4 2 0 w ith 1 7 0 em ployees • Secure card m anufacturer • Enhances position in sm art card m arket • Accretive to EPS from start 11
LUX-I Dent, Czech Republic PRELAMINATED HF & NFC INLAYS • Sales of MSEK 1 8 0 w ith 1 4 5 em ployees INLAYS • RFI D com ponent provider • Enhances offering w ithin RFI D com ponents GLASS UHF INLAYS TRANSPONDERS • Optim izes ASSA ABLOY’s operations • Neutral to EPS from start 12
2 1 % of Group Opening Solutions EMEA sales 5 500 19% • Organic sales grow th of 3 % • Very strong growth in Middle East 5 000 18% • Strong growth in East Europe 4 500 17% • Good growth in Benelux, Scandinavia and Germany 4 000 16% • Stable growth in France and Africa 15% 3 500 • Negative growth in Finland, UK and South Europe 3 000 14% • Operating m argin 1 6 .1 % ( 1 5 .9 % ) 2 500 13% • Good volume leverage (40bps) driven by operational 2 000 12% efficiencies Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 17 17 18 18 18 18 19 19 19 • FX –40bps and acquisitions + 20bps Sales, MSEK Operating margin, % Excluding restructuring items. 13
2 5 % of Group Opening Solutions Am ericas sales • Organic sales grow th of 6 % 6 500 24% • Very strong growth for US Smart Residential and 6 000 Architectural Hardware 5 500 22% • Strong growth for Residential Group, Access & High 5 000 Security, Electromechanical Solutions and Security Doors • Good growth in Canada and stable in Latin America 4 500 20% • Negative growth in Perimeter Security 4 000 • Operating m argin 2 0 .5 % ( 2 0 .1 % ) 3 500 18% • Strong volume leverage (50 bps) driven by growth, raw 3 000 material tailwind and operational efficiencies 2 500 16% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 • FX flat and M&A -10bps 17 17 18 18 18 18 19 19 19 Sales, MSEK Operating margin, % Excluding restructuring items. 14
1 1 % Opening Solutions Asia Pacific of Group sales 3 000 20% • Organic sales grow th of -1 % • Strong growth in South Asia 2 500 15% • Stable growth in Pacific 2 000 10% • Negative growth in China, I ndia, South Korea and Japan 1 500 5% • Operating m argin 9 .5 % ( 9 .2 % ) • Leverage of 10bps despite negative organic growth 1 000 0% • FX + 10bps and M&A 10bps Q3 Q4 Q1 * Q2 Q3 Q4 Q1 Q2 Q3 17 17 18 18 18 18 19 19 19 • China business plan being implemented Sales, MSEK Operating margin, % * * ) Excluding restructuring items and China write downs MSEK 400 in Q2 2018. 15
1 5 % Global Technologies of Group sales 4 500 25% • Organic sales grow th of 6 % • Very strong growth in Secure I ssuance and Global 4 000 23% Solutions 3 500 • Stable growth for Physical Access Control and Citizen I D 21% 3 000 • Negative growth in Extended Access, I dentify & Access Solutions and I dentification Technology 19% 2 500 • Operating m argin 2 0 .3 % ( 2 1 .4 % ) 17% 2 000 • Negative volume leverage (-20bps) due to investments in R&D and new verticals in Global Solutions 1 500 15% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 • FX + 30bps and M&A -120bps 17 17 18 18 18 18 19 19 19 Sales, MSEK Operating margin, % Excluding restructuring items. 16
2 7 % Entrance System s of Group sales • Organic sales grow th of 3 % 7 000 18% 6 500 • Strong growth in Pedestrian Doors and High Performance 17% Doors 6 000 16% • Good growth in I ndustrial Doors and Logistic solutions 5 500 15% • Stable growth in Door components and US Residential 5 000 Doors 4 500 14% • Negative growth in EU Residential Doors 4 000 13% • Strong growth in service 3 500 12% • Operating m argin 1 3 .6 % ( 1 4 .1 % ) 3 000 11% 2 500 • Strong volume leverage (60 bps) due to strong growth in service and operational efficiencies 2 000 10% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 17 17 18 18 18 18 19 19 19 • FX -30 bps and M&A -80 bps due to acquisition cost of MSEK 55 for agta record Sales, MSEK Operating margin, % Excluding restructuring items. 17
FX & acquisition Financial sum m ary, Q3 2 0 1 9 ‘run-rate’ effects in Q4 2 0 1 9 ( 3 0 Sep 2 0 1 9) : SALES FX: + 5% Acq: + 3% July-Septem ber January-Septem ber SEK M 2 0 1 8 2 0 1 9 Change 2 0 1 8 2 0 1 9 Change Sales 2 1 ,1 9 1 2 4 ,0 3 4 1 3 % 6 0 ,8 8 1 6 9 ,0 8 2 1 3 % - Organic growth 960 807 4% 2,620 2,505 4% - Acquired net growth 466 825 4% 1,079 2,303 4% - FX-differences 1,286 1,211 5% 1,154 3,393 5% Operating incom e 3 ,4 2 4 3 8 9 4 1 4 % 9 ,5 6 4 1 0 ,8 7 3 1 4 % ( EBI T) * EBITA-margin* 16.6% 16.7% 0.1pts 16.2% 16.2% 0.0 pts EBIT-margin* 16.2% 16.2% 0.0 pts 15.7% 16.2% 0.5 pts Income before tax* * 3,221 3,645 13% 8,595 10,104 18% Net income* * 2,384 2,696 13% 6,396 7,477 17% EPS* * , SEK 2 .1 5 2 .4 3 1 3 % 5 .7 6 6 .7 3 1 7 % Operating cash flow 3 ,0 0 4 4 ,4 0 1 4 7 % 6 ,4 3 5 9 ,2 0 8 4 3 % ROCE 1 7 % 1 7 % 0 .0 pts 1 5 % 1 6 % 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
Bridge analysis – Q3 2 0 1 9 SEK M Q3 2 0 1 8 Organic Currency Acq/ Div Q3 2 0 1 9 Growth 4% 5% 4% 13% Sales 21,191 807 1,211 825 24,034 Operating profit 3,424 197 192 82 3,894 Operating margin, % 16.2% 24.4% 15.8% 9.9% 16.2% Dilution/ accretion 0 .3 pts -0 .1 pts -0 .2 pts Sales up MSEK 2 ,8 4 3 Price + 1% and volume + 3% • Growth driven by Americas and Global Technologies • EBI T up MSEK 4 7 0 Strong contribution from Americas and Global Technologies • Acquisition cost of MSEK 55 in Entrance Systems for agta record • Margin Accretion from Americas and EMEA • 19
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