Fourth quarter
· Sales increased by 8% in the quarter, with 4% organic growth, and
totaled SEK 13,242 M (12,239).
· Strong growth in Global Technologies and Americas divisions and good growth
in Asia Pacific and Entrance Systems.
· EMEA division stabilized and showed weak growth.
· Acquisitions of Amarr (USA), Ameristar (USA) and Mercor (Poland) with
expected annual sales totaling SEK 3,600 M.
· Restructuring program costed at SEK 1,000 M.
· Operating income (EBIT) amounted to SEK 2,202 1) M (2,030), an increase of
8%.
The operating margin was 16.6% 1) (16.6).
· Net income amounted to SEK 1,510 2) M (1,405).
· Earnings per share rose by 8% to SEK 4.08 2) (3.79).
· Strong operating cash flow amounting to SEK 2,541 M (3,160).
Full year
· Sales increased by 4%, including 2% organic growth, and totaled SEK 48,481 M
(46,619).
· Operating income (EBIT) amounted to SEK 7,9231) M (7,501), representing an
increase of 6%. The operating margin was 16.3% 1) (16.1).
· Net income amounted to SEK 5,496 2) M (5,172).
· Earnings per share rose by 6% to SEK 14.84 2) (13.97).
· Strong operating cash flow totaling SEK 6,803 M (7,044).
· The Board of Directors proposes a dividend of SEK 5.70 per share (5.10).
1) Excluding items affecting comparability in 2013 amounting to SEK -1,000 M for
both the quarter and the full year.
2) Excluding items affecting comparability in 2013 amounting after tax to SEK
-721 M for both the quarter and the full year.
SALES AND INCOME
Fourth quarter
Full year
2012 2013 Change 2012
2013 Change
Sales, SEK M 12,239 13,242 +8% 46,619
48,481 +4%
of which,
Organic growth +4%
+2%
Acquisitions +5%
+4%
Exchange-rate effects -212 -134 -1% 290
-1,156 -2%
Operating income (EBIT), SEK M1) 2,030 2,202 +8% 7,501
7,923 +6%
Operating margin (EBIT), %1) 16.6 16.6 16.1
16.3
Income before tax, SEK M1) 1,836 2,050 +12% 6,784
7,381 +9%
Net income, SEK M2) 1,405 1,510 +7%2) 5,172
5,496 +6%2)
Operating cash flow, SEK M 3,160 2,541 -20% 7,044
6,803 -3%
Earnings per share (EPS), SEK2) 3.79 4.08 +8% 13.97
14.84 +6%
1) Excluding items affecting comparability in 2013 amounting to SEK -1,000 M for
both the quarter and the full year.
2) Excluding items affecting comparability in 2013 amounting after tax to SEK
-721 M for both the quarter and the full year.
COMMENTS BY THE PRESIDENT AND CEO
“The fourth quarter was very satisfactory, with a strong increase in sales and
record earnings,” says Johan Molin, President and CEO. “The global economy
continues to remain static, but a continued positive development primarily in
Global Technologies and Americas, gave an organic growth of 4%. At the same time
acquired sales rose by 5%, mainly through the acquisitions of Ameristar and
Amarr.
“Operating income increased by a full 8% as a result of increased efficiency in
acquired units, somewhat lower raw-material costs and specific savings from the
restructuring programs carried out.
“Sales of new products continued to develop very positively and in the fourth
quarter accounted for a full 27% of total sales value. It was also very pleasing
that the rapid rise
in sales of electromechanical products continued during the quarter.
“Operating income for the full year 2013 improved by a gratifying 6% in spite of
the very challenging market. Operating cash flow also remained very good as a
result of increased profit and stable working capital but was affected by major
investments in buildings.
“Activity in the acquisition field remained high in 2013. Contracts were signed
for a total of twelve acquisitions, whose total annual sales of SEK 4,200 M
represent 9% added growth. After the quarter ended there was one exciting
addition on the technology side for HID with the strategic acquisition of
IdenTrust in digital authentication.
“My judgment is that the world economy is slowly on the way to improving,
although still affected by the budget cutbacks that many countries are making.
Our strategy therefore remains unchanged, to reduce our dependence on mature
markets and to expand strongly in the emerging markets, which are expected to go
on growing well. Another continuing priority will be investments in new
products, especially in the growth area of electromechanics.”
FOURTH QUARTER
The Group’s sales totaled SEK 13,242 M (12,239), an increase of 8% compared with
the fourth quarter of 2012. Organic growth for comparable units was 4% (0).
Acquired units contributed 5% (7). Exchange-rate effects had an impact of SEK
–134 M (-212) on sales, that is –1% (–3).
Operating income before depreciation, EBITDA, amounted to SEK 2,440 M (2,268).
The corresponding EBITDA margin was 18.4% (18.5). The Group’s operating income,
EBIT, excluding items affecting comparability, amounted to SEK 2,202 M (2,030),
an increase of 8%. The operating margin excluding items affecting comparability
was 16.6% (16.6).
Net financial items amounted to SEK –152M (–193). The Group’s income before tax,
excluding items affecting comparability, amounted to SEK 2,050 M (1,836), an
improvement of 12% compared with the previous year. Exchange-rate effects had an
impact of SEK -42 M (-47) on the Group’s income before tax. The profit margin,
excluding items affecting comparability, was 15.5% (15.0). The effective tax
rate on an annual basis amounted to 25% (24). Earnings per share, excluding
items affecting comparability, amounted to SEK 4.08 (3.79), an increase of 8%.
FULL YEAR
Full-year sales for 2013 totaled SEK 48,481 M (46,619), representing an increase
of 4%. Organic growth was 2% (2). Acquired units contributed 4% (9). Exchange
-rate effects affected sales by SEK -1,156 M (290),representing -2% (1),
compared with 2012.
Operating income before depreciation, EBITDA, for the full year amounted to SEK
8,917 M (8,536). The corresponding margin was 18.4% (18.3). The Group’s
operating income, EBIT, excluding items affecting comparability, amounted to
SEK 7,923 M (7,501), which was an increase of 6%. The corresponding operating
margin, excluding items affecting comparability, was 16.3% (16.1).
Earnings per share for the full year, excluding items affecting comparability,
amounted to SEK 14.84 (13.97), an increase of 6%. Operating cash flow totaled
SEK 6,803 M (7,044).
RESTRUCTURING MEASURES
A new restructuring program was launched during the fourth quarter. A total of
some thirty production units and offices are expected to be closed over a three
-year period. The restructuring costs amount to SEK 1,000 M, with an estimated
payback time of just over three years.
Payments related to all existing restructuring programs amounted to SEK 230 M in
the quarter. The restructuring programs proceeded according to plan and led to a
reduction in personnel of 1,274 people during the quarter and 8,358 people since
the projects began.
At the end of the year provisions of SEK 1,369 M remained in the balance sheet
for carrying out the programs, of which SEK 896 M relates to this year’s
restructuring program.
COMMENTS BY DIVISION
EMEA
Sales for the quarter in EMEA division totaled SEK 3,546 M (3,479), with organic
growth
of 1% (-1). The markets in Scandinavia, Africa and eastern Europe showed strong
growth. Britain showed growth and Germany was stable, but the trend was negative
in France, the Netherlands, Spain, Italy and Israel. Acquired growth amounted to
1%. Operating income totaled SEK 631 M (633). The operating margin (EBIT) was
sustained at a high level and was 17.8% (18.2). Return on capital employed
amounted to 22.9% (24.0). Operating cash flow before interest paid totaled SEK
944 M (788).
AMERICAS
Sales for the quarter in Americas division totaled SEK 2,558 M (2,340), with
organic growth of 6% (5). The sales trends for electromechanical products and
the private residential market were very strong, and traditional lock products
remained strong. Security doors and high-security products showed good growth,
while Canada and Mexico showed a stable trend. South America showed strong
growth. Acquired growth amounted to 6%. Operating income totaled SEK 525 M (484)
and the operating margin was 20.5% (20.7). Return on capital employed amounted
to 22.3% (22.9). Operating cash flow before interest paid totaled SEK 656 M
(548).
ASIA PACIFIC
Sales for the quarter in Asia Pacific division totaled SEK 2,066 M (2,034), with
organic growth of 4% (2). South Korea, South-East Asia and New Zealand showed
strong growth. The market in China showed strong growth for fire doors, good
growth for traditional lock products and a weak trend for security doors.
Australia showed a weakly negative trend. Acquired growth amounted to 0%.
Operating income totaled SEK 281 M (276), giving an operating margin (EBIT) of
13.6% (13.6). The quarter’s return on capital employed amounted to 14.8% (20.9).
Operating cash flow before interest paid totaled SEK 450 M (928), affected by a
major investment in building.
GLOBAL TECHNOLOGIES
Sales for the quarter in Global Technologies division totaled SEK 1,690 M
(1,516), with organic growth of 13% (2). HID had strong growth in access control
and logical access, Government ID and project orders. Hospitality showed strong
growth, mainly from the important renovation market. Profitability improved for
both Business Units. Acquired growth amounted to 0%. The division’s operating
income amounted to SEK 312 M (262), with an operating margin (EBIT) of 18.4%
(17.3). Return on capital employed amounted
to 20.3% (17.3). Operating cash flow before interest paid totaled SEK 258 M
(467), affected by a major investment in building.
ENTRANCE SYSTEMS
Sales for the quarter in Entrance Systems division totaled SEK 3,615 M (3,080),
with organic growth of 3% (–5). The markets in Americas and Asia showed good
growth while demand in Europe stabilized. Sales increased in the segments of
industrial doors and high-speed doors, while door automation and docking systems
were stable. Ditec continued to show a negative trend, affected by the weak
demand in southern Europe. Acquired growth amounted to 15%. Operating income
totaled SEK 587 M (515), giving an operating margin of 16.2% (16.7). Return on
capital employed amounted to 16.3% (15.3). Operating cash flow before interest
paid totaled SEK 594 M (651).
ACQUISITIONS
During the quarter ASSA ABLOY acquired the US company Amarr, the third-largest
player on the North American market for overhead doors. The company has about
1,200 employees and its sales in 2014 are expected to total about SEK 2,100 M
(USD 330 M).
During the quarter Ameristar (USA), Amarr (USA), Mercor (Poland) and one minor
acquisition were consolidated. The combined acquisition price for the ten
companies acquired during the year amounted to SEK 4,684 M, and preliminary
acquisition analyses indicate that goodwill and other intangible assets with
indefinite useful life amount to SEK 3,360 M. The acquisition price is adjusted
for acquired net debt and estimated earn-outs. Estimated earn-outs amount to
SEK 602 M.
SUSTAINABLE DEVELOPMENT
ASSA ABLOY places a strong focus on reducing the environmental impact related to
the Group’s factories and offices worldwide. In the ongoing consolidation of the
Group’s units, efficiency benefits will be realized in the form of reduced
energy and water consumption as the number of properties falls and the remaining
premises can be utilized more efficiently. In some cases the consolidated units
are moving into completely new premises optimized for reduced environmental
impact. One example of this is HID’s new North American Operations Center in
Austin, Texas. In the new property, the Division’s manufacturing in the USA is
brought together in a single unit, which has meant that the energy consumption
per manufactured product has been reduced by 20% and the water consumption by
over 50%. All lighting in the property uses LED lamps, and a sophisticated
system continuously controls and measures energy consumption.
ASSA ABLOY’s Sustainability Report for 2013 will be available from 26 March 2014
on the company’s website, www.assaabloy.com.
PARENT COMPANY
Other operating income for the Parent company ASSA ABLOY AB totaled SEK 2,261 M
(1,938) for the full year. Income before tax amounted to SEK 2,896 M (3,507).
Investments in tangible and intangible assets totaled SEK 992 M (1,063), of
which intangible assets accounted for SEK 991 M (1,062). Liquidity is good and
the equity ratio was 45.1% (50.0).
DIVIDEND AND ANNUAL GENERAL MEETING
The Board of Directors proposes a dividend of SEK 5.70 (5.10) per share for the
2013 financial year. The Annual General Meeting will be held on 7 May 2014. The
Annual
Report for 2013 will be available from 26 March 2014 on the company’s website,
www.assaabloy.com.
ACCOUNTING PRINCIPLES
ASSA ABLOY applies International Financial Reporting Standards (IFRS) as
endorsed
by the European Union. Significant accounting and valuation principles are
detailed on pages 90-95 of the 2012 Annual Report.
This Year-end Report was prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ and the Annual Accounts Act. The Year-end Report for the Parent
company was prepared in accordance with the Annual Accounts Act and RFR 2
‘Reporting by a Legal Entity’.
EFFECTS OF CHANGED ACCOUNTING PRINCIPLES
In 2013 financial reporting is affected by changes relating to the reporting of
defined-benefit pension plans. The changed accounting principles remove the
option of using the so-called corridor method: that is, the option of reporting
only a proportion of actuarial gains and losses as income or expense. The
significant changed valuations are instead reported as they arise in ‘Other
comprehensive income’. The changes also mean that
the return on plan assets is no longer reported as expected return but is
reported as an interest income item in the income statement, based on the value
of the discount rate at the start of the financial year. The accounting
principles for defined-benefit pension plans are therefore changed from the
Group’s accounting principles in the 2012 Annual Report and the Interim Reports
published earlier in 2012.
The new principles affect reporting retroactively, and the opening balance at 1
January 2012 has been recalculated, as have the comparatives for 2012. On the
balance-sheet date of 1 January 2012, pension obligations and net debt increased
by SEK 1,092 M. Equity was reduced by SEK 737 M and financial assets increased
by SEK 355 M. Operating income for the quarter and the full year 2012 is
unchanged. Financial items for the quarter and the full year 2012 improved by
SEK 11 M and SEK 53 M respectively. The tax expense fell by SEK 8 M for the
quarter and increased by SEK 6 M for the full year 2012. Net profit for the
quarter and the full year 2012 increased by SEK 19 M and SEK 47 M respectively.
Earnings per share after dilution for the quarter and the full year 2012
increased by SEK 0.05 per share and SEK 0.13 per share respectively.
TRANSACTIONS WITH RELATED PARTIES
No transactions that significantly affected the company’s position and income
have taken place between ASSA ABLOY and related parties.
RISKS AND UNCERTAINTY FACTORS
As an international Group with a wide geographic spread, ASSA ABLOY is exposed
to a number of business and financial risks. The business risks can be divided
into strategic, operational and legal risks. The financial risks are related to
such factors as exchange rates, interest rates, liquidity, the giving of credit,
raw materials and financial instruments. Risk management in ASSA ABLOY aims to
identify, control and reduce risks. This work begins with an assessment of the
probability of risks occurring and their potential effect on the Group. For a
more detailed description of risks and risk management, see the 2012 Annual
Report. No significant risks other than the risks described there are judged to
have occurred.
AUDIT
The Company’s Auditor has not carried out any review of the Report for the
fourth quarter of 2013.
OUTLOOK*
Long-term outlook
Long term, ASSA ABLOY expects an increase in security-driven demand. Focus on
end‑user value and innovation as well as leverage on ASSA ABLOY's strong
position
will accelerate growth and increase profitability.
Organic sales growth is expected to continue at a good rate. The operating
margin (EBIT) and operating cash flow are expected to develop well.
* Outlook published on 28 October 2013:
Long-term outlook
Long term, ASSA ABLOY expects an increase in security-driven demand. Focus on
end‑user value and innovation as well as leverage on ASSA ABLOY's strong
position
will accelerate growth and increase profitability.
Organic sales growth is expected to continue at a good rate. The operating
margin (EBIT) and operating cash flow are expected to develop well.
Stockholm, 7 February 2014
Johan Molin
President and CEO
FINANCIAL INFORMATION
The Interim Report for the first quarter will be published on 29 April 2014. The
Annual General Meeting will be held on 7 May 2014 at the Museum of Modern Art in
Stockholm.
FURTHER INFORMATION CAN BE OBTAINED FROM:
Johan Molin, President and CEO, Tel: +46 8 506 485 42
Carolina Dybeck Happe, Chief Financial Officer, Tel: +46 8 506 485 72
ASSA ABLOY is holding an analysts’ meeting at 10.00 today at Operaterrassen in
Stockholm.
The analysts’ meeting can also be followed on the Internet at www.assaabloy.com.
It is possible to submit questions by telephone on +46 8 5055 6476, +44 203 364
5371
or +1 877 679 2993.
This information is that which ASSA ABLOY is required to disclose under the
Swedish Securities Exchange and Clearing Operations Act and/or the Swedish
Financial Instruments Trading Act.
The information is released for publication at 08.00 on 7 February.
Strong end of year for ASSA ABLOY
| Quelle: ASSA ABLOY AB
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