Sales and income, January-December, 1998
The sales of the ASSA ABLOY Group amounted to 8 582 MSEK (6 968), an increase of 23%. The organic growth for comparable units and in local currency amounted to 6% (8). Exchange rate changes have affected sales by +197 MSEK compared to last year.

 

The Group's result before tax increased by 39% to 748 MSEK (537). Exchange rate changes have had a positive effect of 11 MSEK when recalculating the subsidiaries' result to SEK. All units continue to show improving margin. Earnings per share increased to 7.28 SEK (5.09) and has been calculated after full conversion and tax as well as on the average number of shares.

Cash flow before tax amounted to 1 023 MSEK (841). Exchange rate changes have affected the cash flow negatively by 66 MSEK.

 

The benchmarking process, the co-ordination and cross learning between the units continues to improve profit and cash flow.

 

Development of the subsidiaries
The Finnish units show increased sales of 8%. Both the domestic and the export market show good growth. The halted export to Russia has influenced the sales negatively during the fall. The profit continues to increase. The new door closer factory has successfully been started up and is currently producing 500 000 units on an annual basis.

 

In Sweden the new construction activity showed a slight increase. The sales increased by 5% during the year. A joint sales organisation for the various companies has been established in order to increase the sales efficiency and market impact.

 

The Norwegian companies showed a growth of 5%. The successful merger continues to generate improving results. Further more, two locksmiths companies have been divested which has reduced the turnover by approximately 40 MNOK. The Norwegian economy seems to enter a weaker period. A potential for upgraded security, however, is expected to contribute to continued growth.

 

Ruko in Denmark increased sales by 3%. Excluding the effects from the nation wide strike during the Spring the growth is in line with the rest of the Nordic markets. A new stainless steel door hardware program, FUNXION, has been introduced with good growth potential for the entire Group.

 

German IKON's main segment i.e. institutions and authorities is not showing any growth after the big number of projects in connection with the reunification and move of the capital to Berlin. With stable sales the net margin reached the 10% goal and is expected to continue to increase. The recently acquired Dörrenhaus has gone through a significant re-engineering process including close down of loss making products.

 

The Czech company FAB's volume and result have continued to develop well. The sales increased by 11%. The demand for better locks is steadily increasing. The car locks business is doing particularly well and FAB is sole supplier of car locks to Skoda.

 

The units in UK show good growth, 7%. The implementation of a more efficient sales organisation has contributed to an improved result. The market seems to weaken, but the demand for higher security lock products continues to grow.

 

The integration of the French companies is running well and the result is developing faster than expected. The initial goal for a net margin improvement of 2-3% should be reached during 1999 with a potential for further improvements. The volume increased by 3%, in spite of the deletion of loss makers and products not related to the locks business. An additional volume reduction of MFFR 25-30 is expected during 1999 as a result of this process.

 

The US companies continue to develop well. The organic sales growth amounted to 9% with increasing margins in all units. The last year's restructuring work has considerably reduced working capital and lead times and the result is expected to continue to increase. No signs of weakening have so far been noted.

 

VingCard with the subsidiary Elsafe increased sales by 8% in spite of weakening Asian sales during the autumn. A rationalisation project is in progress following the latest years considerable volume growth and is expected to significantly improve the result.

 

The sales in Asia, VingCard excluded, has in spite of the crisis increased by 32%. The sales are expected to continue grow.

 

Important events
During 1999 an agreement has been reached to acquire 50% of the shares in Lockwood, the clear market leader in Australia. A joint venture managed by ASSA ABLOY will be established. ASSA ABLOY's and Lockwood's sales organisations in Asia will be combined. This will create a leading position in the region.

 

Lockwood's sales amount to MSEK 850, with an EBIT margin of 7%. There is a potential for a margin increase of 4-5%. The purchase price for 50% of Lockwood debt free is MSEK 450. The acquisition will take place 1st April and is expected to contribute to ASSA ABLOY's earnings per share next year. ASSA ABLOY has an option to acquire the remaining shares after three years.

 

During 1998 a number of important acquisitions were made. The integration of the companies is proceeding according to the plan. They are expected to show good growth and contribute to ASSA ABLOY's earnings per share during 1999.

 

Through the acquisition of Medeco security cylinders from the leading manufacturer in USA have been added to the American product portfolio. Medeco has an extensive installed base with after market sales over 70%.

 

The acquisition of 49% of Scovill in Mexico has given the Group access to an interesting growth market as well as export channels to Latin America.

 

During the fall the leading manufacturer of electromechanical locks in the USA, Securitron was acquired. The company has shown good growth during several years and will be of importance to the Group in Europe as well.

 

The Rumanian company Urbis was also acquired during the year. Urbis dominates in its domestic market, which is showing an increasing demand for security products.

 

Dividend, share split and general meeting
The board proposes a dividend of 2,50 (1,75) per share for the financial year 1998. In order to increase liquidity in the shares the board will propose a share split of four to one. The annual general shareholder's meeting will be held at 2 PM May 5, 1999 in Stockholm.

 

Expectations for 1998
There are significant opportunities for ASSA ABLOY. The strong position, the security driven growth, the potential for further rationalisation and a consolidation of the lock business creates opportunities for a continuous good profit growth.

 

Stockholm, 9 February, 1999

 

Carl-Henric Svanberg
President and CEO

 

For further information, please contact

Carl-Henric Svanberg, President & CEO, tel: +46-8-698 8552 alt. +46-7-510 0551, or Göran Jansson, CFO, tel. +46-8-698 8572 alt. +46-70-748 8572

 

ASSA ABLOY AB (publ)

 

P.O. Box 70340, S-107 23 Stockholm
Tel: Int+46-8-698 85 70, Fax: Int +46-8-698 85 85
Visiting address: Klarabergsviadukten 90