Sales for the Group amounted to SEK 6,124 M (6,303), which represents a decrease of 3%. In local currencies sales increased by 9%. This comprised organic growth of 0% for comparable units, while acquired units accounted for 9%. Exchange rates affected sales negatively by SEK 729 M compared with the first quarter last year.
Operating income before depreciation, EBITDA, amounted to SEK 1,078 M (1,104). Gross margin (EBITDA) was 17.6% (17.5). The Group's operating income before goodwill amortization amounted to SEK 846 M (863) after negative currency effects of SEK 98 M. Operating margin before goodwill amortization (EBITA) amounted to 13.8% (13.7). The dilution coming from the Besam acquisition lowered the margin with 0.3%-points. The quarter's result includes restructuring and integration costs of around SEK 30 M. Goodwill amortization amounted to SEK 244 M (232).
The Group's income before tax amounted to SEK 468 M (461). Exchange rate variations when translating foreign subsidiaries' earnings affected income negatively by SEK 53 M. Income before tax improved by 13% in local currencies. Profit margin amounted to 7.6% (7.3).
The Group's tax charge totaled SEK 165 M (162), corresponding to an effective tax rate of 35% (35) in relation to income before tax.
Earnings per share after tax and full conversion amounted to SEK 0.82 (0.81) for the quarter, an increase of 1%. The increase amounted to 12% excluding currency effects. Earnings per share after tax and full conversion but excluding goodwill amortization amounted to SEK 1.48. The increase amounted to 13% excluding currency effects.
In the first quarter, operating cash flow before tax and company acquisitions totaled SEK 564 M (643), which represents 121% of income before tax.
COMMENTS BY SEGMENT (new reporting format)
The segments reflect the Group's new organizational structure, with three geographical segments and one global technologies business that includes Door Automatics, Identification and ASSA ABLOY Hospitality. The new structure will be implemented immediately with the intention to increase flexibility, take advantage of synergies and respond to market opportunities more quickly.
First-quarter sales in EMEA (Europe, Middle East and Africa) amounted to EUR 288 M (291) with flat organic growth compared to last year. Operating income before goodwill amortization amounted to EUR 40 M (40) while the EBITA margin improved to 14.0% (13.7). Return on capital employed before goodwill amortization strengthened to 29.4% (26.3). Operating cash flow before paid interest increased to EUR 26 M (22).
The Nordic countries showed encouraging organic growth in a slow market. Sweden in particular developed in a positive way mainly due to new product launches and the expansion of new sales channels. The CLIQ technology develops well in Europe and drives a market share gain in Germany. The restructuring in the Central European units are now starting to pay off with increasing margins. A number of projects have been started in order to move part of the manufacturing to eastern Europe to benefit from the lower cost level.
France shows encouraging development as a result of increased sales in the DIY channels which balance the de-stocking in the traditional distribution. In the UK a number of new products have been launched, many of them coming from other Group companies. The planned changes in distribution and relocated exports have affected sales negatively.
First-quarter sales in the Americas amounted to USD 263 M (269) and the organic growth was -1%. Operating income before goodwill amortization amounted to USD 42 M (39). The EBITA margin improved to an impressive 15.8% (14.3). Return on capital employed before goodwill amortization increased to 38.1% (33.9). Operating cash flow before paid interest amounted to USD 36 M (41).
Margins continue to improve in spite of the flat top-line, driven by increased coordination to capture synergies. The market direction is still unclear in North America. Recent construction reports indicate that institutional construction has now stabilized, although increasing budget deficits may have a negative impact on public spending. The residential sector remains stable.
The door business is the most affected by the slow market in the North American organization. Increased cooperation between the main sales organizations provides a good base for coordinated growth. The Mexican operations continue to grow successfully and the integration of Poli in Chile develops well.
First-quarter sales in Asia Pacific amounted to AUD 72 M (66) and organic growth was 9% compared to last year. Operating income before goodwill amortization amounted to AUD 9 M (6). The EBITA margin improved to 12.2% (9.0). Return on capital employed before goodwill amortization improved to 24.1% (15.7). Operating cash flow before paid interest amounted to AUD 7 M (12).
Australia and New Zealand continued to show good organic growth. Many of the successful activities carried out in Australia are exploited as a role model for other Group companies. The whole region has generated impressive margin improvements as a result of increased customer value through higher security offerings.
First-quarter sales in the Global Technologies segment amounted to SEK 1,005 M (603). Organic growth was 1% compared to last year. Operating income before goodwill amortization amounted to SEK 110 M (102). The EBITA margin declined to 10.9% (16.9). Return on capital employed before goodwill amortization was 39.7% (56.1). The reduction in EBITA margin and return on capital employed is caused by dilution resulting from the Besam acquisition and the start-up cost for ASSA ABLOY Hospitality. Operating cash flow before paid interest amounted to SEK 93 M (124).
Within Door Automatics the aftermarket sales is showing strong growth which compensates the weak new project sales. The cooperation with other ASSA ABLOY Group companies is working well and the introduction of a new distribution concept using the EntreMatic brand name is underway. Margins continue to develop well.
Identification continued to show profitable expansion. The integration of Interlock in Switzerland is underway but has lowered margins as the integration costs have been expensed during the period. ASSA ABLOY Hospitality, still shows positive margin despite the depressed market.
Acquisition of Black & Decker's European Security Hardware Division
ASSA ABLOY has signed an agreement to acquire Black & Decker's European Security Hardware Business including the well known brand names DOM, Nemef and Corbin. The acquisition strengthens the Group's position in Germany, Holland and Italy. In 2002, sales of the acquired business amounted to EUR 108 M. The purchase price, on a debt-free basis, amounts to USD 108 M. After the ongoing restructuring, the acquired business will be able to make a 10% EBIT margin. The acquisition will create goodwill amounting to approximately EUR 60 M, of which most is tax-deductible and EPS neutral during 2003 and EPS positive from 2004. The acquisition is currently undergoing regulatory investigation.
Acquisition of Interlock in Switzerland
ASSA ABLOY has acquired Interlock Holding, a custom card manufacturer in Switzerland. The company has annual sales of CHF 12.6 M.
As mentioned in the Annual Report, VingCard had been sued by the company Ibertech in Texas. This case has now been settled. The cost has no significant impact on the income statement.
OUTLOOK FOR 2003
ASSA ABLOY anticipates stable volumes in a soft market with continued margin improvements and good cash generation. There is a strong confidence that security driven demand will increase. The Group intends to grow and increase profit by leverage on its strong position and increase focus on customer value.
Stockholm, 29 April 2003
President and CEO
This Interim Report has not been reviewed by the Group's Auditor.
The next Quarterly Reports from ASSA ABLOY AB for 2003 will be published on 7 August and 7 November.
Further information can be obtained from
Bo Dankis, President and CEO, tel: +46 8 506 485 42
Göran Jansson, EVP and CFO, tel: +46 8 506 485 72
Martin Hamner, Director of Investor Relations and Group Controller, tel: + 46 8 506 485 79
ASSA ABLOY AB (publ)
Box 70340, SE 107 23 Stockholm
Tel: +46 8 506 485 00, Fax: + 46 8 506 485 85
Visiting address: Klarabergsviadukten 90
Information about the analysts' meeting, web and telephone conference later today can be found on ASSA ABLOY's website, www.assaabloy.com
The ASSA ABLOY Group is the world's leading manufacturer and supplier of locking solutions,
dedicated to satisfying end-user needs for security, safety and convenience. The Group has about 30,000 employees and annual sales of about EUR3 billion.
The full report including tables can be downloaded from the enclosed link.
ASSA ABLOY är världsledande inom lås- och dörrlösningar och erbjuder mekaniska och elektromekaniska lås, digitala dörrlås, säkerhetsdörrar, entréautomatik, hotellsäkerhet och lösningar för säker identifiering, främst inom identitets- och passerkontroll, samt en rad andra relaterade produkteroch tjänster.
Sedan ASSA ABLOY bildades 1994 har koncernen utvecklats från ett regionalt bolag till en internationell koncern med cirka 47 500 anställda, verksamhet i mer än 70 länder och en en omsättning på 76 miljarder SEK.