SALES AND EARNINGS JANUARY-JUNE 2000 Sales for the period January to June 2000 amounted to SEK 6,079 M (4,920), an increase of 24%. In local currency the increase amounted to 23%, of which the organic growth for comparable units amounted to 5%, while acquired units account for 18% of the period's volume growth. Exchange rate effects have affected sales positively by SEK 29 M.
The Group's income before tax increased by 44% to SEK 610 M (423). Translation of the foreign subsidiaries' results has, due to exchange rate changes, affected this figure positively by SEK 2 M. All geographical areas including the newly acquired units have contributed to the improvement in income.
Earnings per share after tax and full conversion increased by 21% to SEK 1.25 (1.03). The increased tax burden and the full impact of last year's rights issue have affected the earnings per share.
Operating cash flow before tax and acquisitions amounted to SEK 695 M (459). Cash earnings per share after tax and full conversion (CEPS) amounted to SEK 2.47 (2.07).
DEVELOPMENT OF THE SUBSIDIARIES The Finnish units have shown a strong increase during the first six months with an organic growth of 19%. Abloy's exports to Group companies, distributors and direct to professional end users are developing well with particularly good growth in the product groups electromechanics, door closers and industrial locking. The activity level on the domestic market is also high.
The Scandinavian units increased by 5%. Growth for the Swedish units is strong, partly thanks to generally high activity on the market. Norway also shows good growth but has been affected by the six-day-long national strike in May. Denmark is improving after a weaker start to the year and is showing particularly good growth in multi-point locking.
Growth for the German units amounts to 7%. All units are improving, with effeff in the lead. The market is showing a positive development although not as strong as at the beginning of the year. During the period effeff has launched a new electromechanical multi-point lock for higher and more effective security, which is expected to generate good growth. Also during this period, Ikon has launched a new electromechanical cylinder that can be integrated into various access control systems.
The French market weakened somewhat during the second quarter and the growth amounts to 1%. The integration work within the French units continues, not least in Fichet which is developing well and showing particularly good growth in the security doors area. Income for the French units continues to increase despite full implementation of a 35-hour week.
The North American units continue to show stable growth. The fact that the organic growth has weakened somewhat to 4% due mainly to the very strong second quarter last year. Sales of lock products are increasing faster, while growth in the security door area is not as strong for the first six months. Emtek, which sells lock products for the residential market direct to the customer, shows continued strong growth. Securitron, which manufactures door magnets and Scovill in Mexico also show strong growth.
In Australia, Lockwood has developed well during the first six months. Income is increasing faster than expected and growth increased by 6% in spite of an ongoing phase-out of non-profitable products. New products are being launched, including several from various Group companies. The company has clearly regained its market leadership.
New Markets continue to show good growth amounting to 10%. The increase is strong in Asia with an interesting business development in India. In Eastern Europe, Poland shows particularly good growth, while the Czech Republic is somewhat weaker at the moment.
Sales growth in the hotel segment increased by 2%. The trend from the first quarter is persisting with good growth in Europe and in the marine segment. Asia has begun to show signs of growth while the US market is weaker. Elsafe, which manufactures safes for hotel rooms, shows good growth on all markets.
MAIN EVENTS The acquisition of Yale Intruder Security is proceeding according to plan. An agreement has been reached with Gunnebo AB regarding the sale to them of the safes business. This business has net assets of GBP 44 M, sales of approx. GBP 85 M. The agreed price is GBP 57 M. An additional GBP 5 M is to be paid if the company makes a EBIT of GBP 1.5 M for the entire year. Gunnebo, the European leader within bank and safe business, is expected to have greater opportunities to develop the business. The divestiture will enable ASSA ABLOY to focus its resources on other more attractive opportunities within the lock area. The sale will be completed when the Yale acquisition has been closed and necessary anti-trust approvals granted.
ASSA ABLOY has acquired the remaining 51% of the shares in Scovill and the company is consolidated as from July 1. The Mexican market shows good growth and Scovill has developed strongly during the last year and has sales of close to USD 25 M with high profitability.
FINANCING The new rights issue in ASSA ABLOY AB had a subscription rate of 99.9% and generated funds of SEK 1,518 M. Through the rights issue the number of shares increased by 12,652,008, divided between 737,511 series A shares and 11,914,497 series B shares.
In addition to the rights issue mentioned above, ASSA ABLOY signed a new syndicated loan facility of EUR 1,200 M on June 27. The facility is a Multi-Currency Revolving Credit and split into two tranches: one 364-day tranche of EUR 420 M, with an option for ASSA ABLOY to extend, and a five-year tranche of EUR 780 M. The facility replaces the USD 500 M facility signed in June 1997.
Repurchased convertible debentures have been divested and the proceeds amount to SEK 524 M and generated a gain amounting to SEK 323 M. This gain has been offset by non-recurring finance costs incurred in connection with the acquisition of Yale Intruder Security. These costs relate to financing of the Group, SEK 125 M, and a premium, SEK 200 M, giving insurance coverage against increasing interest rates during the next three-year period.
OUTLOOK FOR 2000 The development potential for ASSA ABLOY continues to be considerable. The strong position, security-driven growth and potential for continued rationalisation as well as the on-going consolidation of the lock industry create opportunities for continued good volume growth and profit development. The Yale acquisition including the effects of the recent rights issues are expected to be EPS neutral for the remainder of 2000 and next year.
Stockholm, August 10, 2000
Carl-Henric Svanberg President and CEO
Financial information from ASSA ABLOY will be published as follows:
Interim report 3rd quarter:
November 13, 2000
February 7, 2001
Annual Report 2000:
The company auditor has reviewed this interim report.
For further information, please contact Carl-Henric Svanberg, President & CEO, tel: +46-8-506 48552 or +46-8-510 0551, or Göran Jansson, CFO, tel. +46-8-506 485 72 or +46-70-698 8572
The ASSA ABLOY Group is the world's leading manufacturer and supplier of locks and associated products, dedicated to satisfying end-user needs for security, safety and convenience. In 1999 the Group reported sales exceeding SEK 10 billion and had about 13,000 employees.
ASSA ABLOY is the global leader in door opening solutions and offers mecahnical and electromechanical locks, digital door locks, security doors, entrance automation, hotel security and secure identity solutions, primarily in identity and access management, as well as a number of other related products and services.
Since its formation in 1994, ASSA ABLOY has grown from a regional company into an international Group with some 47,000 employees operating in more than 70 countries and sales of around SEK 71 billion.