Quarterly Report Q1 2023
A very strong start to 2023
First quarter
- Net sales increased by 22% to SEK 32,391 M (26,591), with organic growth of 8% (14) and acquired net growth of 5% (0). Exchange-rates affected sales by 9% (8).
- Very strong organic sales growth was achieved in Global Technologies and Americas, with strong growth in Asia Pacific and good growth in EMEIA and Entrance Systems.
- Four acquisitions with combined annual sales of about SEK 440 M were signed in the quarter.
- A new Manufacturing Footprint Program was launched at the end of the first quarter. The expected restructuring cost for the new Program is SEK 1,225 M and the expected pay-back time, including capital expenditure, is around two years.
- Operating income1 (EBIT) increased by 30% and amounted to SEK 5,186 M (4,001), with an operating margin of 16.0% (15.0).
- Net income1 amounted to SEK 3,692 M (2,859).
- Earnings per share1 amounted to SEK 3.32 (2.57).
- Operating cash flow amounted to SEK 4,069 M (912), a record high for a first quarter.
Sales and income
| Full year | First quarter | |||||||
| 2021 | 2022 | Δ | 2022 | 2023 | Δ | |||
| Sales, SEK M | 95,007 | 120,793 | 27% | 26,591 | 32,391 | 22% | ||
| Of which: | ||||||||
| Organic growth | 8,900 | 13,007 | 12% | 3,287 | 2,218 | 8% | ||
| Acquisitions and divestments | 1,975 | 2,126 | 2% | –52 | 1,344 | 5% | ||
| Exchange-rate effects | –3,517 | 10,653 | 13% | 1,551 | 2,237 | 9% | ||
| Operating income (EBIT)1, SEK M | 14,181 | 18,532 | 31% | 4,001 | 5,186 | 30% | ||
| Operating margin (EBITA) 1, % | 15.6% | 15.9% | 15.6% | 16.6% | ||||
| Operating margin (EBIT)1, % | 14.9% | 15.3% | 15.0% | 16.0% | ||||
| Income before tax1, SEK M | 13,538 | 17,521 | 29% | 3,811 | 4,843 | 27% | ||
| Net income1, SEK M | 10,901 | 13,296 | 22% | 2,859 | 3,692 | 29% | ||
| Operating cash flow, SEK M | 13,265 | 15,808 | 19% | 912 | 4,069 | 346% | ||
| Earnings per share1, SEK | 9.81 | 11.97 | 22% | 2.57 | 3.32 | 29% | ||
1 Excluding the costs of restructuring programs in the first quarter of 2023, which totaled SEK 1,225 M before income tax. The corresponding cost after tax is SEK 978 M.
Comments by the President and CEO
A very strong start to 2023
I am happy to report a very good start to 2023, which delivered a strong organic sales growth of 8%, complemented by strong growth of 5% from acquisitions and combined with a record high adjusted operating margin for a first quarter of 16.0%, an improvement of 100bps since last year.
Sales were driven by very strong organic growth in Global Technologies, up 24%, with strong contributions from both HID and Global Solutions. Sales in Americas also grew very strongly by 11%, driven by very strong demand in the US non-residential segments and good growth in US residential and Latin America. With no major Covid-disruptions, sales-decline in China levelled out and Asia Pacific overall delivered strong growth of 6%. EMEIA reported good growth of 3% with strong growth in the emerging markets. Despite very strong growth last year, Entrance Systems also reported good growth of 3% driven by strong development in the Pedestrian and Industrials segments.
The operating profit excluding items affecting comparability increased by 30% to SEK 5,186 M, and the corresponding margin increased by 100bps to 16.0%. The operating leverage was very strong at 33%, driven by lower direct material costs, strong price realization and continued operational efficiencies. Our operating cash flow also improved significantly to SEK 4,069 M, with a cash conversion of 84% (24) as working capital improved compared to last year in combination with the increased earnings.
MFP enables investments in product development and organic growth
During the quarter, we launched our ninth Manufacturing Footprint Program (MFP), including a restructuring cost of SEK 1.2 billion. The Program will result in the closing of 13 factories and will generate annual savings of more than SEK 0.7 billion with a pay-back period of around two years.
Efficiency improvements are an enabler for investments in product development and long-term organic growth. Our service offering in Entrance Systems is one area we have invested in during the last few years, and we are delivering on our ambition of high-single-digit organic growth. Another focus area is mobile credentials that contribute to our subscribed recurring revenue growth and now represent 5% of total sales.
A high level of acquisition activity
During the first quarter we signed four acquisitions. We are also in a court process regarding the acquisition of HHI and expect a decision in the second quarter.
Finally, the macroeconomic environment remains uncertain with some Key Performance Indicators indicating a slowdown. Although we continue to report strong results, we are prepared and have the agility to mitigate further changes in the demand and if necessary we are ready to implement additional cost reductions, to protect our profitability and cash flow.
Thank you for your continued trust in ASSA ABLOY.
Stockholm, 26 April 2023
Nico Delvaux
President and CEO
Further information can be obtained from:
Nico Delvaux,
President and CEO, tel. no: +46 8 506 485 82
Erik Pieder,
Executive Vice President and CFO, tel.no: +46 8 506 485 72
Björn Tibell,
Head of Investor Relations, tel. no: +46 70 275 67 68,
e-mail: bjorn.tibell@assaabloy.com
ASSA ABLOY is holding a telephone and web conference
at 09.30 on 26 April 2023
which can be followed online at assaabloy.com/investors.
It is possible to submit questions by telephone on:
08–505 100 31, +44 207 107 0613 or +1 631 570 5613
This information is information that ASSA ABLOY AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08.00 CEST on 26 April 2023.
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