TIDM77BL
RNS Number : 6575O
ASSA ABLOY AB (publ)
10 February 2021
Organic growth
-5%
Operating income
1 2
-14%
Earnings per share
1 2
-7%
Strong operational execution
Fourth quarter
-- Net sales decreased by 7% to SEK 23,298 M (24,946), with organic growth of
-5 % (1) and acquired/divested net growth of 5% (3)
-- EMEA and Entrance Systems reported stable organic sales
development. Organic sales declined in Asia Pacific and Americas,
while Global Technologies reported a significant decline
-- Two divestments in Switzerland and Italy were completed. The
combined annual sales of the divested companies amount to around
SEK 625 M
-- A new restructuring program was launched at year-end. The
estimated cost amounts to SEK - 1,366 M with a pay-back time of
around two years
-- Operating margin [1] 2 (EBIT %) excluding acquisitions and divestments was 16.1% (16.2)
-- Net income 1 2 amounted to SEK 2,582 M (2,767)
-- Earnings per share 1 2 amounted to SEK 2.33 (2.49)
-- Operating cash flow amounted to SEK 5,529 M (5,235)
-- The Board of Directors proposes a dividend of SEK 3.90 (3.85)
per share for 2020, distributed in two equal installments.
Sales and income
Fourth quarter January-December
================= ======== =================== ========
2019 2020 <DELTA> 2019 2020 <DELTA>
------------------------------ -------- ------- -------- -------- --------- --------
-7 -7
Sales, SEK M 24,946 23,298 % 94,029 87,649 %
Of which:
Organic growth 147 -1,150 -5 % 2,652 - 7,150 -8 %
Acquisitions and divestments 760 1,211 5% 3,063 3,328 4%
Exchange-rate effects 872 -1,709 -7 % 4,265 -2 ,558 -3 %
Operating income (EBIT) -14 -20
1 [2] , SEK M 4,047 3,475 % 14,920 11,916 %
Operating margin (EBITA)1
2, % 16.8% 15.6% 16.4% 14.3%
Operating margin (EBIT)1
2, % 16.2% 14.9% 15.9% 13.6%
Income before tax1 2, -20
SEK M 3,779 3,306 - 13% 13,883 11,133 %
-18
Net income1 2, SEK M 2,767 2,582 - 7% 10,243 8,375 %
Operating cash flow,
SEK M 5,235 5,529 6% 14,442 14,560 1%
Earnings per share1 2, -18
SEK 2.49 2.33 - 7% 9.22 7.54 %
Comments by the President and CEO
Strong operational execution
We are putting a year behind us that, because of the outbreak of
Covid-19, changed the dynamics of many industries and changed most
of our daily lives in one way or another. The pandemic resulted in
the most challenging operational environment in our history,
particularly in the first half of the year. In response, we have
quickly adapted to the new reality, making significant adjustments
to our cost base, protecting our balance sheet, while continuing to
invest in innovation and growth initiatives. This led to an
operating margin in the final quarter, excluding acquisitions and
divestments, at target level and to a record high operating cash
flow for the full year.
In the fourth quarter, our organic growth declined by 5% and
negative currency effects were 7%, while acquisitions and
divestments contributed a growth of 5%, resulting in a total sales
decline of 7%. Sales were stable in EMEA and Entrance Systems,
declined in Americas and Asia Pacific and were significantly down
in Global Technologies.
Through continued cost-saving measures, we mitigated the
negative effects of the newly introduced lockdowns in the fourth
quarter and we achieved an operating margin of 16% excluding
acquisitions and divestments. Cash flow continued to be very strong
and totaled SEK 14,560 M for the full year and SEK 5,529 M in the
fourth quarter.
Operational improvements
The new restrictions and lockdowns put additional pressure on
some of our customer segments and continued to affect Global
Technologies in particular. EMEA's sales were stable and the
underlying margin improved as strong residential demand in core
markets, together with cost measures, more than offset the negative
effects of the restrictions. In Americas, demand was very strong in
Latin America and in the US residential segment, but declined in
the commercial segments in the US. The operating margin in Americas
was at a high level. Sales declined in all Asia Pacific markets,
but we are seeing a gradual improvement of our profitability in
China. Demand for Entrance Systems continued to be stable with a
strong operating margin.
Our strong cost-saving measures continued and we realized net
cost reductions of SEK 0.5 bn in the quarter, including effects
from our new restructuring program, MFP8. The restructuring cost of
the program amounted to almost SEK 1.4 bn and it will generate
annual savings of around SEK 1 bn once fully implemented.
The outbreak of the Covid-19 pandemic led to a much weaker and
volatile demand in 2020. As the vaccine program is rolled out, we
expect restrictions to be gradually phased out, trust and mobility
to return and demand in general to improve.
I am pleased that ASSA ABLOY continues to stand on very solid
ground. Thanks to the significant efforts of our employees, I am
confident that we will come out of the pandemic as a strong Group,
well positioned to continue to lead the access-solutions industry.
I look forward to seeing our new products being taken up by our
customers and exceeding their expectations.
Stockholm, 5 February 2021
Nico Delvaux
President and CEO
Fourth quarter
The Group's sales decreased by 7% to SEK 23,298 M (24,946) .
Organic growth amounted to -5% (1). Growth from acquisitions and
divestments was 5% (3), of which 6% (3) were acquisitions and -1%
(0) were divestments. Exchange-rates affected sales by -7% (4).
The Group's operating income [3] [4] (EBIT) amounted to SEK
3,475 M (4,047) a decrease of 14%. The corresponding operating
margin was 14.9% (16.2). Exchange-rates had an impact of SEK -321 M
(137) on EBIT. Operating income before amortizations from
acquisitions3 4 (EBITA) amounted to SEK 3,634 M (4,188). The
corresponding EBITA margin was 15.6% (16.8).
Net financial items amounted to SEK -169 M (-268). The Group's
income
before tax3 4 was SEK 3,306 M (3,779), a decrease of 13%
compared with last year. Exchange-rates had an impact of SEK -317 M
(126) on income before tax. The profit margin3 4 was 14.2%
(15.1).
Earnings per share3 4 amounted to SEK 2.33 (2.49), a decrease of
7% compared with last year. Operating cash flow totaled SEK 5,529 M
(5,235), an increase of 6% compared with last year.
Full year
The Group's sales for the full year 2020 totaled SEK 87,649 M
(94,029), representing a decrease of 7%. Organic growth was -8%
(3). Growth from acquisitions and divestments was 4% (3), of which
4% (3) were acquisitions and 0% (0) were divestments. Exchange-rate
effects affected sales by -3% (6).
The Group's operating income3 4 (EBIT) in 2020 amounted to SEK
11,916 M (14,920), a decrease of 20% compared with last year. The
corresponding operating margin was 13.6% (15.9). Operating income
before amortizations from acquisitions3 4 (EBITA) in 2020 amounted
to SEK 12,490 M (15,402). The corresponding EBITA margin was 14.3%
(16.4).
The effective tax rate3 4 was 24.8% (26.2). Earnings per share3
4 in 2020 amounted to SEK 7.54 (9.22), a decrease of 18% compared
with last year. Operating cash flow totaled SEK 14,560 M (14,442),
an increase of 1% compared with last year.
Restructuring measures
A new restructuring program was launched at year-end 2020. The
closures of 10 factories and more than 30 offices are expected to
take place over a period of two years. The estimated cost of the
restructuring program is SEK -1,366 M, with an expected payback
time (inclusive of investments) of around two years.
Payments related to all restructuring programs amounted to SEK
337 M (261) during the quarter. The restructuring programs
proceeded according to plan and led to a personnel reduction of 708
Full-Time Equivalents for the quarter and 2,135 for the full year.
At the end of the quarter provisions of SEK 1,224 M remained in the
balance sheet for carrying out the programs.
Organization
Martin Poxton has been appointed Executive Vice President,
member of the Group Executive Team in ASSA ABLOY, and Head of the
business unit ASSA ABLOY Opening Solutions Greater China and South
East Asia within Asia Pacific division with effect from January 1,
2021. Martin, previously VP Operations for Asia Pacific division,
joined ASSA ABLOY in 2017.
Simon Ellis has been appointed Executive Vice President, member
of the Group Executive Team in ASSA ABLOY, and Head of the business
unit ASSA ABLOY Opening Solutions Pacific and North East Asia
within Asia Pacific division with effect from January 1, 2021.
Simon, previously Head of Pacific region and Japan in Asia Pacific
division, joined ASSA ABLOY in 1999.
The Head of Asia Pacific division, Anders Maltesen, will leave
ASSA ABLOY during the first half of 2021. He will be replaced by
Nico Delvaux, the President and CEO of the ASSA ABLOY Group, as the
head of the Asia Pacific Division.
Comments by division
Opening Solutions EMEA
Sales for the quarter in EMEA totaled SEK 5,242 M (5,525), with
organic growth of -1% (1). Sales growth was strong in the UK and
France, and stable in Scandinavia and Germany. Sales declined in
Benelux, Eastern Europe, Middle East/Africa and South Europe. Net
sales growth from acquisitions, divestments and internal segment
transfers was 0%. Operating income excluding items affecting
comparability totaled SEK 670 M (884), which represents an
operating margin (EBIT) of 12.8% (16.0). In the quarter Gardesa, a
residential door business in Italy, was divested with a capital
loss and related exit costs amounting to SEK -185 M. Return on
capital employed amounted to 14.8% (18.0). Operating cash flow
before non-cash items and interest paid totaled SEK 1,368 M
(1,729).
Opening Solutions Americas
Sales for the quarter in Americas totaled SEK 4,567 M (5,900),
with organic growth of -4 % (5). Sales growth was very strong in US
Residential, US Smart Residential and in Latin America. Sales
declined in the USA for Architectural Hardware, Electromechanical
Solutions, Security Doors and in Canada, while sales for Access
& High Security declined significantly. Net sales growth from
acquisitions and internal segment transfers was -10%. Operating
income excluding items affecting comparability totaled SEK 915 M
(1,182), which represents an operating margin (EBIT) of 20.0%
(20.0). Return on capital employed amounted to 26.7% (23.6).
Operating cash flow before non-cash items and interest paid totaled
SEK 1,578 M (1,612).
Opening Solutions Asia Pacific
Sales for the quarter in Asia Pacific totaled SEK 2,418 M
(2,676), with organic growth of -5% (-10). Sales declined in
Pacific, South Korea and China, and were significantly down in
other regions. Net sales growth from acquisitions, divestments and
internal segment transfers was 1%. Operating income excluding items
affecting comparability totaled SEK 199 M (220), which represents
an operating margin (EBIT) of 8.2% (8.2). Return on capital
employed amounted to 9.1% (9.7). Operating cash flow before
non-cash items and interest paid totaled SEK 307 M (147).
Global Technologies
Sales for the quarter in Global Technologies totaled SEK 3,545 M
(4,377), with organic growth of -17% (2). Sales declined in
Identity and Access Management Solutions, Secure Issuance and in
Physical Access Control. Sales in all other business areas declined
significantly, including Global Solutions. Net sales growth from
acquisitions and divestments was 5%. Operating income excluding
items affecting comparability totaled SEK 582 M (800), which
represents an operating margin (EBIT) of 16.4% (18.3). Return on
capital employed amounted to 10.5% (14.1). Operating cash flow
before non-cash items and interest paid totaled SEK 1,069 M
(1,084).
Entrance Systems
Sales for the quarter in Entrance Systems totaled SEK 7,927 M
(6,893), with organic growth of -1% (0). Sales growth was strong in
Perimeter Security and was stable in Residential and Industrial,
but declined in Pedestrian. Net sales growth from acquisitions,
divestments and internal segment transfers was 23%. Operating
income excluding items affecting comparability totaled SEK 1,251 M
(1,125), which represents an operating margin (EBIT) of 15.8%
(16.3). Return on capital employed amounted to 15.8% (18.6).
Operating cash flow before non-cash items and interest paid totaled
SEK 1,350 M (1,086).
Acquisitions and divestments
Four acquisitions were consolidated during the quarter. The
combined acquisition price for the businesses acquired during the
year, including adjustments from prior year acquisitions, amounted
to SEK 12,134 M. The acquisition price on a cash and debt free
basis totaled SEK 10,572 M. In the purchase price is included SEK
3,752 M of a non-cash valuation at fair value of previously held
shares in associated companies. Preliminary acquisition analyses
indicate that goodwill and other intangible assets with indefinite
useful life amounted to SEK 8,325 M. Estimated deferred
considerations for acquisitions made during the year amounted to
SEK 318 M.
On January 14 2021, it was announced that ASSA ABLOY had sold
Gardesa's Italian residential-door business to Italy-based
Bertolotto and was in the final stages of selling Gardesa's
roller-shutter business. Gardesa is an Italian manufacturer of
residential security doors and roller shutters. The company's total
sales in 2020 were approximately SEK 100 M. The transaction will
have a positive effect on ASSA ABLOY's operating margin going
forward. The divestiture results in a capital loss and related exit
costs amounting in total to approximately SEK -185 M.
On September 7 2020, it was announced that ASSA ABLOY had signed
an agreement to sell its sensor technology business CEDES in
Switzerland to capiton AG. CEDES is a leading sensor technology
company in the door, gate and elevator industry. Sales in 2019
amounted to about SEK 525 M. The divestiture of CEDES was completed
on 10 November 2020 and resulted in a small capital gain. The
transaction will have a neutral effect on ASSA ABLOY's operating
margin going forward.
Sustainable development
ASSA ABLOY has successfully completed its sustainability program
for the period 2015-2020, where we have met or exceeded the
majority of our sustainability targets. We are now launching an
ambitious new sustainability program for 2025, with raised target
levels for all indicators. Our new program builds on the momentum
and progress gained from ASSA ABLOY's successive five-year
sustainability programs since 2010. In tandem, ASSA ABLOY has
committed to setting science-based targets, where our ambition is
to halve our absolute emissions of greenhouse gases by 2030 and to
achieve net-zero no later than 2050. Our commitment to the Science
Based Targets initiative complements our new 2025 sustainability
program.
The Sustainability Report for 2020, with results for the Group's
2020 targets, details of our new 2025 sustainability program and
other information about sustainable development, will be available
from 8 March 2021 on the company's website, www.assaabloy.com.
Parent company
Other operating income for the Parent company ASSA ABLOY AB
totaled SEK 4,580 M (5,172) for the full year 2020. Operating
income for the same period amounted to SEK 868 M (1,523).
Investments in tangible and intangible assets totaled SEK 164 M
(740). Liquidity is good and the equity ratio is 43.6% (42.1).
Dividend and Annual General meeting
An Extraordinary General Meeting held on 24 November 2020
resolved in accordance with the Board's proposal to pay a second
dividend of SEK 1.85 per share for the financial year 2019. The
dividend was distributed on 1 December 2020.
The Board of Directors now proposes a dividend of SEK 3.90
(3.85) per share for
the 2020 financial year. In order to facilitate a more efficient
cash management, the dividend is proposed to be paid in two equal
installments, the first with record date 30 April 2021 and the
second with record date 23 November 2021. If the proposal is
adopted by the Annual General Meeting, the first installment is
estimated to be paid on 5 May 2021 and the second installment on 26
November 2021.
The Annual General Meeting will be held on 28 April 2021. The
Annual Report for 2020 will be available from 8 March 2021 on the
company's website, www.assaabloy.com .
Accounting principles
ASSA ABLOY applies International Financial Reporting Standards
(IFRS) as endorsed by the European Union. The same accounting and
valuation principles as in the latest Annual Report have been
applied. This Report was prepared in accordance with IAS 34
'Interim Financial Reporting' and the Annual Accounts Act. The
Report for the Parent company was prepared in accordance with the
Annual Accounts Act and RFR 2 'Reporting by a Legal Entity'.
ASSA ABLOY makes use of a number of financial performance
measures that are not defined in the reporting rules that the
company uses - so-called 'alternative performance measures'. For
definitions of financial performance measures, refer to Page 19 of
this Report and to the company's latest Annual Report.
To check how the financial measurements have been calculated for
current and earlier periods, refer to the tabulated figures in this
Quarterly Report and to the company's Annual Report. The Annual
Reports for the years 1994 to 2019 appear on the company's website
www.assaabloy.com.
Totals quoted in tables and statements may not always be the
exact sum of the individual items because of rounding differences.
The aim is that each line item should correspond to its source, and
rounding differences may therefore arise.
Transactions with related parties
No transactions that significantly affected the company's
position and income have taken place between ASSA ABLOY and related
parties.
Risks and uncertainty factors
ASSA ABLOY is an international Group with a wide geographical
spread, involving exposure to various forms of strategic,
operational and financial risks. Strategic risks refer to changes
in the business environment with potentially significant effects on
ASSA ABLOY's operations and business objectives. Operational risks
comprise risks directly attributable to business operations,
entailing a potential impact on the Group's financial position and
performance. Financial risks mainly comprise financing risk,
currency risk, interest rate risk, credit risk, and risks
associated with the Group's pension obligations.
Risk-taking in itself provides opportunities for continued
economic growth, but naturally the risks may also have a negative
impact on business operations and company goals. It is therefore
essential to have a systematic and efficient risk assessment
process and an effective risk management program in general. The
purpose of risk management at ASSA ABLOY is not to avoid risks, but
to take a controlled approach to identifying, managing and
minimizing the effects of these risks. This work is based on an
assessment of the probability of the risks and their potential
impact on the Group.
The Covid-19 pandemic has had a substantial business impact on
ASSA ABLOY during 2020. The continued impact of the pandemic on the
business is difficult to predict due to the uncertainty of market
conditions, but the health and safety of our employees remains our
first priority.
For a more detailed description of particular risks and risk
management, see the 2019 Annual Report.
M&A and FX guidance
The guidance below relating to two key figures is provided to
facilitate financial modelling but should not be viewed as market
outlooks or business performance forecasts.
Acquisitions and divestments
It is estimated that completed acquisitions and divestments, on
a rolling 12-month basis as per 31 December 2020, will have an
effect of 4% on sales in the first quarter of 2021 versus the same
period last year, while the effect on the operating margin is
estimated to be dilutive in the first quarter of 2021.
Exchange-rate effects
On the basis of the currency rates on 31 December 2020, it is
estimated that the weighted currency effects on sales in the first
quarter of 2021 versus the same period last year will be - 12%,
while the effect on the operating margin is estimated to be
slightly dilutive in the first quarter of 2021.
Review
The Company's Auditors have not carried out any review of this
Report for the
fourth quarter of 2020.
Stockholm, 5 February 2021
Nico Delvaux
President and CEO
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Financial information
The Annual Report for 2020 will be published on 8 March
2021.
The Quarterly Report for the first quarter of 2021 will be
published on 28 April 2021.
The 2021 Annual General Meeting will be held on 28 April
2021.
A virtual capital markets day will be held on 26 May 2021.
Further information can be obtained from:
Nico Delvaux,
President and CEO, tel. no: +46 8 506 485 82
Erik Pieder,
Executive Vice President and CFO, tel.no: +46 8 506 485 72
ASSA ABLOY is holding a telephone and web conference at
09.30
on 5 February 2021
which can be followed on the Internet at www.assaabloy.com.
It is possible to submit questions by telephone on:
+46 8-566 427 04, +44 333 300 9262 or +1 646 722 4956
This information is information that ASSA ABLOY AB is obliged to make
public pursuant to the EU Market Abuse Regulation. The information
was submitted for publication, through the agency of the contact persons
set out above, at 08.00 CET on 5 February 2021.
ASSA ABLOY AB (publ) Tel +46 (0)8 506 485
Box 703 40 00
107 23 Stockholm Fax +46 (0)8 506 485
Visiting address 85
Klarabergsviadukten www.assaabloy.com No.02/2021
90, Stockholm, Sweden
Corporate identity number:
556059-3575
Financial information - Group
Financial information - Group
Financial information - Group
Financial information - Parent company
Quarterly information - Group
Reporting by division
Financial information - Notes
Financial information - Notes
Definitions of financial performance measures
[1] Excluding costs before income tax for restructuring programs
in Q4 2020 and Q4 2019, totaling SEK
-1,366 M and SEK -312 M respectively. The corresponding cost
after tax is SEK -1,112 M and SEK -246 M
[2] Excluding non-cash operating income in Q3 2020 from
revaluation at fair value of 39% ownership in agta record, totaling
SEK 1,909 M for the year. The operating income has no tax
impact.
[3] Excluding costs before income tax for restructuring programs
in Q4 2020 and Q4 2019, totaling SEK
-1,366 M and SEK -312 M respectively. The corresponding cost
after tax is SEK -1,112 M and SEK -246 M
[4] Excluding non-cash operating income in Q3 2020 from
revaluation at fair value of 39% ownership in agta record, totaling
SEK 1,909 M for the year. The operating income has no tax
impact.
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