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1
Q1 Report 2011Johan Molin
President & CEO
2
Financial highlights Q1 2011
Good start of the year– Strong growth in Asia and North & South America– Stable evolution in Europe– Slight decline in the Pacific – Continued margin expansion– Sale of Cardo Flow and acquisition of FlexiForce
Sales 8,699 MSEK +4%+6% organic, +7% acquired growth, -9% currency
EBIT 1,377 MSEK +6% Currency effect -113 MSEK
EPS 2.53 SEK +7%Tax rate reduced to 22%
3
Market highlights
Rapid growth for digital door locks in China
Safezone automatic door closer meets strong customer demand
Launch of i-Class SE, platform independantSecure Identity Object (SIO)
Good penetration of Aperio within system integration
Introduction of Online Card Services, Identity on Demand (IOD)
Digital Door Lock
Safezone
HDP 5000Card printer
Aperio
Identity on Demand (IOD)
A scalable, secure, automated, on-line and high-quality system for provisioning a personalized smart card
Dedicated setup in Europe and USA
5
Group sales in local currencies Jan-Mar 2011
2 +15
32 +1546 +10
13 +34
5 -1
2 -2
Share of Group sales 2011 YTD, %Year-to-date vs previous year, %
Organic growth indexRecovery from recession
Group -5%EMEA -11%Americas -15%APAC +31%GT +7%Entrance -3%
7
-16-14-12-10-8-6-4-20246810121416
22 00023 00024 00025 00026 00027 00028 00029 00030 00031 00032 00033 00034 00035 00036 000
2004 2005 2006 2007 2008 2009 2010 2011
Gro
wth
%
Sal
es, M
SEK
Organic Growth Acquired Growth Sales in Fixed Currencies
Sales growth Q1 2011 - Currency adjusted
2011 Q1 +13%Organic +6%Acquired +7%
Total sales 5% over 2008 peak
8
Operating income (EBIT), MSEK
3 600
3 800
4 000
4 200
4 400
4 600
4 800
5 000
5 200
5 400
5 600
5 800
6 000
6 200
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
2011
Quarter Rolling 12-monthsQuarter 12-months
Run rate 6,126 MSEK (5,380), +14%
9
Operating margin (EBIT), %
12,0
13,0
14,0
15,0
16,0
17,0
2005
2006
2007
2008
2009
2010
2011
EBIT
%
Quarter Rolling 12-months
Run rate 2011 16.5% (15.6)
Long term target range (average)
2011 Group DilutionAddition of Cardo -0.6%Other acquisitions -0.4%
10
Manufacturing footprint
Conversion to assembly or closures in high cost countries– 40 factories closed to date, 11 to go– 42 factories converted to assembly, 11 to go– 21 offices closed, 4 to go
Consolidation of core production to China and Eastern Europe
Personnel reduction 5,483p, +13% to plan
933 more to go
873 MSEK remains at the end of the first quarter for all three programs
11
Margin highlights Q1 2011
EBIT margin 15.8% (15.5)
+ Volume increase 4%, price 2% + Manufacturing footprint & efficiency improvements
- Increased gross margin despite material cost increases- Slightly lower S, G & A
- Dilution from acquisitions by -0.5%-units- Negative currency effect –0.1%-units
12
Acquisitions Q1 2011
Fully active on acquisitions– Good pipeline targeting 5% growth
7 acquisitions completed Jan-Apr 2011
Annualized >5,750 MSEK, +16%
Major acquisitions Jan-Apr: Cardo SwesafeLasercardFlexiForce
FlexiForceEuropean leader in industrial door hardware
Manufacturer of hardware for industrial doors
Sales 600 MSEK and 300 employees
Sales indirect to door producers and installers
Strongly complementary on products with Cardo and Ditec
LCC manufacturing in Poland and China
Accretive to EPS from start
Entrance systems divisionOrganizational chart, sales and profit 2010
14
ASSA ABLOY Entrance SystemsSales 9.4 BSEK, EBIT 12.7%
Direct sales Distribution sales
38% of Agta Record, Sales BSEK 2.0
16
Division - EMEA
Slow development of EMEA due to austerity programs
Continued growth in Finland, Sweden, Germany and Eastern Europe
Unrest in North Africa affects exports from Italy and Spain
Excellent efficiency improvements and price management
Operating margin (EBIT) + Volume 0%+ Strong Elmech sales + Excellent efficiency gains- Raw materials increasing
SALESshare of
Group total %
35
EBIT %
13
14
15
16
17
18
19
18
Division - AmericasAll business units are growing
Particularly good in South America, Canada and electromechanical locks
Solid development of doors, high security locks and residential
EBIT reached record level despite strong investments in R&D
Operating margin (EBIT) + Volume +7%+ Price management and efficiency with
reinforced investment in R&D- Raw materials increasing
SALESshare of
Group total %
25
EBIT %
17
18
19
20
21
20
Division - Asia Pacific
All of Asia in strong growth
Digital door locks and China are doing particularly well
Decline in NZ and weak Australia mainly due to natural disasters
Good margin expansion for Q1
Operating margin (EBIT)+ Volume +10%+ Efficiency improvements+ Currency gain of +0.6%- Raw materials and salaries increasing
SALESshare of
Group total %
13
EBIT %
6
8
10
12
14
16
22
Division - Global Technologies Strong evolution in HID– Solid development within physical access– Strong growth of IDS– ActivIdentity and LaserCard added
Hospitality– Renovation market in very strong demand– New build still in decline– RFID lock upgrades and energy management are developing
particularly well
Operating margin (EBIT)+ Volume +19%- Mix towards IDS affects leverage- Dilution from Active Identity &
Lasercard by -2.3% - Dilution from currency by -0.9%
SALESshare of
Group total %
15
EBIT %
1213141516171819
24
Division - Entrance Systems
Growth is back with strong demand from retail
Continued strong evolution in service
Strong margin improvement in Ditec
Integration of Cardo is progressing well
Dilution from Cardo by -0,4%
Operating margin (EBIT)
+ Volume +4%+ Efficiency gains & Ditec improvement- Dilution from Cardo
SALESshare of
Group total %
13
EBIT %
12
14
16
18
26
Q1 Report 2011Tomas Eliasson
CFO
27
Financial highlights Q1 2011
MSEK 2010 2011 Change 2009 2010 Change
Sales 8,345 8,699 +4% 34,963 36,823 +5%Whereof Organic growth +6% +3%Acquired growth +7% +8%FX-differences -666 -9% -1,626 -6%
Operating income (EBIT) 1,295 1,377 +6% 5,413* 6,046 +12%EBIT-margin (%) 15.5 15.8 15.5* 16.4Operating cash flow 870 448 -49% 6,843 6,285 -8%
EPS (SEK)* 2.36 2.53 +7% 9.22 10.89 +18%
*Excluding restructuring and one off charges of 1,039 MSEK
1st Quarter Twelve months
28
Bridge Analysis – Jan-Mar 2011
MSEK 2010
Jan-Mar
Acq/Div Currency Organic 2011
Jan-Mar
7% -9% 6% 4%
Revenues 8,345 551 -666 469 8,699
EBIT 1,295 49 -113 146 1,377
% 15.5% 8.9% 17.0% 31.1% 15.8%
Dilution / Accretion
-50 bp -10 bp 90 bp
29
P&L – Components as % of sales
Direct material 32.3% 32.9%
Conversion costs 27.4% 26.2%
Gross Margin 40.3% 40.9%
S, G & A 24.8% 25.1%
EBIT 15.5% 15.8%
2011Q1
2010Q1
*)
*) Currency effect -0.4%
30
Operating cash flow, MSEK
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
7 000
7 500
0
500
1 000
1 500
2 000
12-m
onth
s
Qua
rter
Quarter Cash Rolling 12-months EBT Rolling 12 months
Recessionstarts
Back togrowth
31
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
Gea
ring
Net
Deb
t
Net debt Gearing
Debt/Equity 51 (57)
Debt/Equity 103 (57)
Net debt 21.6 BSEKSale of Cardo Flow and cash flow 2011 willreduce debt level
32
Net interest rate, %
3,00
3,50
4,00
4,50
5,00
5,50
6,00In
tere
st ra
teAdditional debt in Q1 is short term = reduced interestrate
33
Q1 Report 2011Johan Molin
President & CEO
34
Conclusions Q1 2011
13% total growth whereof 6% organic growth
Emerging markets and in particular Asia in strong growth
Margin expansion in all parts
Reduced tax rate by 2% to 22%
Exciting acquired growth ahead and sale of Cardo Flow
35
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
36
Q&A