Q4 Report 2018 Q4 2018 in brief Strong organic sales developm ent - PowerPoint PPT Presentation

Q4 Report 2018

Q4 2018 in brief  Strong organic sales developm ent – Very strong growth in Americas and APAC – Strong growth in Global Technologies – Good growth in EMEA – Growth in Entrance Systems  Electrom echanical products up 3 0 %  Strong EBI T grow th of 1 2 % – Margin diluted by M&A and raw material headwind Launch of the 7 th m anufacturing footprint program   Strong cash flow of SEK 4 .9 billion

Q4 2018 figures in summary Sales EBI T + 1 5 % + 1 2 %  Sales SEK 2 3 ,1 6 7 M + 1 5 % 25 000 3 900 3 7 4 6 – 6% organic 3 800 24 000 3 700 – 3% acquired 23 000 3 600 – 6% currency 22 000 3 500 3 3 5 9 21 000 3 400  EBI TA-m argin* 1 6 .7 % ( 1 7 .1 % ) 20 000 3 300 3 200  19 000 EBI T-m argin 1 6 .2 % ( 1 6 .7 % ) 3 100 18 000 3 000  EBI T SEK 3 ,7 4 6 M + 1 2 % 17 000 2 900 – Amortization of acquisition-related intangible assets 16 000 2 800 SEK –113M (-87) 15 000 2 700 Q4 17 Q4 18  EPS SEK 2 .3 3 + 9 % Sales, SEK M EBIT, SEK M * ) Operating margin before amortization of intangible aseets recognized in business combinations.

Sales by Country ASSA ABLOY 1 0 0 + 9 + 6 Emerging 2 3 + 8 + 4 Oct-Dec 2018 markets 3 8 + 7 + 4 4 1 + 1 4 + 1 0 1 3 + 6 + 3 2 + 8 + 8 3 + 7 + 7 3 -3 -4 Change in local currencies 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  Significant grow th in electrom echanical products – Especially driven by the Americas division and smart locks – Increasing recurring contribution from mobile keys  Easier for custom er to buy from Entrance system s – Merger of Industrial doors and high performance doors – Focus on service  Openings studio continue to lead in BI M specifications – New release with major user experience and design uplift

Sales growth, currency adjusted 2 3 Quarters w ith positive OG % SEK M 25 85 000 20 80 000 15 75 000 10 70 000 5 65 000 0 60 000 -5 55 000 -10 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 5 .8 % * ( 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 EBIT Rolling 12-months EBITA* * Rolling 12-months * ) Excluding China write-downs and restructuring items. * * ) Operating margin before amortization of intangible aseets recognized in business combinations. 7

+ 6 8 % Operating profit, SEK M in 5 years SEK M SEK M 4 000 16 000 Run rate: EBI T SEK 1 3 ,3 0 9 * M ( 1 2 ,3 4 1 ) + 8 % 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  New program launched in Q4 2 0 1 8 w ith < 3 years payback tim e • Closure of ~ 15 factories and > 30 offices • ~ 1,600 FTE net reduction • Restructuring cost for the full program SEK 1,500 M • SEK 1,218 M in Q4 2018 and remainder in Q4 2019 • Annual savings of approximately SEK 800 M by 2021  Status of program s launched 2 0 0 6 -2 0 1 8 • 88 factories closed to date • 7 factories closed during the quarter  Total personnel reduction • 15,362 FTE in total since 2006 • 962 FTE in recent quarter • 1,408 FTE to be affected in all programs  SEK 1 ,1 9 0 M provisions rem ain for all program s

Acquisitions  Fully active pipeline  5 acquisitions in Q4 and 19 in 2018  Acquired annualized sales SEK 3,800 M  Divestment of Wood Door business SEK 600 M

Luxer One, USA  Leading advanced package locker solutions business  Market leader in the last mile delivery space • Reinforces position in solutions for home delivery • Compliments the multi-family product offerings • ‘Click and collect’ at retail stores  Turnover of SEK 335 M with 130 employees  Neutral to EPS

Lorient, UK Acoustic, sm oke, fire and therm al seals  A leading designer and manufacturer of door sealing systems  Complements the acquisition of Planet GDZ  Turnover of SEK 220 M with 135 employees  Architectural seals Accretive to EPS (incl. door drop seals)

2 3 % EMEA of Group sales  5 500 19% Organic grow th of 3 % – Strong growth in Finland, Germany, the 5 000 18% UK and Middle East/ Africa 4 500 17% – Good growth in Eastern Europe 4 000 16% – Stable growth in Scandinavia, Benelux and South Europe 3 500 15% – Slight negative growth in France 3 000 14% – Strong growth for Electromechanical products 2 500 13%  2 000 12% Operating m argin 1 6 .6 % ( 1 7 .3 % ) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 16 17 17 17 17 18 18 18 18 – Dilution from FX, M&A and pension costs Sales, SEK M Operating margin, % Excluding restructuring items.

2 2 % Americas of Group sales  5 500 24% Organic grow th of 1 4 % – Very strong growth for US Residential, 5 000 Electromechanical & High Security and 22% Security doors 4 500 – Strong growth for US Architectural Hardware, Chile and Mexico 4 000 20% – Stable in Canada, Brazil, Colombia and the US Perimeter Protection 3 500 – Very strong growth for Electromechanical 18% products 3 000  Operating m argin 1 9 .9 % ( 1 9 .9 % ) 2 500 16% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 – Good volume leverage, but dilution from raw 16 17 17 17 17 18 18 18 18 material costs, mix and M&A Sales, SEK M Operating margin, % Excluding restructuring items. 1 4

1 1 % Asia Pacific of Group sales  Organic grow th of 1 1 % 3 000 20% – Very strong growth in Japan, South Asia, I ndia and intra-group sales 2 500 15% – Good growth in South Korea and China • New organization established and new strategy being implemented in China 2 000 10% – Stable growth in Pacific 1 500 5%  Operating m argin 9 .6 % ( 9 .7 % ) – Good volume leverage, but dilution from FX and M&A 1 000 0% * Q4 Q1 Q2 Q3 Q4 Q1 * Q2 Q3 Q4 16 17 17 17 17 18 18 18 18 Sales, SEK M Operating margin, % * * ) Ex restructuring items in China in Q4 2016 and China write down of SEK 400 M in Q2 2018 1 5

1 6 % Global Technologies of Group sales  Organic grow th of 8 % 25% 3 500 – HID 23% • Very strong growth in Secure Issuance 3 000 and Identify & Access Solutions • Strong growth in Physical Access 21% Control 2 500 • Good growth in Identification Technology and Extended Access 19% 2 000 • Negative growth in Citizen ID – ASSA ABLOY Global Solutions grew strongly 17% 1 500 • Strong contribution from all verticals 1 000 15%  Operating m argin 1 9 .9 % ( 2 1 .5 % ) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 16 17 17 17 17 18 18 18 18 – Dilution from M&A and mix Sales, SEK M Operating margin, % Excluding restructuring items. 1 6

2 8 % Entrance Systems of Group sales  7 000 18% Organic grow th of 2 % 6 500 17% – Strong growth in US Residential Doors 6 000 – Good growth in I ndustrial Doors and 16% 5 500 Pedestrian Doors 15% 5 000 – Stable growth in Door components 4 500 14% – Negative sales in High Performance Doors 4 000 13% and EU Residential Doors 3 500 12%  3 000 Operating m argin 1 5 .1 % ( 1 5 .9 % ) 11% 2 500 – Margin affected by lower sales growth, 2 000 10% mix and higher project costs Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 16 17 17 17 17 18 18 18 18 Sales, SEK M Operating margin, % Excluding restructuring items. 1 7

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

Financial highlights 2018 October-Decem ber January – Decem ber SEK M 2 0 1 7 2 0 1 8 Change 2 0 1 7 2 0 1 8 Change Sales 2 0 ,1 0 9 2 3 ,1 6 7 1 5 % 7 6 ,1 3 7 8 4 ,0 4 8 1 0 % - Organic growth 878 1,281 6% 2,834 3,901 5% - Acquired net growth 480 714 3% 1,753 1,793 2% - FX-differences -733 1,063 6% 257 2,217 3% Operating incom e 3 ,3 5 9 3 ,7 4 6 1 2 % 1 2 ,3 4 1 1 3 ,3 0 9 8 % ( EBI T) * EBITA-margin* 17.1% 16.7% -0.4 pts 16.5% 16.3% -0.2 pts EBIT-margin* 16.7% 16.2% -0.5 pts 16.2% 15.8% -0.4 pts Income before tax* * 3,226 3,515 9% 11,673 12,110 4% FX & acquisition Net income* * 2,385 2,588 9% 8,635 8,984 4% ‘run-rate’ effects in Q1 2 0 1 9 EPS* * , SEK 2 .1 5 2 .3 3 9% 7 .7 7 8 .0 9 4 % ( 3 1 Dec 2 0 1 8 ) : SALES FX: + 5% Operating cash flow 4 ,8 7 6 4 ,9 2 3 1 % 1 0 ,9 2 9 1 1 ,3 5 7 4 % Acq: + 4% * ) Excluding China write down of SEK 400 M and impairments of SEK 5,595M in Q2 2018. * * ) Excluding the impairment in China of goodwill and other intangible assets. 1 9