Q4 Report 2017 - assaabloy.com digital security solutions for elderly care Development of homecare...

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

Q4 Report 2017

Q4 2017 in brief

Organic growth in all divisions• Strong growth in Global Tech and EMEA

• Continued good growth in Americas, Entrance Systems, and APAC, with flat sales in China

• Continued strong development for smart door locks and electro-mechanical solutions

Strong profit and cash flow

New CEO Nico Delvaux appointed

2

Q4 2017 figures in summary

Sales SEK 20,109 M +3%

• 5% organic

• 3% acquired

• -5% currency

EBIT SEK 3,359 M +5%*

• Amortization of acquisition-related intangible assets SEK 87 M (51)

• Currency effect SEK -130 M

Operating margin 16.7% (16.5*)• EBITA-margin 17.1% (16.8*)

EPS SEK 2.15 +14%**

3 213

3 359

2 250

2 500

2 750

3 000

3 250

3 500

16 000

17 000

18 000

19 000

20 000

21 000

Q4 16* Q4 17

Sales, SEK M EBIT, SEK M

Sales EBITSales +3%

3

* Excluding China write down SEK 300 M and restructuring items in Q4 2016. ** Excluding restructuring items.

Jan. – Dec. 2017 figures in summary

Sales SEK 76,137 M +7%

• 4% organic

• 2% acquired

• 1% currency

EBIT SEK 12,341 M +7%*

• Amortization of acquisition-related intangible assets SEK 240M (200)

• Currency effect SEK 37 M

Operating margin 16.2% (16.2*)

• EBITA-margin 16.5% (16.5*)

EPS SEK 7.77 +10%**

11 554

12 341

6 000

7 000

8 000

9 000

10 000

11 000

12 000

13 000

14 000

40 000

45 000

50 000

55 000

60 000

65 000

70 000

75 000

80 000

Jan-Dec 2016 Jan-Dec 2017

Sales, SEK M EBIT, SEK M

Sales EBIT

4

Sales +7%

* Excluding China write down SEK 300 M and restructuring items in Q4 2016. ** Excluding restructuring items.

Sales by RegionFull year 2017

5

Emerging markets comprise Africa, Asia (excl. Japan), the Middle East, Latin America and Eastern Europe.

40 +8 +5

3 +4 +2

38 +7 +4

1 +16 +4

14 +1 +1

4 +4 +7

ASSA ABLOY 100 +6 +4Emerging markets 23 +5 +3

Share of sales, % Change in local currencies YTD 2017 vs. YTD 2016, %

Organic change YTD 2017 vs. YTD 2016, %

Market highlights

Strong e-cylinder demand• New platform driver: Cliq Web Manager, Cliq-go, Medeco XT

• Bluetooth keys

• Additional sales from new pulse platform in Q1 2018

Strengthened position in smart door locks• Continued strong organic growth

• Launch of Amazon key partnership with Yale

• Gearing up for Yale Lock for nest - in store March 2018

• Acquisition of August Home

Major HID win for eCovers in South America• New country win and leading regional reference

• eCover with Shielding material - New HID Technology

• Deliveries during 2018 with expected additional opportunities

6

Sales growth, currency adjusted

45 000

50 000

55 000

60 000

65 000

70 000

75 000

80 000

-10

-5

0

5

10

15

20

25

2012 2013 2014 2015 2016 2017Organic growth, % Acquired growth, % Sales in fixed currencies, SEK M

7

SEK M%

2017 QTDOrganic +5%Acquired +3%

+8%

Operating margin, %

13

14

15

16

17

18

13

14

15

16

17

18

2012 2013 2014 2015 2016 2017

Quarter Rolling 12-months

8

Long term target range (average)

Margin Bridge 2017 OG Currency ACQQ4 0.3% -0.1% 0.0%

YTD 0.2% -0.1% -0.1%

Run rate: EBIT-margin 16.2%* (16.2)%

* Excluding China write down SEK 300 M and restructuring items in Q4 2016.

Operating profit, SEK M

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

2012 2013 2014 2015 2016 2017

Quarter Rolling 12-months

9

SEK M SEK MRun rate: EBIT SEK 12,341 M (11,554*) +7%

+65%in

5 years


Manufacturing footprint

Status of programs launched 2006-2016• 77 factories closed to date, 11 to go

• 126 factories converted to assembly, 28 to go

Total personnel reduction• 13,564 FTE in total since 2006

• 723 FTE in recent quarter

• 1,353 FTE to go for all programs

SEK 944 M provisions remain for all programs

10

Acquisitions Fully active pipeline

19 acquisitions done

Acquired annualized sales SEK 3,200 M

Added sales 4%

Divestment of AdvanIDe SEK 1,250 M

11

Phoniro, Sweden

Turnover of SEK 175 M with 80 employees

Leading provider of physical & digital security solutions for elderly care

Development of homecare vertical

Accretive to EPS

12

Dale & Excel Hardware, UK

Turnover of SEK 210 M with 75 employees

Market leading supplier of high quality architectural hardware

Complements and extends current hardware portfolio

Accretive to EPS

13

Furniture

Hinges

Pocket Door Systems

Installation tools

EMEA

Organic growth of 5%• Strong growth in Finland, UK,

France, Southern and Eastern Europe, and in Africa/Middle East

• Good growth in Germany

• Growth in Scandinavia and Benelux

• Strong growth for electromechanical products and smart door locks

Operating margin 17.3% (16.8)• Organic growth leverage +0.4%

+ Footprint savings and efficiency- Investments in sales

• Curr. 0.1% and Acq. 0.0%

10%

12%

14%

16%

18%

20%

22%

2 000

2 500

3 000

3 500

4 000

4 500

5 000

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Sales, SEK M Operating margin, %

14

24% of Group sales

Excluding restructuring items.

EMEA Financial Review

SEK M Q4 2016 Organic Currency Acq/Div Q4 2017

Growth 5% 0% 2% 7%

Sales 4,577 237 -20 95 4,869

Operating income* 766 60 -2 18 842

Operating margin, %* 16.8% 25.4% 9.8% 18.8% 17.3%

Dilution/accretion 0.4% 0.1% 0.0%

12 months figures*

Sales 16,837 18,081

EBIT 2,722 2,990

Operating cash flow before paid interest 2,577 2,977

Cash flow/EBIT 95% 99%

15

* Excluding restructuring items for 2016.

Americas

Organic growth of 4%• Strong growth in

Electromechanical, High Security, US Residential, Canada, Mexico and South America (excl. Brazil)

• Growth in Architectural Hardware, Perimeter Protection, Security Doors and in Brazil

Operating margin 19.9% (20.8)• Organic growth leverage +0.4%

+ Leverage- Material cost

• Curr. 0.0% Acq. -1.3%

14%

16%

18%

20%

22%

24%

2 500

3 000

3 500

4 000

4 500

5 000

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417


16

21% of Group sales


Americas Financial Review


Growth 4% -8% 1% -3%

Sales 4,362 153 -329 57 4,243

Operating profit* 908 45 -65 -41 847

Operating margin, %* 20.8% 29.6% 19.9% -72.4% 19.9%

Dilution/accretion 0.4% 0.0% -1.3%

12 months figures*

Sales 17,044 17,940

EBIT 3,640 3,815



17


Asia Pacific

Organic growth of 3%

• Strong growth in South Korea, South Asia, Pacific, and China Architectural Hardware

• Negative in China Fire and Security Doors

• Personnel adjustment in China YoY -8%

• Strong growth in Smart Door Locks

Operating margin 9.7% (10.4*)

• Organic growth leverage -0.8%- China, incl. higher steel costs

+ Savings

• Curr. -0.2% Acq. 0.3%

0%

5%

10%

15%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

Q415

Q116

Q216

Q316

*Q416

Q117

Q217

Q317

Q417


18

11% of Group sales

*Excluding write down in China in Q4 2016 and restructuring items.

Asia Pacific Financial Review


Growth 3% -4% 0% -1%

Sales 2,427 65 -101 9 2,400

Operating profit* 253 -13 -14 7 232

Operating margin, %* 10.4% -19.5% 14.4% 76.6% 9.7%

Dilution/accretion -0.8% -0.2% 0.3%

12 months figures*

Sales 9,189 9,211

EBIT 1,087 934

Operating cash flow before paid interest 1,564 859


19


Global Technologies

Organic growth of 9%• HID

• Strong growth in Access Control (Mobile keys), Secure Issuance, Citizen ID and Identification Technology

• Negative in Identity & Access management

• Strong seasonality in acquired businesses

• Hospitality• Strong growth, including Mobile

keys

Operating margin 21.5% (18.6)• Organic growth leverage 0.9%• Curr. 0.2% and Acq. 1.8%

14%

16%

18%

20%

22%

1 000

1 500

2 000

2 500

3 000

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417


20

14% of Group sales


Global Technologies Financial Review


Growth 9% -6% 2% 5%

Sales 2,687 239 -140 48 2,835

Operating profit* 500 74 -25 59 608


Dilution/accretion 0.9% 0.2% 1.8%

12 months figures*

Sales 9,697 10,373

EBIT 1,752 1,946



21


Entrance Systems

Organic growth of 3%

• Strong growth in Pedestrian Doors, Door components, Industrial and High speed doors.

• Good growth in Residential doors

• Negative sales in warehouse and logistics solutions

Operating margin 15.9% (15.4)

• Organic growth leverage +0.6%+ Good leverage from consolidation

• Curr. 0.1% and Acq. -0.2% 10%

11%

12%

13%

14%

15%

16%

17%

18%

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000

6 500

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417


22

30% of Group sales


Entrance Systems Financial Review


Growth 3% -3% 5% 5%

Sales 5,772 182 -153 271 6,072

Operating profit* 888 65 -21 34 966


Dilution/accretion 0.6% 0.1% -0.2%

12 months figures*

Sales 19,789 21,781

EBIT 2,753 3,087



23



Q4 Report 2017Carolina Dybeck HappeCFO


Financial highlights

25

October - December January - December

SEK M 2016 2017 Change 2016 2017 Change

Sales 19,484 20,109 3% 71,293 76,137 7%

- Organic growth 120 878 5% 1,428 2,834 4%

- Acquired growth 455 480 3% 1,967 1,753 2%

- FX-differences 609 -733 -5% -201 257 1%

Operating income (EBIT)* 3,213 3,359 5% 11,554 12,341 7%

EBITA-margin* 16.8% 17.1% 16.5% 16.5%

EBIT-margin* 16.5% 16.7% 16.2% 16.2%

Income before tax** 2,767 3,226 17% 10,549 11,673 11%

Net income** 2,088 2,385 14% 7,874 8,635 10%

EPS, SEK** 1.88 2.15 14% 7.09 7.77 10%

Operating cash flow 4,620 4,876 6% 10,467 10,929 4%* Excluding China write down SEK 300 M and restructuring items in Q4 2016. ** Excluding restructuring items.

Bridge Analysis – Q4 2017

Price +2% and volume +3%

Positive leverage from all divisions, except APAC

Accretion from acquisitions/divestments in Global Technologies

Dilution from acquisitions in Americas and Entrance Systems

26


5% -5% 3% 3%

Sales 19,484 878 -733 480 20,109

Operating profit* 3,213 199 -130 77 3,359


Dilution/accretion 0.3% -0.1% 0.0%

* Excluding write down in China and restructuring items in Q4 2016.

P&L components as % of salesJanuary - December 2017

Higher material cost and lower conversion cost

Organic growth leverage• S, G & A down 0.3% vs. previous year, despite investments in R&D and sales

27

% YTD 2016YTD 2017

excl. acquisitions Δ YTD 2017

Direct material -35.9% -36.5% -0.6% -36.3%

Conversion cost -24.6% -24.2% +0.4% -24.3%

Gross margin 39.5% 39.3% -0.2% 39.4%

S, G & A -23.3% -23.0% +0.3% -23.2%

EBIT* 16.2% 16.3% +0.1% 16.2%


Operating cash flow, SEK M

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

0

1 000

2 000

3 000

4 000

5 000

6 000

2012 2013 2014 2015 2016 2017

Quarter, SEK M Cash rolling 12 months, SEK M EBT rolling 12 months, SEK M

28

Quarter 12 months12 months cash flow / EBT = 94%

Gearing % and net debt, SEK M

0

15

30

45

60

75

90

0

5 000

10 000

15 000

20 000

25 000

30 000

2012 2013 2014 2015 2016 2017

Net debt, SEK M Gearing, %

29

Net debt GearingDebt/Equity 50% (49)

Net debt/EBITDA1.8 (1.8)

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2012 2013 2014 2015 2016 2017

Quarter, SEK Rolling 12 months, SEK

Quarter

Earnings per share, SEK

30

12 monthsYTD EPS +10%*

Dividend proposal 2017: 3.30 SEK, +10%

* Excluding restructuring items in Q4 2016. Chart is restated for Stock split 3:1 2015 and excludes cost for restructuring programs in 2013 and 2016.

+67%in

5 years


Q4 Report 2017Johan MolinPresident and CEO

Conclusions Q4 2017

Sales +8%, excluding currency• Strong growth in Global Tech and

EMEA

• Continued good growth in Americas, Entrance Systems, and APAC, with flat sales in China

• Strong development for smart door locks and electro-mechanical solutions

Strong profit and cash flow

32

* Excluding write down in China and restructuring items in Q4 2016.

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