Assa Abloy Ab Class B · OMXSTO:ASSA_B
Assa Abloy Ab Class B — Q3 2010 Earnings Presentation
28 slides from Assa Abloy Ab Class B's earnings presentation, 2010
Slide 1: Q3 Report 2010
-Q3 Report 2010 ee
Slide 2: ASSA ABLOY overview
ASSA ABLOY overview Financials (SEK bn) Sales by product group Sep 2010 Net sales 36.0 Security doors & fittings, 22% EBIT 5.8 Op cash flow 6.5 Mech. Locks & systems, 43% Net debt 10.9 Market cap 62 Electromech & electronic locks, 35% Sales by region Sep 2010 Leading market positions Competitors 43%
Slide 3: Financial highlights Q3 2010
Financial highlights Q3 2010 ▪ Strong quarter in all parts – Very solid development (+26%) for Global Technologies – Continued strong growth in APAC and South America – EMEA and Americas bottomed and growing – Margin expansion in all divisions – Bid for ActivIdentity and stake in Agta Record ▪ Sales
Slide 4: Financial highlights Jan-Sep 2010
Financial highlights Jan-Sep 2010 ▪ Resumed organic growth and strong profit development ▪ Sales 27,175 MSEK +4% 2% organic, +7% acquired growth, -5% currency ▪ EBIT 4,440 MSEK +11% Currency effect -191 MSEK ▪ EPS 8.03 SEK +18% Reduced interest and tax rate 4
Slide 5: Market highlights
Market highlights ▪ Good growth of electromechanical locks in all parts ▪ Strong customer interest for Cliq Remote ▪ WiFi locks increasingly popular in the USA ▪ Residential digital door locks introduced in Australia ▪ Secure delivery infrastructure introduced in October WiFi Residential DDL Electri
Slide 6: Secure delivery infrastructure
Secure delivery infrastructure Launched October 2010 Secure vault ▪ Secure encrypted delivery of digital keys – Smart cards – Mobile phones - NFC – ID and banking cards ▪ Online card security management – Card personalization service – Cradle to grave ▪ Secure issuance – Online HDP & DTC printers TC
Slide 7: Group sales in local currencies Jan-Sep
Group sales in local currencies Jan-Sep 2010 43 +7 33 -2 14 +64 2 -4 2 +30 6 +8 Share of Group sales 2010 YTD, % Year-to-date vs previous year, % 7
Slide 8: Sales growth Q3 2010 - Currency adjusted
Sales growth Q3 2010 - Currency adjusted 39 000 14 38 000 -2% from 2008 peak 12 37 000 10 36 000 35 000 8 34 000 6 33 000 4 Sales, MSEK 32 000 Growth % 2 31 000 30 000 0 29 000 -2 28 000 27 000 2010 Q3 +16% -4 26 000 Organic +6% -6 25 000 Acquired +10% -8 24 000 -10 23 000 -12 22 000 21 000 -14 2004
Slide 9: Operating income (EBIT), MSEK
Operating income (EBIT), MSEK 1 700 6 000 1 600 Run rate 5,838 MSEK (5,484), +6% 5 800 1 500 5 600 1 400 5 400 1 300 5 200 1 200 5 000 1 100 4 800 1 000 4 600 900 4 400 800 4 200 700 4 000 600 3 800 2005 2006 2007 2008 2009 2010 Quarter 12-months Quarter Rolling 12-months 9
Slide 10: Operating margin (EBIT), %
Operating margin (EBIT), % 17,0 16,0 EBIT % 15,0 Run rate 2010 16.3% (15.5) 14,0 13,0 12,0 2005 2006 2007 2008 2009 2010 Quarter Rolling 12-months Long Term Target 10
Slide 11: Manufacturing footprint
Manufacturing footprint ▪ Conversion to assembly or closures in high cost countries – 37 factories closed to date, 14 to go – 34 factories converted to assembly, 19 to go – 19 offices closed, 6 to go ▪ Consolidation of core production to China and Eastern Europe ▪ Personnel reduction 5,179p, +16% to
Slide 12: Margin highlights Q3 2010
Margin highlights Q3 2010 EBIT margin 17.2% (16.0) - Volume increase of 5%, Price 1% - No acquisition dilution - Negative mix effect due to growth in emerging markets -0.2% + Manufacturing footprint gives good contribution + S, G & A cost declining, 23.4% (24.1) 12
Slide 13: Acquisitions 2010
Acquisitions 2010 ▪ Fully active on acquisitions – Growing pipeline with target 5% growth ▪ 11 acquisitions completed in 2010 → Annualized 2 300 MSEK, +7% → New acquisitions Q3 → ActivIdentity 400 MSEK, public offer → 33% stake in Agta Record 13
Slide 14: ActivIdentity, USA
ActivIdentity, USA ▪ Strengthens HID’s offering in logical access ▪ Products centered around establishing a persons identity when interacting digitally ▪ Strong authentication and card management systems ▪ 2,500 customers worldwide, 38% software ▪ 220 employees and 400 MSEK ▪ Slightly dilutive 2011
Slide 15: Agta Record, Switzerland
Agta Record, Switzerland ▪ Same business model as AA Entrance System with end-user focus and service ▪ Reinforces leadership in door automatics ▪ Very complementary with main strength in France and CH ▪ Good synergies within sales, service, products and infrastructure ▪ HQ in Switzerland ▪ 1,700 emp
Slide 16: Division - EMEA
Division - EMEA SALES ▪ Slow recovery in all parts share of Group total % ▪ Weak quarter in Eastern Europe, France, Denmark and the Netherlands 34 ▪ Good growth in Finland, Germany, Italy and Spain ▪ Good effect from manufacturing footprint ▪ Strong efficiency gain from seamless flow EBIT % ▪ Operat
Slide 17: Division - Americas
Division - Americas SALES ▪ South America, Mexico and Canada in good share of growth Group total % ▪ Electromechanics developing well 27 ▪ Residential growing for first time since H1 2008 ▪ Security doors continued to decline ▪ Strong EBIT performance in all parts EBIT % 21 ▪ Operating margin (EBIT)
Slide 18: Division - Asia Pacific
Division - Asia Pacific SALES ▪ China sales strong on the back of 3rd tier cities share of Group total % ▪ Korean market continued well 15 ▪ South Asia and especially India is strong ▪ Good growth and solid profit in the Pacific ▪ Good efficiency development EBIT % ▪ Operating margin (EBIT) 16 + Vol
Slide 19: Division - Global Technologies
Division - Global Technologies SALES ▪ Fantastic evolution in HID share of Group total % – Access control growing in all parts of the world – Secure issuance benefitting from new printers 13 – Identification solutions in strong demand ▪ Hospitality, first quarter of growth since 2008 – Renovation ma
Slide 20: Division - Entrance Systems
Division - Entrance Systems SALES ▪ Quotation levels and orders are slightly growing share of Group total % ▪ Service and service contracts growing 11 ▪ Retail coming back, health care weak ▪ Ditec sales stabilised but dilutive by 1.0% ▪ Operating margin (EBIT) EBIT % 18 - Volume -1% 17 + Efficiency
Slide 21: Financial highlights Q3 2010
Financial highlights Q3 2010 3rd Quarter Nine months MSEK 2009 2010 Change 2009 2010 Change Sales 8,405 9,474 +13% 26,163 27,175 +4% Whereof Organic growth +6% +2% Acquired growth +10% +7% FX-differences -216 -3% -1,240 -5% Operating income (EBIT) 1,346 1,630 +21% 4,014* 4,440 +11% EBIT-margin (%) 1
Slide 22: Finance net
Finance net ▪ Interest net on net debt going down 20% ▪ New rules: Earnouts to be discounted MSEK Jan-Sep Jan-Sep 2009 2010 Interest net -403 -320 Exchange effects and other -74 -14 Defined benefit pensions -51 -111 Discounted earnouts n/a -34 Total other -125 -159 Total -528 -479 22
Slide 23: P&L – Components as % of sales
P&L – Components as % of sales Q3 Year-on-Year 2009 2010 ▪ Direct material 33.0% 35.0% ▪ Conversion costs 26.9% 24.4% ▪ Gross Margin 40.1% 40.6% ▪ S, G & A 24.1% 23.4% ▪ EBIT 16.0% 17.2% 23
Slide 24: Bridge Analysis – Jul-Sep 2010
Bridge Analysis – Jul-Sep 2010 MSEK 2009 Acq/Div Currency Organic 2010 Jul-Sep Jul-Sep 10% -3% 6% 13% Revenues 8,405 798 -216 488 9,474 EBIT 1,346 127 -28 184 1,630 % 16.0% 16.0% 12.8% 37.7% 17.2% 24
Slide 25: Operating cash flow, MSEK
Operating cash flow, MSEK 7 500 7 000 2 000 6 500 6 000 1 500 12-months Quarter 5 500 5 000 1 000 4 500 500 4 000 3 500 0 3 000 05 06 07 08 09 10 20 20 20 20 20 20 Quarter Rolling 12-months 25
Slide 26: Gearing
Gearing % and net debt MSEK 16 000 120 14 000 100 12 000 80 10 000 Net Debt Gearing 8 000 60 6 000 Debt/Equity 40 4 000 55 (67) 20 2 000 0 0 05 06 07 08 09 10 20 20 20 20 20 20 Net debt Gearing 26
Slide 27: Conclusions Q3 2010
Conclusions Q3 2010 ▪ 6% organic growth and 16% total growth in Q3 ▪ Many new exciting products ▪ Margin expansion in all parts ▪ Strong cash flow ▪ Good activity on acquisitions with ActivIdentity and Agta Record 27
Slide 28: Outlook
Outlook Long Term ▪ 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 for 2010 ▪ Organic growth is expected to be slightly positive 28