"Assa Abloy is becoming less dependent on western markets"

Johan Molin, CEO, Assa Abloy.

The door opening solutions company Assa Abloy is becoming less dependent on mature markets such as the US and Europe. Five years ago, emerging markets constituted 9 percent of total sales, since then, they have grown rapidly and now constitute 23 percent. In this interview, CEO Johan Molin makes it clear that this trend will continue and that he believes electro mechanics and access control will be key products in the future.

Johan Molin succeeded Bo Dankis as CEO for the Swedish access solutions company Assa Abloy in December 2005. Previously he led a successful turnaround as CEO of the Danish industrial group Nilfisk-Advance, world leader in industrial and commercial cleaning machinery.
During his five years as CEO, Assa Abloy has acquired 65 companies, and the offensive acquisition strategy will continue.

When presenting the third quarter interim report on October 27th 2010, Johan Molin stated Assa Abloy now has cemented a definite step forward from the recession. The profit was higher than expected, and the company shows growth in all geographical regions. For example, sales for the third quarter in the Americas division showed a positive organic growth of 2 percent, compared to 22 percent negative growth in the third quarter of 2009. But the US market is still slow and the EMEA region reported weaker sales development within the new construction arena because of reduced government spending.

Are you surprised that the worst of the recession is over?
No, the recession has loosened its grip and you could say the permafrost is thawing. We could see a turning point eight months ago, but this is a more general turnaround, not least for when it comes to electro mechanics.

But mature markets like the EMEA and the US are still very slow.
The Western European market has not showed a distinct growth for many years and the ongoing extensive governmental savings not only in southern European countries like Spain, Greece and Italy, but also Ireland and Great Britain, simply means there is no money. In the US, new construction is decreasing as well as the market, but we are doing well. Assa Abloy is gaining market share while our largest competitors are losing.

The Asia Pacific division is very strong and shows organic growth of 15 percent. Why?
It is a matter of general wealth. The level of urbanisation in Asia is very high. Many people settle down in the cities and need private residences. Consequently, there is an increasing need for work space and a lot of construction is going on; one can make comparisons with Western Europe in the 1960's.
China is a very good market for us and we have doubled our sales in India. But we are also strong in other emerging markets such as South America, and Brazil in particular.

Still, EMEA and US markets represent 60 percent of Assa Abloy's turnover, Asia represents 18 percent. When will you see a turnaround?
Well, I am not able to foretell the future, but the emerging markets are continuing to grow. Five years ago, they constituted 9 percent of our sales, now they account for 23 percent. It is a massive growth.
I am also convinced that the US and European markets will take off. Prosperity is increasing here too, even though it is at a slower pace, and as long as we can continue to provide the market with good products, I am not worried.

Assa Abloy has made many acquisitions lately.
We have a history of many acquisitions. During my five years, we have made 65 acquisitions and organic growth is always an aim. This year, our most important acquisitions are the Chinese company Pan Pan and American Actividentity.

So far, how would you summarise your time as CEO for Assa Abloy?
Well, I did not expect the financial crisis. There have been ups and down, but summing it up I think we have been successful. We have paid out full dividends during the whole recession and we have continued to acquire companies.

Which products will be most important for Assa Abloy in the future?
Electro mechanics and access control. I believe we will see more electronic solutions covering whole interior's of buildings and there will be more electronically controlled doors in commercial buildings. We will also see a convergence of physical and logical access control.
Innovation is an important part of our company and we have doubled investments in technical development over the last five years and we will launch many exciting products in the future.

Johan Molin
Age: 51.
Place of residence: Stockholm.
Family: Wife and two children.
Hobbies: Running, the outdoors, cooking.

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