Q4 year end-2013 ASSA ABLOY invetors presentation 7 february

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The ASSA ABLOY Group released the interim report October-December and results 2013 on Friday 7 February 2014 at 08.00 am (CET). A combined investors’ and analyst meeting and web conference was held at Operaterrassen in Stockholm, Sweden. This is the presentation from the meeting.

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Q4 year end-2013 ASSA ABLOY invetors presentation 7 february

  1. 1. 1 Q4 Report 2013 Johan Molin President & CEO
  2. 2. Financial highlights Q4 2013  Strong ending of the year – Strong growth in Global Tech and Americas – Good growth in APAC and ESD – EMEA bottoming – Important gains of efficiency and savings – New Manufacturing footprint program  Sales 13,242 MSEK +8% +4% organic, +5% acquired growth, -1% currency  EBIT 2,202 MSEK *) +8% Currency effect -46 MSEK  EPS 4.08 SEK *) +8% Underlying tax rate 25% 2 *) Excluding restructuring items of 1,000 MSEK.
  3. 3. Financial highlights Jan-Dec 2013  Good year for ASSA ABLOY despite the tough market – Improved market presence – Innovation moved forward – Reduced footprint and professional sourcing  Sales 48,481 MSEK +4% +2% organic, +4% acquired growth, -2% currency  EBIT 7,923 MSEK *) +6% Currency effect -261 MSEK  EPS 14.84 SEK *) +6% Underlying tax rate 25% 3 *) Excluding restructuring items of 1,000 MSEK.
  4. 4.  New Overhead Sectional Door generation – Lower running costs & increased energy saving  Record sales of CLIQ Remote – Cloud based functionality added  Strong growth for ASSA ABLOY door closers – In all regions: EMEA, Americas and APAC  Seos innovative Bluetooth Smart solution – Patented solution for opening doors with mobile phone 4 Market highlights
  5. 5. 5 Group sales in local currencies Jan-Dec 2013 2 +13 32 +19 17 +9 4 +4 1 +14 Share of Group sales 2013 YTD, % Year-to-date vs previous year, % 44 -1 Emerging markets 25% of sales
  6. 6. -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 25 000 28 000 31 000 34 000 37 000 40 000 43 000 46 000 49 000 2006 2007 2008 2009 2010 2011 2012 2013 Organic Growth AcquiredGrowth Sales inFixedCurrencies Sales growth, currency adjusted 6 2013 Q4 +9% Organic +4% Acquired +5% Sales MSEK Growth, %
  7. 7. Operating income (EBIT*), MSEK 4 000 4 500 5 000 5 500 6 000 6 500 7 000 7 500 8 000 900 1 100 1 300 1 500 1 700 1 900 2 100 2 300 2006 2007 2008 2009 2010 2011 2012 2013 Quarter Rolling 12-months Quarter 12-months Run rate 7,923 MSEK (7,501) +6% 7 *) Excluding restructuring items of 1,000 MSEK in Q4 and full year 2013.
  8. 8. *) Excluding restructuring items of 1,000 MSEK in Q4 and full year 2013. 12,0 13,0 14,0 15,0 16,0 17,0 2006 2007 2008 2009 2010 2011 2012 2013 Quarter Rolling 12-months 2013 Dilution QTD -0.6% YTD -0.1% 2014 Dilution Full Year -0.3 % Operating margin (EBIT)*, % Run rate 2013 16.3% (16.1) Long term target range (average) 8 EBIT Margin
  9. 9. Manufacturing footprint  New program launched in Q4 – Closure of 10 factories and 17 offices – Personnel reduction 2,449p – Payback 3.4 years – Restructuring cost 1,000 MSEK  Status all programs 2006-2013: – 57 factories closed – 21 closures to go  Q4 Personnel reduction of 1,274p - 1,626p remains  Provision of 1,369 MSEK 9
  10. 10. Margin highlights Q4 2013 EBIT margin 16.6% (16.6) 0.0% + Volume increase +3%, price +1% + Margin expansion 0.0% + Organic growth + Manufacturing footprint + Capacity adjustments - Dilution from Currency -0.2% - Acquisitions -0.6% 10
  11. 11. Acquisitions 2013  Fully active pipeline  12 acquisitions done in 2013  Annualized sales 4,200 MSEK  Added sales 9% 11
  12. 12. Amarr, USA 12  Turnover of 2,100 MSEK with 1,200 employees  Major player in the North American sectional door market  Attractive market position with 77 service centers  Base for further expansion and good synergies  Accretive to EPS
  13. 13. IdenTrust, USA 13  Turnover of 90 MSEK with 63 employees  A leading provider of digital authentication solutions  Complements ActiveIdentity  Creates leadership in secure identity and issuance  Dilutive to EPS
  14. 14. Division - EMEA  Bottoming with slight growth  Strong growth in Scandinavia (warm winter), Africa and Eastern Europe  Growth in the UK and flat in Germany  Decline in Finland, France, Holland, Italy, Iberia and Israel  Focus on efficiency and manning  Operating margin (EBIT) = Organic 1% + Footprint savings - Material cost - Dilution & Currency (-0.6) SALES share of Group total % 26 14 13 14 15 16 17 18 19 2008 2009 2010 2011 2012 2013 EBIT %
  15. 15. Division - Americas  Strong growth in AHW, Electromechanical, Residential and South America  Growth in Doors and High security  Stable in Mexico and Canada  Continued investments in R&D and front end  Operating margin (EBIT) + Organic +6% + Efficiency improvement - Material cost - Dilution from acquisition (-0.9%) 16 SALES share of Group total % 19 18 19 20 21 22 2008 2009 2010 2011 2012 2013 EBIT %
  16. 16. Division - Asia Pacific  Strong growth in Korea, China Fire Doors, South East Asia and New Zealand  Good growth in AHG China  Slight decline in China Security Doors and Australia  Positive leverage offset by negative impact from Pacific currencies  Reduction of personnel in China by 800  Operating margin (EBIT) = Organic +4% + Material cost + Efficiency in China - Mix & cost pressure 15 18 SALES share of Group total % 5 7 9 11 13 15 17 2008 2009 2010 2011 2012 2013 EBIT %
  17. 17. Division - Global Technologies  HID – Strong growth IAM, Government ID, IDT and in Project sales – Continued strong profit improvement – Consolidation of the US operations to Austin, Texas  Hospitality – Strong growth mainly from the renovation market – Good profit development  Operating margin (EBIT) + Organic +13% + Good leverage from volume - Dilution from Project sales 13 20 SALES share of Group total % 13 14 15 16 17 18 19 20 2008 2009 2010 2011 2012 2013 EBIT %
  18. 18. Division - Entrance Systems  Europe improving while Americas & Asia are growing  Growth in Industrial Doors and High Speed Doors  Stable sales in Door automatics and Docking stations  Strong leverage from footprint improvements  Rapid growth +17%, EBIT +14%  Operating margin (EBIT) + Organic +3% + Strong leverage +1.1% + Strong efficiency improvements - Dilution from acquisitions -1.6% 27 22 SALES share of Group total % 12 13 14 15 16 17 18 19 2008 2009 2010 2011 2012 2013 EBIT %
  19. 19. 24 Q4 Report 2013 Carolina Dybeck Happe CFO
  20. 20. Financial highlights Q4 2013 MSEK 2012 2013 Change 2012 2013 Change Sales 12,239 13,242 +8% 46,619 48,481 +4% Whereof Organic growth +4% +2% Acquired growth +5% +4% FX-differences -134 -1% -1,156 -2% Operating income (EBIT)* 2,030 2,202 +8% 7,501 7,923 +5% EBIT-margin (%) )* 16.6 16.6 16.1 16.3 Operating cash flow 3,160 2,541 -20% 7,044 6,803 -3% EPS (SEK)* 3.79 4.08 +8% 13.97 14.84 +6% 4th Quarter Twelve months 25 *) Excluding restructuring items of 1,000 MSEK for Q4 and full year 2013.
  21. 21. Bridge Analysis – Oct-Dec 2013 MSEK 2012 Oct-Dec Organic Currency Acq/Div 2013 Oct-Dec 4% -1% 5% 8% Revenues 12,239 486 -134 652 13,242 EBIT 2,030 186 -46 32 2,202 % 16.6% 38.4% 34.4% 4.9% 16.6% Dilution / Accretion 0.8% -0.2% -0.6% 26
  22. 22. P&L – Components as % of sales Jan – Dec 2013  Direct material 34.6% 34.7% 35.0%  Conversion costs 25.9% 25.5% 25.5%  Gross Margin 39.5% 39.8% 39.5%  S, G & A 23.4% 23.4% 23.2%  EBIT 16.1% 16.4% 16.3% 2013 YTD excluding acquisitions 2012 YTD 2013 YTD 27
  23. 23. Organic growth vs. employee change *) 7% 0% -12% 3% 4% 2% 2% -5% -10% -12% 1% -2% -4% -5% -15% -10% -5% 0% 5% 10% 2007 2008 2009 2010 2011 2012 2013 Growth Employees *) Organic growth each year, i.e. excluding acquisitions younger than 12 months, and the corresponding change in total number of employees for the same units. 28
  24. 24. Operating cash flow, MSEK 3 000 3 500 4 000 4 500 5 000 5 500 6 000 6 500 7 000 7 500 8 000 0 500 1 000 1 500 2 000 2 500 3 000 3 500 2006 2007 2008 2009 2010 2011 2012 2013 Quarter Cash Rolling 12-months EBT Rolling 12 months 29 Quarter 12 months Net Invest in buildings (-500M) and good sales in Dec (-200M)
  25. 25. 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 2006 2007 2008 2009 2010 2011 2012 2013 Net debt Gearing Debt/Equity 68 (61) Net debt/EBITDA 2.2 (1.9) 30 Net Debt Gearing *) 2006-2011 Not restated for changed pension accounting principles.
  26. 26. Earnings per share, SEK 5,00 6,00 7,00 8,00 9,00 10,00 11,00 12,00 13,00 14,00 15,00 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 2006 2007 2008 2009 2010 2011 2012 2013 Quarter Rolling 12-months Quarter SEK 12-months 31 *) Excluding restructuring costs of 1,000 MSEK in Q4 and full year 2013. **) 2006-2011 Not restated for changed pension accounting principles. Since 2006 EPS +86% Dividend 2014: 5.70 SEK (5.10)
  27. 27. 32 Q4 Report 2013 Johan Molin President & CEO
  28. 28. Conclusions Q4 2013  Bottoming Europe  Strong growth in Global Tech and Americas  Good growth in APAC and ESD  Strong efficiency improvements supports profit  New Manufacturing Footprint launched  Strong cash flow of 2,541 MSEK  Record strong EBIT of 2,202 MSEK 33
  29. 29. 34 Q&A

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