ASSA ABLOY: Quarterly Report Q1 2023

Rhea-AI Summary

ASSA ABLOY reported strong financial results for the first quarter of 2023, with net sales increasing 22% to SEK 32,391 million. Organic growth was at 8%, and acquisitions contributed an additional 5%. The company signed four acquisitions with a combined annual sales of approximately SEK 440 million.

Operating income rose 30% to SEK 5,186 million, yielding an operating margin of 16.0%. Net income also saw a significant increase, reaching SEK 3,692 million, and earnings per share were reported at SEK 3.32. The strong cash flow of SEK 4,069 million sets a record for the first quarter.

However, the company has launched a new Manufacturing Footprint Program, involving a restructuring cost of SEK 1,225 million, expected to enhance operational efficiency.

Positive

• Net sales increased by 22% to SEK 32,391 million.
• Operating income (EBIT) rose by 30% to SEK 5,186 million.
• Net income increased to SEK 3,692 million, reflecting strong performance.
• Operating cash flow reached a record high of SEK 4,069 million.
• Four acquisitions signed, expected to contribute SEK 440 million in annual sales.

Negative

• Restructuring costs for Manufacturing Footprint Program total SEK 1,225 million.

STOCKHOLM, April 26, 2023 /PRNewswire/ -- 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

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.

The following files are available for download:

https://mb.cision.com/Main/7333/3758117/2011668.pdf

The full report (PDF)

 

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SOURCE ASSA ABLOY

FAQ

What were the net sales for ASSA ABLOY in Q1 2023?

ASSA ABLOY reported net sales of SEK 32,391 million in Q1 2023.

How much did ASSA ABLOY's operating income increase in Q1 2023?

Operating income (EBIT) increased by 30% to SEK 5,186 million.

What is the earnings per share for ASSA ABLOY for Q1 2023?

Earnings per share for Q1 2023 were SEK 3.32.

What acquisitions did ASSA ABLOY sign in Q1 2023?

ASSA ABLOY signed four acquisitions during Q1 2023, expected to contribute SEK 440 million in annual sales.

What restructuring costs did ASSA ABLOY incur in Q1 2023?

ASSA ABLOY incurred restructuring costs of SEK 1,225 million for their Manufacturing Footprint Program.