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Quarterly Report Q3 2022

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Very strong performance in the quarter

Third quarter

  • Net sales increased by 33% to SEK 31,820 M (23,930), with organic growth of 14% (7) and acquired net growth of 3% (2). Exchange-rates affected sales by 16 (–1).

  • Very strong organic growth in Entrance Systems, Global Technologies and Americas, good growth in EMEIA, but organic sales declined in Asia Pacific.

  • Six acquisitions with combined annual sales of about SEK 1,000 M were signed in the quarter.

  • The US regulator will seek to block ASSA ABLOY’s proposed acquisition of the HHI division of Spectrum Brands. ASSA ABLOY and Spectrum Brands will contest in court this effort to oppose the transaction.

  • Operating income (EBIT) increased by 47% and amounted to SEK 4,973 M (3,392), with an operating margin of 15.6% (14.2). Excluding an operating loss of SEK 196 M for the CERTEGO divestment, the operating margin last year was 15.0%.

  • Net income amounted to SEK 3,552 M (2,392).

  • Earnings per share amounted to SEK 3.20 (2.15).

  • Operating cash flow amounted to SEK 4,520 M (3,619).
     

Sales and income

Third quarter January-September
2021 2022 Δ 2021 2022 Δ
Sales, SEK M 23,930 31,820 33% 69,384 87,878 27%
Of which:
Organic growth 1,576 3,741 14% 6,661 10,351 14%
Acquisitions and divestments 490 857 3% 2,211 790 1%
Exchange-rate effects –361 3,292 16% –3,839 7,353 12%
Operating income (EBIT), SEK M 3,392 4,973 47% 10,168 13,380 32%
Operating margin (EBITA), % 14.8% 16.2% 15.3% 15.8%
Operating margin (EBIT), % 14.2% 15.6% 14.7% 15.2%
Income before tax, SEK M 3,233 4,736 47% 9,719 12,756 31%
Net income, SEK M 2,392 3,552 48% 7,858 9,567 22%
Operating cash flow, SEK M 3,619 4,520 25% 9,881 9,219 –7%
Earnings per share, SEK 2.15 3.20 48% 7.07 8.61 22%

 
 
Comments by the President and CEO

Very strong performance in the quarter
Following a very strong sales development during the first half of 2022, the momentum continued during the third quarter with double-digit organic sales growth in most of our markets.

Our organic sales grew by 14%, complemented with 16% positive currency effects and 3% growth from M&A. Entrance Systems and Americas delivered very strong sales growth of 20% and 17% respectively, driven predominantly by a continued strong US market and price realization. Despite continued component shortages, Global Technologies achieved a very strong organic growth of 19% due to our launch of redesigned products and our continued recovery in the travel-related segments. EMEIA reported good organic growth of 4%, driven by very strong demand in Scandinavia and in most emerging markets. Although demand has improved in Southeast Asia and remained very strong in Pacific, organic sales in Asia Pacific were down by 2% as demand in China continued to be very weak.

Excluding an operating loss from divestments in 2021, our EBIT increased by 39% to SEK 4,973 M and the margin improved to 15.6% (15.0), driven by lower material headwind, continued operational efficiencies as well as a significant margin improvement in Global Technologies. Our operating cash flow in the quarter continued to improve, up 25% to SEK 4,520 M.

Delivering on our strategic activities
To accelerate our profitable growth, we are working with a number of strategic activities. One key activity is actively upgrading our installed base from mechanical to electromechanical solutions. We are leading this transition and are investing in new platforms and partner collaborations that, over time, will further strengthen our position in the industry. Our innovation efforts are paying off, and for the fourth consecutive quarter our sales of electromechanical products and solutions grew organically at double-digit rates and were up 16% in the quarter. This transition will also further improve the resilience of our business through more recurring sales and service, both of which achieved double-digit growth in the quarter.

We are continuing to execute our acquisition strategy, with six further acquisitions signed during the quarter, bringing the number of acquisitions closed this year to eleven by the end of September. In September, the U.S. Department of Justice (DoJ) announced that it will seek to block our proposed acquisition of the HHI division of Spectrum Brands. We strongly disagree with the DoJ’s characterization of the acquisition and will vigorously contest in court this effort to oppose the transaction.

While growth-generating activities create value, focus on costs is critical. The demand remains strong in most markets, but due to weaker demand in some European markets in the quarter (mainly the UK, France and Benelux), some local organizations have initiated cost-reduction actions to protect their profitability. We have a strong track record of being agile, and we will continue to act in response to possible changes in market conditions.

Lastly, I would like to note that we will host our Capital Markets Day on 16 November 2022 in London, where we will provide an update on our strategy and will display exciting new products and solutions such as mobile credentials and connected doors.
 
Stockholm, 26 October 2022
 
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 October 2022
which can be followed online at www.assaabloy.com.

It is possible to submit questions by telephone on:
08–505 583 59, +44 333 300 9265 or +1 631 913 1422



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 October 2022.

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Assa Abloy Q3 2022

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