ASSA ABLOY Quarterly Report Q3 2023
STOCKHOLM, Oct. 25, 2023 /PRNewswire/ -- Continued strong execution
Third quarter
Net sales increased by 16% to SEK 36,881 M (31,820), with organic growth of 1% (14) and acquired net growth of 11% (3). Exchange-rates affected sales by 4% (16).
Good organic sales growth in Global Technologies and Americas, stable organic sales in Entrance Systems, while organic sales declined in Asia Pacific and EMEIA.
Ten acquisitions with combined annual sales of about SEK 2,000 M were signed in the quarter.
The operating margin (EBITA) was 16.7% (16.2).
Operating income1 (EBIT) increased by 16% and amounted to SEK 5,777 M (4,973), with an operating margin of 15.7% (15.6).
The operating margin1 (EBIT) excluding the acquisition of HHI and divestment of the Emtek/U.S. Smart Residential business was record high at 17.4%.
Net income1 amounted to SEK 3,656 M (3,552).
Earnings per share1 amounted to SEK 3.31 (3.20).
Operating cash flow amounted to record high SEK 7,177 M (4,520).
Sales and income
Third quarter | January-September | |||||||
2022 | 2023 | Δ | 2022 | 2023 | Δ | |||
Sales, SEK M | 31,820 | 36,881 | 16 % | 87,878 | 103,746 | 18 % | ||
Of which: | ||||||||
Organic growth | 3,741 | 144 | 1 % | 10,351 | 3,259 | 4 % | ||
Acquisitions and divestments | 857 | 3,733 | 11 % | 790 | 7,079 | 8 % | ||
Exchange-rate effects | 3,292 | 1,184 | 4 % | 7,353 | 5,530 | 6 % | ||
Operating income (EBIT)1, SEK M | 4,973 | 5,777 | 16 % | 13,380 | 16,462 | 23 % | ||
Operating margin (EBITA)1, % | 16.2 % | 16.7 % | 15.8 % | 16.6 % | ||||
Operating margin (EBIT)1, % | 15.6 % | 15.7 % | 15.2 % | 15.9 % | ||||
Income before tax1, SEK M | 4,736 | 4,876 | 3 % | 12,756 | 14,774 | 16 % | ||
Net income1, SEK M | 3,552 | 3,656 | 3 % | 9,567 | 11,079 | 16 % | ||
Operating cash flow, SEK M | 4,520 | 7,177 | 59 % | 9,219 | 17,918 | 94 % | ||
Earnings per share1, SEK | 3.20 | 3.31 | 3 % | 8.61 | 9.99 | 16 % | ||
1 Adjusted for items affecting comparability. Please see the section "Items affecting comparability" in the report for further details about the financial effects.
Comments by the President and CEO
Continued strong execution
"I am happy to report continued strong execution despite weak residential construction markets. Our operating margin over the last twelve months, excluding the HHI-transaction, was 16.6% and for the quarter stood at a record 17.4%. During the third quarter, sales increased 16% with slower organic growth of 1% against high comparable, which was compensated by net acquired growth of 11% and currency effects of 4%. Global Technologies and Americas delivered good organic sales growth of 4% and 3% respectively. Global Technologies was primarily driven by strong growth in Global Solutions and the US non-residential business was the main driver for Americas growth. Organic sales in Entrance Systems were stable with sales growth in all business segments except the Residential segment. EMEIA reported negative organic growth of 3%, mainly due to weakness in the Nordics. Asia Pacific organic sales declined 7% due to negative internal sales growth and continued soft demand in China.
The operating profit excluding items affecting comparability increased strongly by 16% to SEK 5,777 M, and the operating margin reached a record high of 17.4% excluding the HHI-transaction and related integration costs. The operating leverage was again very strong, driven by lower direct material costs, positive effects from our structural and short-term cost measures of SEK 0.5 billion as well as solid price realization. The operating cash flow also improved by 59% to a record SEK 7,177 M with a cash conversion of 147%.
Strong long-term growth trends support sustainable profitable growth
We are part of a good industry with strong long-term growth drivers. Two interlinked long-term growth trends are sustainability and digitalization. There is an ever-increasing demand for more sustainable buildings. This drives increased demand for electromechanical products and solutions as they support the improved efficiency and sustainability of buildings. Our investments in more efficient access solutions supported by Environmental Product Declarations enable us to benefit from this trend. It is clear our investments pay off, organic sales growth for our electromechanical products and solutions in the current year-to-date was around 10%.
A number of important and strategic acquisitions
We have signed ten acquisitions in the third quarter, which means that as of September 2023 we have acquired 18 businesses with combined annual sales of around SEK 19 bn. HHI was consolidated for the first full quarter and is performing in line with our expectations. We have already started to realize the first synergies which contributed to an improvement in HHI's underlying margin versus the first half of 2023. Acquisitions continue to be an important strategic activity to accelerate profitable growth.
Even though residential construction is experiencing a difficult period, particularly in Europe, ASSA ABLOY has again proven that it is a robust, agile and resilient organization with a strong and stable aftermarket supporting our strong financial performance. We will continue our strong execution and ASSA ABLOY will therefore keep delivering in the long-term.
Thank you for your continued trust in ASSA ABLOY!
Stockholm, October 25, 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 October 25, 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 October 25, 2023.
The following files are available for download:
The full report (PDF) | |
ASSA ABLOY |
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