Q2 Report 2018 Q2 2018 in brief Strong sales grow th Strong - PowerPoint PPT Presentation

Q2 Report 2018

Q2 2018 in brief  Strong sales grow th – Strong growth in Americas, Global Technologies and Entrance Systems – Stable growth in EMEA and APAC – Strong development for smart door locks and electro-mechanical solutions  One-off costs in China – Write-down of goodwill, intangible assets and operating assets  Stable operating m argin*  Strong cash flow * ) Excluding China write down of SEK 400 M in Q2 2018.

Q2 2018 figures in summary  Sales SEK 2 1 ,1 4 0 M + 9 % Sales EBI T* 22 000 3 500 + 9 % + 6 % – 5% organic 21 000 3 400 – 2% acquired 3 3 1 1 – 2% currency 20 000 3 300  EBI T* SEK 3 ,3 1 1 M + 6 % 19 000 3 200 3 1 1 4 – EBIT including China write-down, SEK -2,911 M 18 000 3 100 – Amortization of acquisition-related intangible assets SEK -97 M (-54) 17 000 3 000 – Currency effect SEK 37 M 2 900 16 000  Operating m argin* 1 5 .7 % ( 1 6 .1 ) 15 000 2 800 – EBITA-margin* 16.1% (16.3) Q2 17 Q2 18 Sales, SEK M EBIT, SEK M  EPS* * SEK 1 .8 4 -6 % * ) Excluding China write down of SEK 400 M in Q2 2018 and the impairment of goodwill and other intangible assets. * * ) Excluding the impairment in China of goodwill and other intangible assets.

Sales by Region ASSA ABLOY 1 0 0 + 7 + 5 Emerging markets 2 3 + 3 + 1 Q2 2018 3 8 + 6 + 4 4 1 + 1 1 + 8 1 3 -6 -4 2 + 4 5 + 2 1 3 + 1 7 + 1 4 3 + 1 + 6 Change excluding forex im pact Organic change Share of sales, % QTD 2 0 1 8 vs. QTD 2 0 1 7 , % QTD 2 0 1 8 vs. QTD 2 0 1 7 , % Emerging markets comprise Africa, Asia (excl. Japan), the Middle East, Latin America and Eastern Europe. 4

Market highlights  HI D Ticketing provider for FI FA W orld Cup 2 0 1 8 – Over 3 million personalized RFID tickets delivered for all games  ASSA ABLOY innovation recognized by Forbes – World’s top 100 most innovative companies in 2018  Hospitality launches VOSTI O at HI TEC Houston – Cloud based hotel access management system – Ensuring up to date security, compliance and business operations – SaaS model eliminating need for local servers and IT hardware

Sales growth, currency adjusted % SEK M 25 80 000 20 75 000 15 70 000 10 65 000 5 60 000 0 55 000 -5 50 000 2013 2014 2015 2016 2017 2018 Organic growth, % Acquired growth, % Sales in fixed currencies, SEK M 6

Operating margin, % % 18 18 Run rate: EBI T-m argin 1 6 .1 % * ( 1 6 .2 ) 17 17 Long term target range ( average) 16 16 15 15 14 14 13 13 2013 2014 2015 2016 2017 2018 Quarter Rolling 12-months * ) Excluding China write-downs and restructuring items. 7

Operating profit, SEK M + 6 6 % in 5 years SEK M SEK M 4 000 16 000 Run rate: EBI T SEK 1 2 ,5 7 9 * M ( 1 2 ,1 3 4 ) + 4 % 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 2013 2014 2015 2016 2017 2018 Quarter Rolling 12-months * ) Excluding China write-downs and restructuring items. 8

Manufacturing footprint  Status of program s launched 2 0 0 6 -2 0 1 6 • 79 factories closed to date, 9 to go • 129 factories converted to assembly, 25 to go  Total personnel reduction • 14,235 FTE in total since 2006 • 163 FTE in recent quarter • 833 FTE to go for all programs  SEK 6 1 9 M provisions rem ain for all program s  Next program planned for end of 2 0 1 8

Acquisitions  Fully active pipeline  12 acquisitions done in 2018  Acquired annualized sales SEK 1,900 M  Divestment of Wood Door business SEK 600 M

Brüken, Mexico Facades Patch fittings Locks  Turnover of SEK 260 M with 80 employees  A leading player in glass and aluminum hardware  Broadens offering in the Mexican market  Hinges Accretive to EPS Partitions Bath hardware

Door Systems, USA  Turnover of SEK 230 M with 100 employees  Distributor of commercial and residential doors  Strong service organization  Strong position in the Chicago metropolitan area  Accretive to EPS

Planet, Switzerland  Turnover of SEK 160M with 55 employees  A leading supplier of drop down seals and finger protection covers  Fills a gap in our product portfolio in the important DACH market  Accretive to EPS

2 4 % EMEA of Group sales  5 500 19% Organic grow th of 2 % – Strong growth in Finland, Scandinavia, 5 000 18% Germany and Eastern Europe 4 500 17% – Good growth in Southern Europe 4 000 16% – Stable growth in UK and Africa/ Middle East 3 500 15% – Negative growth in Benelux and France 3 000 14% – Strong growth for electromechanical products and smart door locks 2 500 13%  2 000 12% Operating m argin 1 5 .9 % ( 1 5 .7 ) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16 16 16 17 17 17 17 18 18 Sales, SEK M Operating margin, % Excluding restructuring items.

2 4 % Americas of Group sales  5 500 24% Organic grow th of 9 % – Strong growth in Electromechanical & 5 000 High Security, US Residential, 22% Architectural Hardware, Canada, 4 500 Perimeter Protection, Mexico and in South America (excl. Colombia) 4 000 20% – Stable growth in Security doors – Negative growth in Colombia 3 500 – Very strong growth for smart locks 18% 3 000  Operating m argin 2 0 .1 % ( 2 2 .1 ) 2 500 16% – High raw material cost Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16 16 16 17 17 17 17 18 18 – Negative mix effect Sales, SEK M Operating margin, % Excluding restructuring items. 1 5

1 1 % Asia Pacific of Group sales  3 000 20% Organic grow th of 2 % – Strong growth in South Korea, Japan, and in Pacific 2 500 15% – Negative growth in South Asia – Weak development in China 2 000 10% • Strategic overview and new business plan  Operating m argin 8 .9 % * ( 1 1 .2 ) 1 500 5% – Low operating margins in China  W rite-dow n of goodw ill, intangible 1 000 0% Q2 Q3 * Q4 Q1 Q2 Q3 Q4 Q1 Q2 assets and operating assets 16 16 16 17 17 17 17 18 18 Sales, SEK M Operating margin, % * * ) Excluding restructuring items and China write downs SEK 400 M in Q2 2018. 1 6

1 3 % Global Technologies of Group sales  3 000 22% Organic grow th of 6 % – HI D • Strong growth in Physical Access 2 500 20% Control, Citizen I D, Extended Access and in I dentity & Access management 2 000 18% • Stable sales in Secure I ssuance and in I dentification Technology 1 500 16% – Hospitality • Strong growth with Mobile key solutions 1 000 14% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16 16 16 17 17 17 17 18 18  Operating m argin 1 9 .6 % ( 1 8 .4 ) Sales, SEK M Operating margin, % Excluding restructuring items. 1 7

2 8 % Entrance Systems of Group sales  6 500 18% Organic grow th of 6 % 6 000 17% – Strong growth in Logistic solutions and US Residential Doors, Pedestrian Doors 5 500 16% and I ndustrial Doors 5 000 15% – Stable growth in High Performance Doors 4 500 14% – Negative sales in Door components and in 4 000 EU Residential Doors 13% 3 500 12% 3 000  11% Operating m argin 1 3 .8 % ( 1 3 .4 ) 2 500 2 000 10% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 16 16 16 17 17 17 17 18 18 Sales, SEK M Operating margin, % Excluding restructuring items. 1 8

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

Financial highlights 2018 April - June January - June SEK M 2 0 1 7 2 0 1 8 Change 2 0 1 7 2 0 1 8 Change Sales 1 9 ,3 8 7 2 1 ,1 4 0 9 % 3 7 ,5 2 9 3 9 ,6 9 0 6 % - Organic growth 344 954 5% 1,366 1,659 5% - Acquired growth 451 366 2% 900 633 2% - FX-differences 698 433 2% 1,478 -131 -1% Operating incom e 3 ,1 1 4 3 ,3 1 1 6 % 5 ,9 0 1 6 ,1 4 0 4 % ( EBI T) * EBITA-margin* 16.3% 16.1% 16.0% 16.0% EBIT-margin* 16.1% 15.7% 15.7% 15.5% Income before tax* * 2,944 2,720 -8% 5,537 5,374 -3% Net income* * 2,179 2,049 -6% 4,097 4,013 -2% EPS* * , SEK 1 .9 6 1 .8 4 -6% 3 .6 9 3 .6 1 -2 % Operating cash flow 2 ,5 7 5 2 ,8 5 5 1 1 % 3 ,3 9 9 3 ,4 3 1 + 1 % * ) Excluding China write down of SEK 400 M in Q2 2018. * * ) Excluding the impairment in China of goodwill and other intangible assets. 2 3

Bridge Analysis – Q2 2018 SEK M Q2 2 0 1 7 Organic Currency Acq/ Div Q2 2 0 1 8 5% 2% 2% 9% 19,387 954 433 366 21,140 Operating profit * 3,114 95 37 64 3,311 Operating margin, % * 16.1% 10.0% 8.6% 17.5% 15.7% Dilution/ accretion -0.3% -0.1% 0.0%  Price + 2% and volume + 3%  Positive leverage from EMEA and Entrance Systems  Dilution from direct material in Americas -30 bps  Dilution from APAC with -30 bps  Accretion from acquisitions/ divestments in Global Technologies  Capital gain from the divestment of the Wood Door business * ) Excluding China write down SEK 400 M in Q2 2018. 2 1