Quarterly Report Q4 2020
Strong operational execution
Fourth quarter
- Net sales decreased by 7% to SEK 23,298 M (24,946), with organic growth of –5% (1) and acquired/divested net growth of 5% (3)
- EMEA and Entrance Systems reported stable organic sales development. Organic sales declined in Asia Pacific and Americas, while Global Technologies reported a significant decline
- Two divestments in Switzerland and Italy were completed. The combined annual sales of the divested companies amount to around SEK 625 M
- A new restructuring program was launched at year-end. The estimated cost amounts to SEK –1,366 M with a pay-back time of around two years
- Operating margin1 2 (EBIT %) excluding acquisitions and divestments was 16.1% (16.2)
- Net income1 2 amounted to SEK 2,582 M (2,767)
- Earnings per share1 2 amounted to SEK 2.33 (2.49)
- Operating cash flow amounted to SEK 5,529 M (5,235)
- The Board of Directors proposes a dividend of SEK 3.90 (3.85) per share for 2020, distributed in two equal installments.
Sales and income
| Fourth quarter | January-December | |||||||
| 2019 | 2020 | Δ | 2019 | 2020 | Δ | |||
| Sales, SEK M | 24,946 | 23,298 | –7% | 94,029 | 87,649 | –7% | ||
| Of which: | ||||||||
| Organic growth | 147 | –1,150 | –5% | 2,652 | –7,150 | –8% | ||
| Acquisitions and divestments | 760 | 1,211 | 5% | 3,063 | 3,328 | 4% | ||
| Exchange-rate effects | 872 | –1,709 | –7% | 4,265 | –2,558 | –3% | ||
| Operating income (EBIT)1 2, SEK M | 4,047 | 3,475 | –14% | 14,920 | 11,916 | –20% | ||
| Operating margin (EBITA)1 2, % | 16.8% | 15.6% | 16.4% | 14.3% | ||||
| Operating margin (EBIT)1 2, % | 16.2% | 14.9% | 15.9% | 13.6% | ||||
| Income before tax1 2, SEK M | 3,779 | 3,306 | –13% | 13,883 | 11,133 | –20% | ||
| Net income1 2, SEK M | 2,767 | 2,582 | –7% | 10,243 | 8,375 | –18% | ||
| Operating cash flow, SEK M | 5,235 | 5,529 | 6% | 14,442 | 14,560 | 1% | ||
| Earnings per share1 2, SEK | 2.49 | 2.33 | –7% | 9.22 | 7.54 | –18% | ||
1 Excluding costs before income tax for restructuring programs in Q4 2020 and Q4 2019, totaling SEK –1,366 M and SEK –312 M respectively. The corresponding cost after tax is SEK –1,112 M and SEK –246 M
2 Excluding non-cash operating income in Q3 2020 from revaluation at fair value of 39% ownership in agta record, totaling SEK 1,909 M for the year. The operating income has no tax impact.
Comments by the President and CEO
Strong operational execution
We are putting a year behind us that, because of the outbreak of Covid-19, changed the dynamics of many industries and changed most of our daily lives in one way or another. The pandemic resulted in the most challenging operational environment in our history, particularly in the first half of the year. In response, we have quickly adapted to the new reality, making significant adjustments to our cost base, protecting our balance sheet, while continuing to invest in innovation and growth initiatives. This led to an operating margin in the final quarter, excluding acquisitions and divestments, at target level and to a record high operating cash flow for the full year.
In the fourth quarter, our organic growth declined by 5% and negative currency effects were 7%, while acquisitions and divestments contributed a growth of 5%, resulting in a total sales decline of 7%. Sales were stable in EMEA and Entrance Systems, declined in Americas and Asia Pacific and were significantly down in Global Technologies.
Through continued cost-saving measures, we mitigated the negative effects of the newly introduced lockdowns in the fourth quarter and we achieved an operating margin of 16% excluding acquisitions and divestments. Cash flow continued to be very strong and totaled SEK 14,560 M for the full year and SEK 5,529 M in the fourth quarter.
Operational improvements
The new restrictions and lockdowns put additional pressure on some of our customer segments and continued to affect Global Technologies in particular. EMEA’s sales were stable and the underlying margin improved as strong residential demand in core markets, together with cost measures, more than offset the negative effects of the restrictions. In Americas, demand was very strong in Latin America and in the US residential segment, but declined in the commercial segments in the US. The operating margin in Americas was at a high level. Sales declined in all Asia Pacific markets, but we are seeing a gradual improvement of our profitability in China. Demand for Entrance Systems continued to be stable with a strong operating margin.
Our strong cost-saving measures continued and we realized net cost reductions of SEK 0.5 bn in the quarter, including effects from our new restructuring program, MFP8. The restructuring cost of the program amounted to almost SEK 1.4 bn and it will generate annual savings of around SEK 1 bn once fully implemented.
The outbreak of the Covid-19 pandemic led to a much weaker and volatile demand in 2020. As the vaccine program is rolled out, we expect restrictions to be gradually phased out, trust and mobility to return and demand in general to improve.
I am pleased that ASSA ABLOY continues to stand on very solid ground. Thanks to the significant efforts of our employees, I am confident that we will come out of the pandemic as a strong Group, well positioned to continue to lead the access-solutions industry. I look forward to seeing our new products being taken up by our customers and exceeding their expectations.
Stockholm, 5 February 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 5 February 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 04, +44 333 300 9262 or +1 646 722 4956
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 CET on 5 February 2021.
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