Q2 Report 2016 Johan Molin President and CEO Financial highlights - PowerPoint PPT Presentation

ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience Q2 Report 2016 Johan Molin President and CEO

Financial highlights Q2, 2016  Strong growth in mature markets – Strong growth in Americas, EMEA and Global Tech – Good growth in Entrance Systems – Negative in APAC due to weak Chinese market  Sales 17,894 MSEK +5% 4% organic, 4% acquired growth, -3% currency  EBIT 2,910 MSEK +6% Currency effect -81 MSEK  EPS 1.82 SEK +7% Underlying tax rate 26% 2

Financial highlights Jan-Jun 2016  Strong development despite a challenging market – Strong growth in Americas – Good growth in Entrance Systems, EMEA and Global Tech – Negative growth in APAC due to China  Sales 33,785 MSEK +4% 4% organic, 3% acquired growth, -3% currency  EBIT 5,321 MSEK +5% Currency effect -158 MSEK  EPS 3.30 SEK +5% Underlying tax rate 26% 3

Market highlights  ASSA ABLOY in Forbes 100 most innovative companies  Strong development in EMEA digital product sales – Driven by APERIO and smart door locks  Successful roll out of Service centers in USA – Incremental growth through local service and quick deliveries DSC Flash  Japanese profile CLIQ-cylinder – Orders and quick pipeline build

Group sales in local currencies Jan-Jun 2016 Emerging markets 23% (25) of sales 38 +7 40 +7 15 +1 1 +12 3 +39 3 +1 Share of Group sales 2016 YTD, % Year-to-date vs previous year, % 5

Sales growth, currency adjusted Sales MSEK Growth % 2016 Q2 +8% 70 000 21 Organic +4% 67 000 18 Acquired +4% 64 000 15 61 000 12 58 000 9 55 000 6 52 000 3 49 000 0 46 000 -3 43 000 -6 40 000 -9 37 000 -12 34 000 -15 2009 2010 2011 2012 2013 2014 2015 2016 Organic Growth Acquired Growth Sales in Fixed Currencies 6

Operating income (EBIT), MSEK Quarter Run rate 11,329 MSEK (10,251) +11% 12-months 3 200 11 500 11 000 3 000 10 500 2 800 10 000 2 600 9 500 9 000 2 400 8 500 2 200 8 000 2 000 7 500 1 800 7 000 6 500 1 600 6 000 1 400 5 500 1 200 5 000 1 000 4 500 2009 2010 2011 2012 2013 2014 2015 2016 Quarter Rolling 12-months 7

Operating margin, % EBIT Margin Run rate 2016 16.3% (16.3) 17 16 15 14 13 12 2009 2010 2011 2012 2013 2014 2015 2016 2016 Acquisitions Currency Quarter Rolling 12-months Q2 -0.2% -0.1% 8

Manufacturing footprint  Status of manufacturing footprint programs 2006-2013: – 76 factories closed to date, 2 to go – 99 factories converted to assembly, 16 to go  Total personnel reduction: – 11,356 FTE in total  493 FTE to go for all programs  New MFP in progress  395 MSEK of the provision remains for all programs 9

Margin highlights Q2 2016 EBIT margin 16.3% (16.1) +0.2% + Volume increase 3%, price 1% Margin improvement + 4% Organic growth + Manufacturing footprint & pricing - Currency -0.1% - Acquisitions -0.2% 10

Acquisitions 2016 Fully active pipeline  9 acquisitions done in 2016  Divestment of Carlocks 550 MSEK  Acquired annualized sales 1,700 MSEK  Added sales 2.5%  11

Nassau, Denmark  Turnover of 540 MSEK with 360 employees  Important European supplier of industrial doors  Adds additional coverage in industrial doors and service  Neutral to EPS 12

Demoteller, USA  Turnover of 85 MSEK with 32 employees  Solutions for the financial card Trism (Fii Software) instance issuance market  Enhances position within secure issuance  Accretive to EPS 13

Mauer, Bulgaria  Turnover of 100 MSEK with 200 employees  Manufacturer of cylinders and locks  Market Leader of locking products in Bulgaria  Accretive to EPS 14

Division – EMEA Sales Strong growth in Scandinavia, Finland, Germany,  share of Group total % Iberia, Eastern Europe and Africa Good growth in UK, Benelux, France, Italy and Israel 23%  Strong progress of elmech solutions  Positive calendar effect  EBIT % Operating margin (EBIT)  19 18 + Organic +6% 17 16 = Direct material 15 14 - Acquisitions & currency -0.2% 13 2010 2011 2012 2013 2014 2015 2016 15

Division - Americas Sales share of Strong growth in Door group, Elmech, Residential,  Group total % Canada, Mexico and South America (ex Brazil) 24% 20 Good growth in AHW, High security and Canada  Negative in Brazil  Quotation levels continue to develop positive  EBIT % 23 Operating margin (EBIT)  22 21 + Organic +8% 20 19 + Direct Material 18 2010 2011 2012 2013 2014 2015 2016 - Acquisitions and currency -0.7% 17

Division - Asia Pacific Sales share of Strong growth in Pacific  Group total % Good growth in South Asia and Korea  13% 14 Continued decline in China  Personnel reduction China YTD – 586 p – Exciting orders for elmech in Japan  EBIT % 18 Operating margin (EBIT)  16 14 - Organic -6% 12 + Savings mitigate sales decline 10 = Acquisitions and currency 0.2% 8 2010 2011 2012 2013 2014 2015 2016 19

Division - Global Technologies Sales HID  share of Group total % Strong growth in PACS, Gov ID, – IDT (inlays) and Quantum secure 13% 13 Flat in IAM (Identity) and project sales – Hospitality  Growth – Strong profit – EBIT % Operating margin (EBIT)  21 20 + Organic +5% 19 18 - R&D investments 17 16 - Acquisitions and currency -0.1% 15 14 2010 2011 2012 2013 2014 2015 2016 21

Division - Entrance Systems Sales share of Strong growth in Door automatics, EU Industrial, High  Group total % speed doors 27% Good growth in Amarr and 4Front and Ditec  28 Negative in EU Residential  Continued good leverage  EBIT % 18  Operating margin (EBIT) 16 + Organic +4% 14 12 + Direct Material and consolidation effects 10 - Acquisitions and currency -0.3% 2010 2011 2012 2013 2014 2015 2016 23

ASSA ABLOY is the global leader in door opening ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs solutions, dedicated to satisfying end-user needs for security, safety and convenience for security, safety and convenience Q2 Report 2016 Carolina Dybeck Happe CFO

Financial highlights Q2 2016 2nd Quarter Six months MSEK 2015 2016 Change 2015 2016 Change Sales 17,082 17,894 +5% 32,334 33,785 +4% Whereof Organic growth 656 650 +4% 1,336 1,099 +4% Acquired growth 453 593 +4% 829 1,083 +3% FX-differences 2,008 -431 -3% 3,900 -730 -3% Operating income (EBIT) 2,742 2,910 +6% 5,071 5,321 +5% EBIT-margin (%) 16.1 16.3 15.7 15.7 Operating cash flow 1,991 2,519 +27% 2,511 3,017 +20% EPS (SEK) 1.70 1.82 +7% 3.15 3.30 +5% 26

Bridge Analysis – Apr-Jun 2016 MSEK 2015 Organic Currency Acq/Div 2016 Apr-Jun Apr-Jun 4% -3% 4% 5% Sales 17,082 650 -431 593 17,894 EBIT 2,742 195 -81 54 2,910 % 16.1% 29.9% 18.8% 9.1% 16.3% Dilution / Accretion 0.5% -0.1% -0.2% 27

P&L Components as % of sales Jan – Jun 2016 2015 2016 2016 YTD YTD excl YTD acquisitions Direct material 36.3% 35.6% 35.3% Conversion costs 24.8% 24.9% 25.3% Gross Margin 38.9% 39.5% 39.4% S, G & A 23.2% 23.5% 23.7% EBIT 15.7% 16.0% 15.7% 28

Operating cash flow, MSEK 12-months Quarter 5 000 11 000 10 500 4 500 10 000 4 000 9 500 3 500 9 000 8 500 3 000 8 000 2 500 7 500 2 000 7 000 6 500 1 500 6 000 1 000 5 500 500 5 000 0 4 500 2009 2010 2011 2012 2013 2014 2015 2016 Quarter Cash Rolling 12-months EBT Rolling 12 months 29

Gearing % and net debt, MSEK Net Debt Gearing 30 000 120 Debt/Equity 64 (70) 25 000 100 20 000 80 15 000 60 10 000 40 5 000 20 0 0 2009 2010 2011 2012 2013 2014 2015 2016 Net debt Gearing Net debt/EBITDA 2.1 (2.3) *) 2009-2011 Not restated for changed pension accounting principles. 30

Earnings per share, SEK Quarter SEK 12-months Q2 EPS +7% 2.00 7.50 7.00 1.80 6.50 1.60 6.00 1.40 5.50 1.20 5.00 4.50 1.00 4.00 0.80 3.50 0.60 3.00 0.40 2.50 2009 2010 2011 2012 2013 2014 2015 2016 Quarter Rolling 12-months Restated for Stock split 3:1 2015. 31

ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience Q2 Report 2016 Johan Molin President and CEO

Conclusions Q2 2016 Good growth by 5% with 4% organic and 4% acquired  Strong growth in mature markets  Chosen by Forbes as 100 most innovative company  Good EBIT development +6%  Strong cash flow +27%  33

ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience Q&A