President & CEO Q3 Report 2011 Johan Molin 1
Financial highlights Q3 2011 � Good perform ance in a w eak m arket – Continued strong growth in Asia – Stable but slow development in mature markets – South America slowing – New footprint program with closure of 17 sites � Sales 1 0 ,8 4 1 MSEK + 1 4 % + 2% organic, + 18% acquired growth, -6% currency � EBI T 1 ,7 5 1 MSEK + 7 % Currency effect -112 MSEK � EPS 3 .3 0 SEK * ) + 1 3 % Tax rate reduced to 22% * ) Excluding one-off gain of 424 MSEK 2
Financial highlights Jan-Sept 2011 � Good developm ent in a w eak construction m arket � Sales 3 0 ,0 4 2 MSEK + 1 1 % + 4% organic, + 16% acquired growth, -9% currency � EBI T 4 ,7 4 3 MSEK + 7 % Currency effect -388 MSEK � EPS 8 .8 6 SEK * ) + 1 0 % Reduced tax rate to 22% * ) Excluding one-off gain of 424 MSEK 3
Market highlights � Big potential for HID access control from new US Reader w ith integrated PI V government PIV standard � Yale Real Living – New high end digital door lock launched for home automation � Good progress from specification work in US and Europe Yale Real 1 st price in categories Integrated Security Product � Living and Access Control Product of the Year for Aperio and CLIQ Remote at IFSEC (Europe) 1 st price for best innovation � with Secure Element Access Control at ASIS (America) � Blackberry delivered with ASSA ABLOY access control Blackberry 4
Hardware manufacturers adapt technology Blackberry release NFC phones, Dell embedd readers in laptops � Dell Latitude and Precision Laptops offer contactless smart card reader options embedded in the laptop � BlackBerry smartphones are NFC- enabled and can be activated with iCLASS digital credentials Contactless smart card reader embedded in laptop 5
Group sales in local currencies Jan-Sep 2011 4 7 + 3 0 2 9 + 9 1 5 + 2 8 2 -1 2 + 8 5 -2 Share of Group sales 2 0 1 1 YTD, % Year-to-date vs previous year, % 6
Organic growth index Recovery from recession Group -4 % Division I ndex EMEA -9 % Am ericas -1 7 % Asia Pacific + 2 6 % Global Tech + 9 % Entrance -2 % 7
Sales growth Q3 2011 - Currency adjusted 40 000 20 18 38 000 16 14 36 000 12 10 34 000 8 Sales, MSEK 6 Grow th % 32 000 4 2 30 000 0 -2 28 000 -4 2 0 1 1 Q3 + 2 0 % -6 26 000 -8 Organic + 2 % -10 24 000 -12 Acquired + 1 8 % -14 22 000 -16 2005 2006 2007 2008 2009 2010 2011 Organic Growth Acquired Growth Sales in Fixed Currencies 8
Operating income (EBIT), MSEK 1 800 6 400 6 200 1 700 Run rate 6 ,3 4 9 MSEK ( 5 ,8 3 8 ) , + 9 % 6 000 1 600 5 800 1 500 5 600 1 400 5 400 1 300 12-months 5 200 Quarter 1 200 5 000 4 800 1 100 4 600 1 000 4 400 900 4 200 800 4 000 700 3 800 600 3 600 2005 2006 2007 2008 2009 2010 2011 Quarter Rolling 12-months 9
Operating margin (EBIT), % 17,0 Long term target range ( average) 16,0 EBI T % 15,0 14,0 Run rate 2 0 1 1 1 6 .0 % ( 1 6 .2 ) 13,0 12,0 2011 Group Dilution Quarter Rolling 12-months Addition of Cardo -0.6% Other acquisitions -0.4% 10
New manufacturing footprint program � 17 additional factories to be closed – Further consolidation potential within the ASSA ABLOY Group – Synergies larger than expected with Crawford – Net cost 900 MSEK (after 424 MSEK Cardo capital gain) – Cost planned to be booked in Q4, payback 3.1 years � Status current manufacturing footprint program: – 41 factories closed to date, 10 to go – 46 factories converted to assembly, 7 to go – 21 offices closed, 4 to go � Personnel reduction Q3 -181p, tot 5,753p � 621 in further planned reductions � 688 MSEK of the provision remains 11
Margin highlights Q3 2011 EBI T m argin 1 6 .2 % ( 1 7 .2 ) + Volume increase 0% , price 2% � Margin expansion 0.3% + Manufacturing footprint & efficiency improvements - Geographical mix - Dilution from acquisitions by -1.0% - Negative currency effect –0.3% 12
Acquisitions Jan-Oct 2011 � Fully active on acquisitions – Good pipeline targeting 5% growth � 1 6 acquisitions Jan-Oct 2 0 1 1 � Annualized 7 ,8 0 0 MSEK, + 2 1 % � Major acquisitions Jan-Oct: � Cardo � Swesafe � Lasercard � FlexiForce � Portafeu � Angel Metal � Albany 13
14 Albany, US
Albany Door Systems � Market leader in high speed doors � Strong presence in Europe and US � Sales and service has good fit with Crawford and Besam (direct channel) � Total sales 180 MUSD with 700 employees � Accretive to EPS from start 15
Angel Metal, Korea � Market leader in locks and hardware in Korea � Sales 2011 expected to reach 180 MSEK with 54 employees � Strong market share in Korea � Serving both residential and commercial segments � Strong specification presence and innovation capability � Accretive to EPS from start 16
Division - EMEA SALES � Slow but stable in most parts share of Group total % � Growth in Scandinavia, Finland and East Europe � 31 France, Belgium, Germany and UK stable � Southern Europe with Spain and Italy in strong decline � Several large orders from specification with new products � EBIT margin maintained EBI T % � Operating margin (EBIT) 19 18 - Volume + 0% 17 16 - Material cost 15 14 - Acquisition dilution by 0.3% 13 2007 2008 2009 2010 2011 + Restructuring savings 17
Division - Americas SALES � Weak institutional construction continues to affect US share of Group total % � Brazil, Mexico and Latin America declining � 22 Good development of residential and elmech � Stable high margin sustained through efficiency gains � Investment in R&D and sales maintained � Operating margin (EBIT) EBI T % - Volume -1% 22 21 - Material cost 20 + Efficiency improvement and price 19 18 2007 2008 2009 2010 2011 19
Division - Asia Pacific SALES � Strong growth in Asia, especially South East Asia share of Group total % including India � Australia in decline due to end of government stimuli 14 � Earth quakes in New Zeeland hampers demand � Very good evolution from digital door locks (DDL) � Negative mix due to Pacific and China doors EBI T % 17 � Operating margin (EBIT) 15 13 = Volume + 7% 11 9 - Raw material & price 7 5 2007 2008 2009 2010 2011 - Sales mix 21
Division - Global Technologies SALES � HID share of Group total % – Access control and secure issuance in good growth – Strong demand from e-Government with LaserCard 14 – Identification Technology declining but improved profit � Hospitality – Good demand for NFC locks, > 70% of all new locks – Large hotel chains planning for NFC upgrades – Aftermarket in good growth due to patented keyways � � Operating margin (EBIT) EBI T % 19 + Volume + 5% (26), good leverage 18 17 16 - Dilution from LaserCard and ActivIdentity 15 14 with -2.0% 13 2007 2008 2009 2010 2011 - Dilution from currency 23
Division - Entrance Systems SALES share of � Good development of automatic doors and Ditec Group total % � Crawford and FlexiForce experiences good industrial 19 demand � Service contract sales in steady growth � Synergies from Crawford and Normstahl larger than expected � Sales and EBIT more than doubled EBI T % 19 � 18 Operating margin (EBIT) 17 16 15 + Volume + 5% 14 13 12 - Dilution from acquisitions -2.0% 2007 2008 2009 2010 2011 - Increased R&D and sales costs 25
The new ASSA ABLOY Entrance Systems ASSA ABLOY Entrance System s Sales SEK 1 0 .4 B EBI T > 1 2 % 3 .3 BSEK 0 .6 BSEK 0 .9 BSEK 3 .5 BSEK 1 .0 BSEK 1 .1 BSEK Distribution sales 2 3 % Direct sales 7 7 % I n addition, 3 8 % of Agta Record, Sales SEK 2 .0 B 27
CFO Q3 Report 2011 Tomas Eliasson 28
Financial highlights Q3 2011 3rd Quarter Nine months MSEK 2010 2011 Change 2010 2011 Change Sales 9,474 10,841 +14% 27,175 30,042 +11% Whereof Organic growth +2% +4% Acquired growth +18% +16% FX-differences -491 -6% -2,113 -9% Operating income (EBIT) 1,630 1,751 +7% 4,440 4,743 +7% EBIT-margin (%) 17.2 16.2 16.3 15.8 Operating cash flow 1,890 1,528 -19% 4,200 3,286 -22% EPS (SEK) 2.93 3.30 +13% 8.03 8.86 +10% 29
Bridge Analysis – Jul-Sep 2011 2010 Acq/ Div Currency Organic 2011 MSEK Jul-Sep Jul-Sep 18% -6% 2% 14% Revenues 9,474 1,650 -491 208 10,481 EBIT 1,630 176 -112 57 1,751 % 17.2% 10.7% 22.8% 27.5% 16.2% Dilution / -100 bp -30 bp + 30 bp Accretion 30
P&L – Components as % of sales 2 0 1 0 2 0 1 1 2 0 1 1 Q3 Q3 excluding Q3 acquisitions � Direct material 35.0% 36.3% 34.4% � Conversion costs 24.4% 23.6% 26.3% � Gross Margin 40.6% 40.1% 39.3% � S, G & A 23.4% 22.9% 23.1% � EBIT 17.2% 17.2% 16.2% 31
Operating cash flow, MSEK Back to 7 500 grow th 7 000 2 000 6 500 6 000 1 500 12-months Recession 5 500 Quarter starts 5 000 1 000 4 500 4 000 500 3 500 0 3 000 Quarter Cash Rolling 12-months EBT Rolling 12 months 32
Net debt/ EBI TDA Gearing 120 100 2 .2 80 60 40 20 0 Debt/ Equity Debt/ Equity 6 9 ( 5 5 ) 5 1 ( 5 7 ) Gearing % and net debt MSEK Gearing 33 Net debt 5 000 0 30 000 25 000 20 000 15 000 10 000 Net Debt
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