ASSA ABLOY · Public Organic sales growth of 1% –Good growth in Scandinavia, Germany and South...
Transcript of ASSA ABLOY · Public Organic sales growth of 1% –Good growth in Scandinavia, Germany and South...
Public
ASSA ABLOYQ4 Report 2019
Public
Organic sales development
– Strong growth in Americas
– Good growth in Global Technologies
– Stable growth in EMEA and Entrance Systems
– Negative growth in APAC
Strong EBIT growth of 8%
– Unchanged margin – higher M&A and R&D offset by mix, efficiencies and lower raw material costs
Strong cash flow of SEK 5.2 bn
Provision for manufacturing footprint program of MSEK 312
2
Stable growth and strong EBIT in Q4 2019
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Q4 2019 figures in summary
Sales SEK 24,946 M +8%
– 1% organic
– 3% acquired
– 4% currency
EBITA-margin* 16.8% (16.7%)
EBIT-margin* 16.2% (16.2%)
EBIT* SEK 4,047 M +8%
EPS SEK 2.49 +7%
3 746
4 047
3 000
3 200
3 400
3 600
3 800
4 000
4 200
4 400
4 600
17 000
18 000
19 000
20 000
21 000
22 000
23 000
24 000
25 000
26 000
Q4 18 Q4 19
Sales, MSEK EBIT, MSEK
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Sales +8%
EBIT* +8%
*) Excluding restructuring items.
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Full year 2019 figures in summary
Sales SEK 94,029 M +12%
– 3% organic
– 3% acquired
– 6% currency
EBITA-margin* 16.4% (16.3%)
EBIT-margin* 15.9% (15.8%)
EBIT* SEK 14,920 M +12%
Cash flow SEK 14,442 M +27%
EPS SEK 9.22 +14%
Proposed dividend 3.85 SEK +10%
13 309
14 920
9 000
10 000
11 000
12 000
13 000
14 000
15 000
16 000
17 000
60 000
65 000
70 000
75 000
80 000
85 000
90 000
95 000
100 000
2018* 2019
Sales, MSEK EBIT, MSEK
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Sales +12%
EBIT* +12%
*) Excluding China write-downs and restructuring items.
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Sales by regionOct – Dec 2019
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ASSA ABLOY 100 +4 +1
Emerging markets 18 -2 -4
Emerging markets comprise follows IMF’s definition as per 2018-12-31
43 +8 +4
3 +16 +15
37 +1 +0
1 -15 -19
12 -7 -8
4 +38 +3
Share of sales, %Change in local currencies
QTD 2019 vs. QTD 2018, %Organic change
QTD 2019 vs. QTD 2018, %
Market highlights
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• Strong project wins
• Argentina Selects HID goID to Provide Citizens with World’s First
Mobile National ID Program
• US large retailer selects Entrance Systems loading dock
solutions
• New products in our mechanical core
• Korea launched waterproof floor hinges
• Global launch of new padlocks range
• Strong recognition for our innovative products
• 4 products in top door locks of 2019 in Consumer reports in the US
• Several HID awards, e.g. China Intelligent Architecture Brand Award
• Global Solutions wins HotelTechAwards, best mobile key solution
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CES Highlights
• New product launches
• August: August Wi-Fi Smart Lock
• Yale • Liftmaster Lock, Linus Smart Lock and Smart
Cabinet Lock
• Smart Storage Line - & Smart Safe, Smart Delivery Box and Yale Access
• Yale and Samsung reveal concept UWB lock for automatic unlock
• Nine product awards at the CES 2020
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Sales growth
8
50 000
55 000
60 000
65 000
70 000
75 000
80 000
85 000
90 000
95 000
100 000
0
2
4
6
8
10
12
14
16
18
20
2014 2015 2016 2017 2018 2019
Organic growth, % Acquired growth, % Sales in fixed currencies, MSEK
MSEK%
27 Quarters with
positive OG
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Operating margin
9
*) Excluding China write-downs and restructuring items.
13
14
15
16
17
18
13
14
15
16
17
18
2014 2015 2016 2017 2018 2019
Quarter EBIT Rolling 12-months EBITA** Rolling 12-months
Run rate: EBIT-margin 15.9% (15.8%*)
% %
Long term target range (average)
**) Operating margin before amortization of intangible assets recognized in business combinations.
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0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2014 2015 2016 2017 2018 2019
Quarter Rolling 12-months
MSEK, 12 monthsMSEK
Operating profit
10
+61%in
5 years
*) Excluding China write-downs and restructuring items.
+8%vs
Q4 LY
+12%vs FY
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Fully active pipeline
– 3 acquisitions completed in Q4 and 12 in 2019
– Acquired annualized sales of MSEK 2,500
Additional acquisitions to be closed
– agta record
Sales of MEUR 378 and EBITA-margin of 12%* in 2018
Expected to close early 2020
– AM Group
Sales of MSEK 800
Expected to close in Q1
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Acquisitions
* Adjusted for extraordinary personnel expenses of MEUR 8.9
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Sales of MSEK 800 with 425 employees
Industrial door company within Entrance Automation
Complements product offering and geographic coverage
Accretive to EPS from start
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AM Group, Australia
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Organic sales growth of 1%
– Good growth in Scandinavia, Germany and South Europe
– Stable growth in France and East Europe
– Negative growth in Finland, UK, Middle East & Africa, and Benelux
Operating margin 16.0% (16.6%)*
– Negative volume leverage -50bps on low growth and higher R&D costs
– FX –30bps and acquisitions +20bps
12%
13%
14%
15%
16%
17%
18%
19%
2 500
3 000
3 500
4 000
4 500
5 000
5 500
6 000
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Sales, MSEK Operating margin, %
13
Opening Solutions EMEA
22% of Group sales
Excluding restructuring items.
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Organic sales growth of 5%
– Very strong growth for Electromechanical Solutions and Perimeter Security
– Strong growth for Residential Group, Canada, Security Doors and Architectural Hardware
– Good growth in Latin America and Access & High Security
– Negative growth in US Smart Residential
Operating margin 20.0% (19.9%)*
– Strong volume leverage (40 bps) driven by strong growth, operational efficiencies and raw material tailwind
– FX 10bps and M&A -40bps16%
17%
18%
19%
20%
21%
22%
23%
24%
2 500
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3 500
4 000
4 500
5 000
5 500
6 000
6 500
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Sales, MSEK Operating margin, %
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Opening Solutions Americas
24% of Group sales
Excluding restructuring items.
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Organic sales growth of -10%
– Good growth in South Asia and Pacific
– Negative growth in China, India and South Korea
– Negative intra group sales
Operating margin 8.2% (9.6%)*
– Negative leverage of -120bps, due to negative organic growth and weak performance in South Korea
– FX -10bps and M&A -10bps
– China business plan according to plan
Stabilizing performance
Consolidation of sales and operations is ongoing
Headcount reduced by 10% in 20190%
5%
10%
15%
20%
1 000
1 500
2 000
2 500
3 000
Q4 17 Q1 18 *Q2
18
Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Sales, MSEK Operating margin, %*
15
Opening Solutions Asia Pacific
10% of Group sales
*) Excluding restructuring items and China write downs MSEK 400 in Q2 2018.
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Organic sales growth of 2%
– Very strong growth in Extended Access
– Strong growth in Physical Access Control and Global Solutions
– Stable growth in Identity & Access Solutions
– Negative growth in Identification Technology, Secure Issuance and Citizen ID
Operating margin 18.3% (19.9%)*
– Strong volume leverage (140bps) driven by operational efficiencies, raw material tailwind and mix
– FX +20bps and M&A -320bps
High acquisition costs for closing De La Rue and Placard 12%
14%
16%
18%
20%
22%
24%
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Sales, MSEK Operating margin, %
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Global Technologies 17% of Group sales
Excluding restructuring items.
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Organic sales growth of 0%
– Strong growth in Pedestrian Doors
– Good growth in Logistics solutions
– Stable growth in High Performance Doors
– Negative growth in Industrial Doors, EU Residential Doors, US Residential Doors and Door components
– Good growth in service
Operating margin 16.3% (15.1%)*
– Strong volume leverage (130 bps) due to operational efficiencies, strong raw material tailwind, good growth in service and other positive mix
– FX -10 bps and M&A flat
New organizational structure from Q1 2020
11%
12%
13%
14%
15%
16%
17%
18%
4 000
4 500
5 000
5 500
6 000
6 500
7 000
7 500
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Sales, MSEK Operating margin, %
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Entrance Systems 27% of Group sales
Excluding restructuring items.
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Financial summary, Q4 2019
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October-December January-December
SEK M 2018 2019 Change 2018 2019 Change
Sales 23,167 24,946 8% 84,048 94,029 12%
- Organic growth 1,281 147 1% 3,901 2,652 3%
- Acquired net growth 714 760 3% 1,793 3,063 3%
- FX-differences 1,063 872 4% 2,217 4,265 6%
Operating income (EBIT)* 3,746 4,047 8% 13,309 14,920 12%
EBITA-margin* 16.7% 16.8% 0.1pts 16.3% 16.4% 0.1 pts
EBIT-margin* 16.2% 16.2% 0.0 pts 15.8% 15.9% 0.1 pts
Income before tax** 3,515 3,779 8% 12,110 13,883 15%
Net income** 2,588 2,767 7% 8,984 10,243 14%
EPS**, SEK 2.33 2.49 7% 8.09 9.22 14%
Operating cash flow 4,923 5,235 6% 11,357 14,442 27%
ROCE 18% 17% -1.0 pts 16% 17% 1.0 pts
*) Excluding China write down of MSEK 400 in Q2 2018 **) Excluding the impairment in China of goodwill and other intangible assets
FX & acquisition ‘run-rate’ effects in Q1 2020(31 Dec 2019):SALESFX: +1% Acq: +2%
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Bridge analysis – Q4 2019
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SEK M Q4 2018 Organic Currency Acq/Div Q4 2019
Growth 1% 4% 3% 8%
Sales 23,167 147 872 760 24,946
Operating profit* 3,746 163 137 2 4,047
Operating margin, %* 16.2% 110.7% 15.7% 0.3% 16.2%
Dilution/accretion 0.6 pts -0.1 pts -0.5 pts
Sales up MSEK 1,779
Price +1% and volume +0%
Driven by Americas and Global Technologies
EBIT up MSEK 302
Strong contribution from Americas and Entrance Systems
Margin
Accretion in Entrance Systems and Americas
Acquisitions and integration costs of above MSEK 60
*) Excluding restructuring items.
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Cost breakdown as % of salesOct-Dec
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% QTD 2018*QTD 2019
excl. acquisitions* Δ QTD 2019*
Direct material -37.0% -36.1% +0.9 pts -36.1%
Conversion cost -23.6% -23.7% -0.1 pts -23.9%
Gross margin 39.4% 40.2% +0.8 pts 40.0%
S, G & A -23.2% -23.5% -0.3 pts -23.8%
EBIT 16.2% 16.7% +0.5 pts 16.2%
• Direct Material – lower raw material costs and mix
• Conversion cost – low growth and IT investments
• SG&A – continued investments in R&D and sales
*) Excluding restructuring items.
Manufacturing Footprint Program
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Initiatives in MFP7
Payback time of <3 years
Closure of ~15 factories and >30 offices
Restructuring cost for the full program MSEK 1,530
MSEK 1,218 in Q4 2018
MSEK 312 in Q4 2019
Annual savings of approximately MSEK 800 by 2021
Status of all MFPs in 2019
Five factories closed
1,367 FTEs left the Group
MSEK 778 provisions remain for all MFPs
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Operating cash flow, MSEK
22
0
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8 000
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12 000
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16 000
18 000
20 000
0
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2 000
3 000
4 000
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2014 2015 2016 2017 2018 2019
Quarter, MSEK Cash rolling 12 months, MSEK EBT rolling 12 months, MSEK
12 months cash flow / EBT = 104%
Quarter12 months
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Gearing % and net debt, MSEK
23
0
15
30
45
60
75
90
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25 000
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35 000
40 000
2014 2015 2016 2017 2018 2019*
Net debt, MSEK Gearing, %
Net debt Gearing
Debt/Equity 56%* (56%)
*) IFRS 16 effect on net debt SEK 3.7 bn.
Net debt/EBITDA1.8 (1.9)
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Earnings per share, SEK
24
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
0,50
0,75
1,00
1,25
1,50
1,75
2,00
2,25
2,50
2014 2015 2016 2017 2018 2019
Quarter, SEK Rolling 12 months, SEK
Quarter 12 months
YTD EPS +14%*
* Excluding restructuring items and impairment of intangible assets in China. Chart is restated for Stock split 3:1 2015.
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Q4
– Stable organic sales growth of 1%
– Strong EBIT growth of 8%*
– Cash flow of MSEK 5,235
Full year
– Good organic growth of 3%
– Strong EBIT growth of 12%*
– Record cash flow of MSEK 14,442
Proposed dividend of SEK 3.85/share
Welcoming new heads of HID and Entrance Systems
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Conclusions
*) Excluding China write-downs and restructuring items.
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Q&A
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Appendix
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Cost breakdown as % of sales
% QTD 2018*
QTD 2019excl.
acquisitions* Δ QTD 2019* YTD 2018**
YTD 2019excl.
acquisitions Δ YTD 2019*
Direct material -37.0% -36.1% 0.9 pts -36.1% -36.2% -36.1% 0.1 pts -36.0%
Conversion cost -23.6% -23.7% 0.1 pts -23.9% -24.2% -24.0% 0.2 pts -23.9%
Gross margin 39.4% 40.2% 0.8 pts 40.0% 39.6% 39.9% 0.3 pts 40.1%
S, G & A -23.2% -23.5% -0.3 pts -23.8% -23.8% -23.8% 0.0 pts -24.2%
EBIT 16.2% 16.7% 0.5 pts 16.2% 15.8% 16.1% 0.3 pts 15.9%
*) Excluding restructuring items. **) Excluding restructuring items and China write down in Q2 2018.
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Opening Solutions EMEA’s bridge
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MSEK Q4 2018 Organic Currency Acq/Div Q4 2019
Growth 1% 2% -2% 1%
Sales 5,485 32 148 -141 5,525
Operating income 911 -25 11 -13 884
Operating margin, % 16.6% -77.0% 7.7% 9.3% 16.0%
Dilution/accretion -0.5 pts -0.3 pts 0.2 pts
12 months figures
Sales 20,201 21,144
EBIT 3,256 3,396
Operating cash flow before paid interest
2,819 3,515
Cash flow/EBIT 87% 103%
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Opening Solutions Americas’ bridge
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MSEK Q4 2018 Organic Currency Acq/Div Q4 2019
Growth 5% 5% 4% 14%
Sales 5,173 269 248 210 5,900
Operating income 1,027 78 58 19 1,182
Operating margin, % 19.9% 28.8% 23.6% 9.0% 20.0%
Dilution/accretion 0.4 pts 0.1 pts -0.4 pts
12 months figures
Sales 19,817 23,172
EBIT 3,941 4,673
Operating cash flow before paid interest
3,903 5,263
Cash flow/EBIT 99% 113%
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Opening Solutions Asia Pacific’s bridge
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MSEK Q4 2018 Organic Currency Acq/Div Q4 2019
Growth -10% 3% 4% -3%
Sales 2,756 -279 85 115 2,676
Operating income* 264 -57 7 6 220
Operating margin, %* 9.6% 20.5% 7.8% 5.3% 8.2%
Dilution/accretion -1.2 pts -0.1 pts -0.1 pts
12 months figures
Sales 9,949 10,689
EBIT* 892 879
Operating cash flow before paid interest
811 622
Cash flow/EBIT 91% 71%
*) Excluding China write downs in Q2 2018.
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Global Technologies’ bridge
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MSEK Q4 2018 Organic Currency Acq/Div Q4 2019
Growth 2% 6% 14% 22%
Sales 3,602 69 165 541 4,377
Operating income 716 71 35 -23 800
Operating margin, % 19.9% 102.4% 21.3% -4.2% 18.3%
Dilution/accretion 1.4 pts 0.2 pts -3.2 pts
12 months figures
Sales 11,951 15,423
EBIT 2,387 2,890
Operating cash flow before paid interest
2,463 3,183
Cash flow/EBIT 103% 110%
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Entrance Systems’ bridge
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MSEK Q4 2018 Organic Currency Acq/Div Q4 2019
Growth 0% 4% 0% 4%
Sales 6,616 8 241 27 6,893
Operating income 998 94 28 4 1,125
Operating margin, % 15.1% 1129.6% 11.6% 15.9 16.3%
Dilution/accretion 1.3 pts -0.1 pts 0.0 pts
12 months figures
Sales 23,762 25,553
EBIT 3,358 3,652
Operating cash flow before paid interest
2,772 3,655
Cash flow/EBIT 83% 100%
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