q1 2014 assa abloy investors presentation 29 april
DESCRIPTION
This presentation was held when the ASSA ABLOY Group released its interim report first quarter January-March 2014 on Tuesday 29 April 2014. The presentation was held at the combined investors’ and analyst meeting and web conference at Operaterrassen in Stockholm, Sweden.TRANSCRIPT
1
Q1 Report 2014 Johan Molin
President & CEO
Financial highlights Q1 2014
Continued good development – Strong growth in EMEA and good growth in ESD – Growth in Americas, Global Tech and APAC – Continued gains of efficiency and savings – Easter effect in Europe and severe winter in the US
Sales 12,305 MSEK +13% 4% organic, 8% acquired growth, 1% currency
EBIT 1,857 MSEK +12% Currency effect 13 MSEK
EPS 3.41 SEK +11% Underlying tax rate 26%
2
Shift to e-cylinders for utilities and authorities – Cloud services, high reliability, key control
and increased flexibility drives demand
Shift of locking technology in hotel market – RFID locks with virtual keys increasingly popular
Walmart service contract – 1,660 stores in 11 states, driving service & equip sales
New Innovation awards at ISC west – Best in Locks/Safes/Hardware – Best in Access Control Products
- Wireless
3
Market highlights
4
Group sales in local currencies Jan-Mar 2014
2 +15
35 +23 13 +2
4 +9
1 +22
Share of Group sales 2014 YTD, % Year-to-date vs previous year, %
45 +7
Emerging markets 22% of sales
-15-12-9-6-303691215182124
28 00031 00034 00037 00040 00043 00046 00049 00052 000
2007 2008 2009 2010 2011 2012 2013 2014Organic Growth Acquired Growth Sales in Fixed Currencies
Sales growth, currency adjusted
5
2014 Q1 +12% Organic +4% Acquired +8%
Sales MSEK Growth, %
Operating income (EBIT*), MSEK
4 500
5 500
6 500
7 500
8 500
900
1 100
1 300
1 500
1 700
1 900
2 100
2 300
2007 2008 2009 2010 2011 2012 2013 2014Quarter Rolling 12-months
Quarter 12-months
Run rate 8,118 MSEK (7,509) +8%
6
12,0
13,0
14,0
15,0
16,0
17,0
2007 2008 2009 2010 2011 2012 2013 2014Quarter Rolling 12-months 2014 Dilution
Q1 -0.5% 2014 FC -0.4%
Operating margin (EBIT), %
Run rate 2014 16.3% (16.1)
Long term target range (average)
7
EBIT Margin
Manufacturing footprint
8
Status manufacturing footprint programs 2006-2013: – 57 factories closed to date, 21 to go – 70 factories converted to assembly, 19 to go – 28 offices closed, 19 to go
Personal reduction QTD 123p and total 8,481p
1,503p in further planned reductions
1,279 MSEK of the provision remains for all programs
Margin highlights Q1 2014
EBIT margin 15.1% (15.3) -0.2%
+ Volume increase +3%, price +1%
+ Margin decrease -0.2% + Organic growth + Manufacturing footprint + Efficiency improvements - Acquisitions -0.5%
9
Acquisitions 2014
Fully active pipeline
4 new acquisitions in 2014
Annualized sales 400 MSEK
Completed acquisitions 2014 Lumidigm Unilock Safeguard Traka
10
Safeguard, Norway
11
Turnover of 240 MSEK with 110 employees
Strong presense in Oslo and oil industry
Good fit with ASSA ABLOY locksmith chain
Accretive to EPS
Unilock, Korea
12
Turnover of 60 MSEK with 30 employees
Adds product range of Digital Cabinet Locks
Complements existing business in Korea and China
Technology gives access to US and European markets
Accretive to EPS
Lumidigm, USA
13
Turnover of 160 MSEK with 33 employees
Authentication based on advanced fingerprint biometrics
Utilizes multispectral imaging technology
Unique patented technology
Neutral to EPS
Division - EMEA
Strong growth in Scandinavia, Germany, Africa and Eastern Europe
Good growth UK, Benelux, France and Iberia
Flat in Italy and Finland and slight decline in Israel
Investment in front-end and R&D
Positive Easter effect
Operating margin (EBIT) + Organic 5% + Footprint savings - Careful investments - Dilution (-0.3%)
SALES share of
Group total %
28
14
13 14 15 16 17 18 19
2009 2010 2011 2012 2013 2014
EBIT %
Division - Americas
Strong growth in Residential and Latin America
Growth in Doors and Electromechanical
Flat in AHW and decline in High security and Canada
Good efficiency improvements
Tough winter
Operating margin (EBIT)
+ Organic 2%
+ Efficiency improvements
- Currency & dilution (-0.4%)
16
SALES share of
Group total %
22
18
19
20
21
22
2009 2010 2011 2012 2013 2014
EBIT %
Division - Asia Pacific
Strong growth in Australia and New Zealand
Growth in China and Korea
Decline in South East Asia
Strong impact from currencies (-0.9%)
Continued outsourcing in China
Operating margin (EBIT) = Organic 3% + Efficiency in China - Cost pressure in China - Currency (-0.9%)
11
18
SALES share of
Group total %
5 7 9
11 13 15 17
2009 2010 2011 2012 2013 2014
EBIT %
Division - Global Technologies
HID – Good growth in IDT – Growth in IAM (Identity and access management) – Weak Gov ID and Project sales – Consolidation of North American operations to Austin
Hospitality – Continued strong growth – Good profit development
Operating margin (EBIT) + Organic 3% + Currency gain (+0.6%) - Dilution (-0.4%)
12
20
SALES share of
Group total %
13 14 15 16 17 18 19 20
2009 2010 2011 2012 2013 2014
EBIT %
Division - Entrance Systems Strong growth in Industrial Doors, High Speed Doors
and Flexiforce
Growth in Door automatics, US dockings and US industrial doors
Slightly negative EU residential and Ditec
Consolidation develops well
Rapid growth +23%, EBIT +16%
Operating margin (EBIT) + Organic 4% + Good efficiency improvements + Currency (+0.3%) - Dilution (-1.4%)
27
22
SALES share of
Group total %
11 12 13 14 15 16 17 18
2009 2010 2011 2012 2013 2014
EBIT %
24
Q1 Report 2014 Carolina Dybeck Happe
CFO
Financial highlights Q1 2014
MSEK 2013 2014 Change 2012 2013 Change
Sales 10,868 12,305 +13% 46,619 48,481 +4% Whereof Organic growth +4% +2% Acquired growth +8% +4% FX-differences +109 +1% -1,156 -2% Operating income (EBIT)* 1,662 1,857 +12% 7,501 7,923 +5% EBIT-margin (%) )* 15.3 15.1 16.1 16.3 Operating cash flow 498 557 +12% 7,044 6,803 -3% EPS (SEK)* 3.07 3.41 +11% 13.97 14.84 +6%
1st Quarter Twelve months
25
*) Excluding restructuring items of 1,000 MSEK for the full year 2013.
Bridge Analysis – Jan-Mar 2014
MSEK 2013
Jan-Mar
Organic Currency Acq/Div 2014
Jan-Mar
4% 1% 8% 13%
Revenues 10,868 394 109 933 12,305
EBIT 1,662 97 13 84 1,857
% 15.3% 24.6% 12.2% 9.0% 15.1%
Dilution / Accretion 0.3% 0.0% -0.5%
26
P&L – Components as % of sales Jan – Mar 2014
Direct material 32.8% 33.4% 34.6%
Conversion costs 27.1% 26.9% 26.5%
Gross Margin 40.1% 39.7% 38.9%
S, G & A 24.8% 24.1% 23.8%
EBIT 15.3% 15.6% 15.1%
2014 Q1 excluding acquisitions
2013 Q1
2014 Q1
27
Operating cash flow, MSEK
3 0003 5004 0004 5005 0005 5006 0006 5007 0007 5008 000
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2007 2008 2009 2010 2011 2012 2013 2014
Quarter Cash Rolling 12-months EBT Rolling 12 months
28
Quarter 12 months
Gearing % and net debt MSEK
0
20
40
60
80
100
120
0
5 000
10 000
15 000
20 000
25 000
30 000
2007 2008 2009 2010 2011 2012 2013 2014
Net debt Gearing
Debt/Equity 72 (57)
Net debt/EBITDA 2.3 (1.8)
29
Net Debt Gearing
*) 2007-2011 Not restated for changed pension accounting principles.
Earnings per share, SEK
6,007,008,009,0010,0011,0012,0013,0014,0015,0016,00
0,000,501,001,502,002,503,003,504,00
2007 2008 2009 2010 2011 2012 2013 2014Quarter Rolling 12-months
Quarter SEK 12-months
30
*) Excluding restructuring costs of 1,000 MSEK in Q4 and full year 2013. **) 2007-2011 Not restated for changed pension accounting principles.
Since 2006 EPS +90% Dividend 2014: 5.70 SEK (5.10)
31
Q1 Report 2014 Johan Molin
President & CEO
Conclusions Q1 2014
Sales growth by 13% with 4% organic – Europe with good growth – Weak North America – South America and Africa with strong growth
Dilution from acquisitions (-0.5%)
Efficiency improvements supports profit
EBIT improvement of 12% to 1,857 MSEK
32
33
Q&A