q3 report presentation 2016

ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience

© ASSA ABLOY. All rights reserved

Q3 Report 2016Johan MolinPresident and CEO


Financial highlights Q3, 2016

Stable development in the third quarter

– Strong growth in Americas and Global Tech

– Good growth in Entrance Systems

– Growth in EMEA

– Negative growth in APAC due to China

Sales 18,025 MSEK 3%+2% organic, +2% acquired growth, -1% currency

EBIT 3,020 MSEK 2% Currency effect -2 MSEK

EPS 1.91 SEK 3%Underlying tax rate 26%

2


Financial highlights Jan-Sep 2016

Strong development despite a challenging market

– Strong growth in Americas and Global Tech

– Good growth in EMEA and Entrance Systems

– Negative growth in APAC due to China

Sales 51,809 MSEK 4%

3% organic, 3% acquired growth, -2% currency

EBIT 8,340 MSEK 4% Currency effect -160 MSEK

EPS 5.21 SEK 4%Underlying tax rate 26%

3


Data analytics – simple and actionable

– Launch of Cliq data analytics in the USA

Launch of energy efficient industrial solutions

– Freezer transportation with High Performance Doors

– Industrial docking systems

– Online savings ROI calculator

Strong pull from DIY channel with digital products

– Entry ticket to DIY chains. Ex. Mexico, UK, Germany

ASSA ABLOY locksmiths unified across Nordics

– Nordic locksmiths rebranded to Certego

– Certego offers 24/7 service in all countries

Market highlights


5

Group sales in local currencies Jan-Sep 2016

3 +39

40 +7

15 -4

4 +2

1 +14

Share of Group sales 2016 YTD, %Year-to-date vs previous year, %

37 +7

Emerging markets 24% (25) of sales


-15

-12

-9

-6

-3

0

3

6

9

12

15

18

21

34 000

37 000

40 000

43 000

46 000

49 000

52 000

55 000

58 000

61 000

64 000

67 000

70 000

2009 2010 2011 2012 2013 2014 2015 2016

Growth %Sales MSEK

Organic Growth Acquired Growth Sales in Fixed Currencies

Sales growth, currency adjusted

6

2016 Q3 +4%

Organic +2%

Acquired +2%


Operating income (EBIT), MSEK

4 500

5 000

5 500

6 000

6 500

7 000

7 500

8 000

8 500

9 000

9 500

10 000

10 500

11 000

11 500

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2 600

2 800

3 000

3 200

2009 2010 2011 2012 2013 2014 2015 2016

12-monthsQuarter

Quarter Rolling 12-months

Run rate 11,379 MSEK (10,722) +6%

7


12

13

14

15

16

17

2009 2010 2011 2012 2013 2014 2015 2016

EBIT Margin


2016 Acquisitions CurrencyQ3 -0.2% 0.2%

Operating margin, %

Run rate 2016 16.2% (16.3)

8


Manufacturing footprint

9

Status of manufacturing footprint programs 2006-2013:

– 76 factories closed to date, 2 to go

– 101 factories converted to assembly, 14 to go

Total personnel reduction:

– 11,916 FTE in total

– 560 FTE in recent quarter

360 FTE to go for all programs

New MFP-program in progress

339 MSEK of the provision remains for all programs


Margin highlights Q3 2016

EBIT margin 16.8% (17.0) -0.2%

+ Volume increase 1%, price 1%

Margin development

- APAC decline

+ Manufacturing footprint & pricing

+ Currency 0.2%

- Acquisitions -0.2%

10


Acquisitions 2016

Fully active pipeline

10 acquisitions done in 2016

Divestment of Carlocks 550 MSEK

Acquired annualized sales 1,900 MSEK

Added sales 2.8%

11


Trojan, UK

12

Turnover of 220 MSEK with 66

employees

UK residential door and window

hardware manufacturer

Complements the product portfolio

in a very good way

Accretive to EPS


Division – EMEA

Strong growth in Scandinavia, UK and Israel

Good growth in Germany, Benelux, Iberia and Italy

Flat to negative in Finland, Africa, France and EE

Negative calendar effect

Operating margin (EBIT)

+ Organic +2%

+ Direct material

- Front-end investments

+ Acquisitions +0.2%

13

13

14

15

16

17

18

19

2010 2011 2012 2013 2014 2015 2016

EBIT %

22%

Sales share of

Group total %


Division - Americas

Strong growth in Door group, Elmech, Mexico and South America (ex Brazil)

Good growth in Residential, Canada and High security

Growth in AHW and negative in Brazil

Quotation levels continue to develop positive


+ Organic +5%

+ Strong leverage


15

20

18

19

20

21

22

23

2010 2011 2012 2013 2014 2015 2016

EBIT %

25%

Sales share of

Group total %


Division - Asia Pacific

Good growth in Pacific

Growth in Korea and flat in South Asia

Continued decline in China yoy -12%

– Strong personnel reduction China

– China correction related to 2015 neutralized by release of earn outs


- Organic -7%*

+ Savings and personnel reduction

- Redundancy cost

14

17

8

10

12

14

16

18

2010 2011 2012 2013 2014 2015 2016

EBIT %

13%

Sales share of

Group total %

*) Comparable period restated due to adjusted China reporting.


Division - Global Technologies

HID

– Strong growth in Secure issuance, IAM, Gov ID,

IDT (inlays) and project sales

– Good growth in PACS

Hospitality

– Flat sales with good orders

– Good profit


+ Organic +7%

- Mix and R&D investment


13

19

14

15

16

17

18

19

20

21

2010 2011 2012 2013 2014 2015 2016

EBIT %

13%

Sales share of

Group total %


Division - Entrance Systems

Strong growth in Door automatics, High speed doors,

Flexiforce and Amarr

Good growth in Industrial and 4Front

Negative in EU Residential

Continued good leverage


+ Organic +4%

+ Direct material and consolidation effects


28

21

10

12

14

16

18

2010 2011 2012 2013 2014 2015 2016

EBIT %

27%

Sales share of

Group total %



Q3 Report 2016Carolina Dybeck HappeCFO



Financial highlights Q3 2016

MSEK 2015 2016 Change 2015 2016 Change

Sales 17,465 18,025 +3% 49,799 51,809 +4%

Whereof

Organic growth 471 307 +2% 1,807 1,308 +3%

Acquired growth 606 429 +2% 1,435 1,512 +3%

FX-differences 1,661 -176 -1% 5,561 -810 -2%

Operating income (EBIT) 2,970 3,020 +2% 8,041 8,340 +4%

EBIT-margin (%) 17.0 16.8 16.1 16.1

Operating cash flow 2,816 2,830 0% 5,327 5,846 +10%

EPS (SEK) 1.86 1.91 +3% 5.02 5.21 +4%

3rd Quarter Nine months

24


Bridge Analysis – Jul-Sep 2016

MSEK 2015

Jul-Sep

Organic Currency Acq/Div 2016

Jul-Sep

2% -1% 2% 3%

Sales 17,465 307 -176 429 18,025

EBIT 2,970 18 -2 34 3,020

% 17.0% 5.7% 1.2% 7.9% 16.8%

Dilution / Accretion -0.2% 0.2% -0.2%

25


P&L Components as % of salesJan – Sep 2016

Direct material 36.6% 35.9% 35.6%

Conversion costs 24.5% 24.6% 24.9%

Gross Margin 38.9% 39.5% 39.5%

S, G & A 22.8% 23.1% 23.4%

EBIT 16.1% 16.4% 16.1%

2016YTD excl

acquisitions

2015YTD

2016YTD

26


Operating cash flow, MSEK

4 500

5 000

5 500

6 000

6 500

7 000

7 500

8 000

8 500

9 000

9 500

10 000

10 500

11 000

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2009 2010 2011 2012 2013 2014 2015 2016

12-monthsQuarter

Quarter Cash Rolling 12-months EBT Rolling 12 months

27


Gearing % and net debt, MSEK

0

20

40

60

80

100

120

0

5 000

10 000

15 000

20 000

25 000

30 000

2009 2010 2011 2012 2013 2014 2015 2016

GearingNet Debt

Net debt Gearing

Debt/Equity 57 (63)

Net debt/EBITDA2.0 (2.1)

28

*) 2009-2011 Not restated for changed pension accounting principles.


Earnings per share, SEK

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2009 2010 2011 2012 2013 2014 2015 2016

12-monthsQuarter SEK


29

Restated for Stock split 3:1 2015.

Q3 EPS +3%



Q3 Report 2016Johan MolinPresident and CEO


Conclusions Q3 2016

Good growth by 3% with 2% organic and 2% acquired

Strong growth in Americas and Global Tech

Digital door locks progressing nicely in DIY

Decline in China continued

Stable EBIT development and good cash flow

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