SecurityWorldMarket

01/05/2019

Flying start for 2019 at Assa Abloy

Stockholm, Sweden

Nico Delvaux, President & CEO, Assa Abloy

According to the first quarter report, Assa Abloy has made a flying start in 2019 with increased net sales, acquisitions, and strong growth in the Americas, Global Technologies, Asia pacific backed up by good growth in Entrance Systems and the EMEA.

The impressive growth resulted from a strong organic growth of 5%, acquired net growth of 3%, and positive currency effects of 8%. All divisions reported organic growth. Growth continued to be particularly strong in the Americas and Global Technologies divisions. Entrance Systems and EMEA reported good growth while Asia Pacific’s external growth was flat. Sales growth for electromechanical products remains particularly strong and now represents 31% of total sales.

Operating income increased by 15% to SEK 3,246 M, driven primarily by good operating leverage in Americas and Global Technologies. According to President and CEO, Nico Delvaux, this was partly offset by weaker performance in Asia Pacific due to flat external growth, increasing low-margin intra-group sales and build-up of the new Chinese organisation.

In addition, he said. "Seasonal effects always impact the operating cash flow in the first quarter, but this year cash flow more than doubled versus last year. The improvement was driven by the higher earnings combined with actions taken in Q4 2018 to balance the seasonal variations between Q4 and Q1."

He also explained that one of Assa Abloy’s strategic objectives is product leadership through innovation. "To maintain our leading position, more than 2,000 engineers are dedicated to continuously developing new solutions for our customers, and this is reflected in that close to 4% of our sales were invested in R&D in the quarter."

Sales of electromechanical products increased 30% in the quarter, driven by strong sales in the commercial/institutional segment and by smart locks in the US residential segment. Delvaux explains, "The global sales potential for smart locks is significant, but we expect the growth rate to slow down from the second quarter onwards due to tougher comparatives. Our innovation efforts are also recognised by independent parties. In March, for instance, our new Tanzanian e-Passport, which has been designed and delivered by HID, won an award at the High Security Printing conference in Europe."

Assa Abloy recently made the announcement that it was to acquire a majority stake in Agta Record subject to anti-trust approval.  "This will be Assa Abloy’s largest acquisition in eight years, and it is expected to add 5% to the revenue base. Assa Abloy and Agta Record complement each other very well, and I am confident that our customers and shareholders will benefit from the strong value we can create together. Our intention is to keep the ‘record’ brand and operate it as a separate unit within Entrance Systems Division."


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