A Strong End to 2015 for ASSA ABLOY

ASSA ABLOY reported a its fourth quarter 2015 result. Net sales increased by 15% in the quarter to SEK 18,301 million (15,847). Organic growth was 5%. The company reported strong growth in Americas, Global Technologies, Entrance Systems and EMEA, and negative growth in Asia Pacific due to continued weak demand in China.

Agreements have been signed for the acquisition of six companies, including CEDES in Switzerland, with combined expected annual sales of about SEK 1,100 million ($130 million). Operating income (EBIT) for the quarter increased by 13% to SEK 3,038 million ($360 million). The operating margin was 16.6%.

Full year net sales increased by 20% to SEK 68,099 million ($8.05 billion). Organic growth was 4%. Sixteen acquisitions with total annual sales of about SEK 2,500 million ($296 million) have been consolidated. Operating income (EBIT) increased by 20% to SEK 11,079 million ($1.31 billion), while the operating margin was 16.3%.

“The final quarter of the year continued strongly for ASSA ABLOY, with a rise in sales of 15% for the quarter and totaling 20% for the year,” says Johan Molin, president and CEO. “Operating income also grew very satisfactorily by a full 13% for the quarter and a total of 20% for the full year.

“Organic growth was strong, at a full 5% for the quarter,” Molin added. “The strong sales trend in the USA, Europe and the Pacific region continued unchanged. The sales trend in the developing countries remained good except in China, where sales continued to fall. However, a weaker demand picture can be perceived in many developing markets, linked to a shortage of financing for major projects. This principally affected Global Technologies.

“The strong development of electromechanical products continued during the year as our customers are converting from mechanical locks to an ever-increasing extent. It is clear that ASSA ABLOY has established a leadership in this area for both commercial and residential applications. Particularly striking during the year was the strong demand for digital door-locks for so-called home automation in the USA, and for the Cliq system based on the new cloud technology.

“During the quarter CEDES was acquired – an interesting technology company that adds intelligence to connected doors, mainly in Entrance Systems. Another technology acquisition was made in HID through the purchase of IAI, which is a leader in advanced printers mainly for the Government sector and banks. Three acquisitions were also made in Brazil, where ASSA ABLOY has built a market-leading position over a short period.

“Operating income increased by a full 13% during the quarter. The organic growth of 5% resulted in a good underlying growth in the operating margin, to which continued efficiency improvements contributed strongly. Operating margin remained on virtually the same level as in the fourth quarter of 2014 despite higher negative impacts from exchange-rate effects and dilution from acquisitions as a consequence of the many acquisitions made at the end of the year.

“My judgment is that the global economic trend remains weak. Although America is showing a positive trend, Europe and many of the Emerging Markets are stagnating. However, our strategy of expanding in the Emerging Markets remains unchanged, since they are expected to achieve very good economic growth long term. We are also continuing our investments in new products, especially in the growth area of electromechanics.”