Quarterly Report Q2 2021
Significant sales growth and margin recovery
Second quarter
- Net sales increased by 19% to SEK 23,648 M (19,953), with strong organic growth of 23% (–18) and acquired net growth of 5% (3). Currency effects amounted to –9% (0)
- Very strong organic sales growth was reported by EMEIA, Americas, Entrance Systems and Global Technologies. The organic sales growth for
Asia Pacific was stable - Four acquisitions with combined annual sales of about SEK 400 M were signed
- Operating income (EBIT) increased by 71% and amounted to SEK 3,589 M (2,097), corresponding to an operating margin of 15.2% (10.5)
- Net income amounted to SEK 3,212 M (1,400)
- Earnings per share amounted to SEK 2.89 (1.26)
- Operating cash flow increased by 6% to SEK 3,627 M (3,418).
Sales and income
| Second quarter | First half-year | |||||||
| 2020 | 2021 | Δ | 2020 | 2021 | Δ | |||
| Sales, SEK M | 19,953 | 23,648 | 19% | 42,126 | 45,454 | 8% | ||
| Of which: | ||||||||
| Organic growth | –4,198 | 4,258 | 23% | –4,957 | 5,085 | 13% | ||
| Acquisitions and divestments | 654 | 856 | 5% | 1,302 | 1,721 | 4% | ||
| Exchange-rate effects | –48 | –1,418 | –9% | 733 | –3,478 | –9% | ||
| Operating income (EBIT), SEK M | 2,097 | 3,589 | 71% | 4,848 | 6,776 | 40% | ||
| Operating margin (EBITA), % | 11.2% | 15.8% | 12.2% | 15.6% | ||||
| Operating margin (EBIT), % | 10.5% | 15.2% | 11.5% | 14.9% | ||||
| Income before tax, SEK M | 1,892 | 3,441 | 82% | 4,411 | 6,486 | 47% | ||
| Net income, SEK M | 1,400 | 3,212 | 129% | 3,264 | 5,465 | 67% | ||
| Operating cash flow, SEK M | 3,418 | 3,627 | 6% | 4,624 | 6,262 | 35% | ||
| Earnings per share, SEK | 1.26 | 2.89 | 130% | 2.94 | 4.92 | 68% | ||
Comments by the President and CEO
Significant sales growth and margin recovery
During the last few months, we have seen positive signs that more markets are opening up again in parallel with the vaccine roll-out. This has resulted in increased mobility and activity level in most of our core markets. In combination with the sharp drop in activity level last year, this has led to a record organic sales growth of 23% in the second quarter. EMEIA, which was most affected by the lockdowns last year, reports an organic sales growth of 39% with all regions growing strongly. Americas was up 26% and Entrance Systems grew by 21% as all their markets and product areas grew strongly. Global Technologies also reports a strong organic sales growth of 17%, but volumes in the travel related segments remain lower than before the pandemic. In Asia Pacific, the recovery is slower due to continued restrictions and lockdowns in many markets and the organic sales growth was flat.
Operating income increased by 71% to SEK 3,589 M and the operating margin was 15.2%, up 4.7 percentage points on last year. Despite significantly higher raw material and logistical costs, we achieved an operating leverage of 40%. Operating cash flow was strong and totaled SEK 3,627 M.
Accelerating growth
Demand in many markets has gradually improved and sales, adjusted for currency, are now back to or above pre-Covid levels in EMEIA, Americas and Entrance Systems. We are therefore shifting our focus so as to accelerate our profitable growth – something we discussed in more detail at our Capital Markets Day in May. One important driver for growth is upgrading the installed base to incorporate electromechanical products and solutions and the pandemic is accelerating this transition. This also provides opportunities to accelerate our recurring revenue from licenses and software. The shift to more sustainable solutions is another important driver of growth. Product innovation will continue to be a key enabler for both of these initiatives.
Our acquisition strategy will also continue to boost our topline and we signed four acquisitions in the quarter. Two of these, Sure-Lock in the US and MR Group in Portugal, strengthen our position in the mature markets with products and solutions that complement our core mechanical business. We have also recently announced the divestment of our locksmith business CERTEGO in the Nordic market. This will streamline EMEIA’s channels to the market in the Nordic region and the transaction will be accretive for our operating margin.
Since raw material costs have continued to increase during the second quarter we have continued to implement numerous price increases that largely offset the cost impact. During the quarter we have also worked hard to address the shortage of some components. Thanks to excellent operational execution, we were able to manage the different component shortages and logistical constraints in an efficient way, while maintaining our customer service at a high level.
As we look forward, we expect mobility to increase and demand in many markets and segments to normalize, apart from the travel-related verticals where restrictions are still delaying our recovery. I now look forward to working together with my colleagues on our long-term growth plans to accelerate our profitable growth.
Stockholm, 19 July 2021
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
ASSA ABLOY is holding a telephone and web conference
at 09.30 on 19 July 2021
which can be followed on the Internet at www.assaabloy.com.
It is possible to submit questions by telephone on:
+46 8 566 427 05, +44 333 300 9269 or +1 646 722 4903
This is information that ASSA ABLOY AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08.00 CEST on 19 July 2021.
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