Q3 Report 2010 - Assa Abloy · 3 Financial highlights Jan-Sep 2010 Resumed organic growth and strong profit development Sales 27,175 MSEK +4% 2% organic, +7% acquired growth, -5%
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1
Q3 Report 2010Johan Molin
President & CEO
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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 9,474 MSEK +13%+6% organic, +10% acquired growth, -3% currency
EBIT 1,630 MSEK +21% Currency effect -28 MSEK
EPS 2.93 SEK +24%Reduced tax rate & depreciation of earn out
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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
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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 DDLAustralia
Electric strike
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Secure delivery infrastructureLaunched October 2010
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
Secure vault
TCP/IP Ethernet
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Group sales in local currencies Jan-Sep 2010
2 +30
33 -243 +7
14 +64
6 +8
2 -4
Share of Group sales 2010 YTD, %Year-to-date vs previous year, %
7
21 00022 00023 00024 00025 00026 00027 00028 00029 00030 00031 00032 00033 00034 00035 00036 00037 00038 00039 000
2004 2005 2006 2007 2008 2009 2010
Sa
les,
MS
EK
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
Gro
wth
%
Organic Growth Acquired Growth Sales in Fixed Currencies
Sales growth Q3 2010 - Currency adjusted
2010 Q3 +16%Organic +6%Acquired +10%
-2% from 2008 peak
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Operating income (EBIT), MSEK
600
700
800
900
1 000
1 100
1 200
1 300
1 400
1 500
1 600
1 700
2005
2006
2007
2008
2009
2010
3 800
4 000
4 200
4 400
4 600
4 800
5 000
5 200
5 400
5 600
5 800
6 000
Quarter Rolling 12-monthsQuarter 12-months
Run rate 5,838 MSEK (5,484), +6%
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Operating margin (EBIT), %
12,0
13,0
14,0
15,0
16,0
17,020
05
2006
2007
2008
2009
2010
EB
IT %
Quarter Rolling 12-months Long Term Target
Run rate 2010 16.3% (15.5)
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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 plan
1,236 more to go
1,106 MSEK remains at the end of the third quarter for all three programs
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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)
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Acquisitions 2010
Fully active on acquisitions– Growing pipeline with
target 5% growth
11 acquisitions completed in 2010
Annualized 2 300 MSEK, +7%
New acquisitions Q3ActivIdentity 400 MSEK, public offer33% stake in Agta Record
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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
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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 employees and 2,000 MSEK sales
Ambition to acquire over time
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Division - EMEA Slow recovery in all parts
Weak quarter in Eastern Europe, France, Denmark and the Netherlands
Good growth in Finland, Germany, Italy and Spain
Good effect from manufacturing footprint
Strong efficiency gain from seamless flow
Operating margin (EBIT) + Volume 1%+ Good response to new products+ Strong efficiency gains- Raw materials increasing
SALESshare of
Group total %
34
EBIT %
13
14
15
16
17
18
2005
2006
2007
2008
2009
2010
16
Division - AmericasSouth America, Mexico and Canada in good growth
Electromechanics developing well
Residential growing for first time since H1 2008
Security doors continued to decline
Strong EBIT performance in all parts
Operating margin (EBIT) + Volume +2%+ Strong efficiency improvement- Raw materials increasing
SALESshare of
Group total %
27
EBIT %
17
18
19
20
21
2005
2006
2007
2008
2009
2010
17
Division - Asia Pacific
China sales strong on the back of 3rd tier cities
Korean market continued well
South Asia and especially India is strong
Good growth and solid profit in the Pacific
Good efficiency development
Operating margin (EBIT)+ Volume +15%+ Currency effects-Raw materials increasing
SALESshare of
Group total %
15
EBIT %
6
8
10
12
14
16
2005
2006
2007
2008
2009
2010
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Division - Global Technologies
Fantastic evolution in HID– Access control growing in all parts of the world– Secure issuance benefitting from new printers– Identification solutions in strong demand
Hospitality, first quarter of growth since 2008– Renovation market is back– New RFID systems increasingly popular– Savings and move to China supports profit
Operating margin (EBIT)+ Volume +26%+ All business units doing well
SALESshare of
Group total %
13
EBIT %
1213141516171819
2005
2006
2007
2008
2009
2010
19
Division - Entrance Systems
Quotation levels and orders are slightly growing
Service and service contracts growing
Retail coming back, health care weak
Ditec sales stabilised but dilutive by 1.0%
Operating margin (EBIT) - Volume -1% + Efficiency gains
SALESshare of
Group total %
11
EBIT %
12
13
14
15
16
17
18
2005
2006
2007
2008
2009
2010
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Q3 Report 2010Tomas Eliasson
CFO
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Financial highlights Q3 2010
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 (%) 16.0 17.2 15.3* 16.3
Operating cash flow 2,125 1,890 -11% 4,547 4,200 -8%
EPS (SEK)* 2.36 2.93 +24% 6.81 8.03 +18%
*Excluding restructuring and one off charges of 109 MSEK in Q1
3rd Quarter Nine months
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Finance net
Interest net on net debt going down 20%
New rules: Earnouts to be discounted
MSEK Jan-Sep 2009
Jan-Sep 2010
Interest net -403 -320
Exchange effects and otherDefined benefit pensionsDiscounted earnouts
Total other
-74
-51
n/a
-125
-14
-111
-34
-159Total -528 -479
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P&L – Components as % of salesQ3 Year-on-Year
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%
2009 2010
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Bridge Analysis – Jul-Sep 2010
MSEK 2009
Jul-Sep
Acq/Div Currency Organic 2010
Jul-Sep
10% -3% 6% 13%
Revenues 8,405 798 -216
-28
12.8%
488
184
37.7%
9,474
EBIT 1,346 127 1,630
% 16.0% 16.0% 17.2%
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Operating cash flow, MSEK
0
500
1 000
1 500
2 000
2005
2006
2007
2008
2009
2010
Qua
rter
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
7 000
7 500
12-m
onth
s
Quarter Rolling 12-months
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Gearing % and net debt MSEK
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2005
2006
2007
2008
2009
2010
Net D
ebt
0
20
40
60
80
100
120
Gea
ring
Net debt Gearing
Debt/Equity 55 (67)
Debt/Equity 55 (67)
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Q3 Report 2010Johan Molin
President & CEO
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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 AgtaRecord
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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
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Q&A
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