Quarterly Report Q4 2022

Record performance in the quarter

Fourth quarter

• Net sales increased by 28% to a record total of SEK 32,915 M (25,623), with organic growth of 9% (10) and acquired net growth of 5% (–1). Exchange-rates affected sales by 14% (1).
• Very strong organic sales growth in Global Technologies, Americas and Entrance Systems, good growth in EMEIA, but a decline in organic sales in Asia Pacific.
• Eight acquisitions with combined annual sales of about SEK 1,500 M were signed in the quarter.
• ASSA ABLOY has entered into agreements for the sale of Emtek and the Smart Residential business in the U.S. and Canada for a sales price of USD 800 M, conditional on the successful closing of the HHI transaction.
• Operating income (EBIT) increased by 28% and amounted to a record SEK 5,152 M (4,013), with an operating margin of 15.7% (15.7).
• Net income amounted to SEK 3,729 M (3,043).
• Earnings per share before and after dilution amounted to SEK 3.36 (2.74).
• Operating cash flow amounted to a record SEK 6,588 M (3,384).
• The Board of Directors proposes a dividend of SEK 4.80 (4.20) per share for 2022, to be distributed in two equal installments.

Sales and income

	Fourth quarter					January-December
	2021	2022		Δ		2021	2022	Δ
Sales, SEK M	25,623	32,915		28%		95,007	120,793	27%
Of which:
Organic growth	2,239	2,656		9%		8,900	13,007	12%
Acquisitions and divestments	–236	1,336		5%		1,975	2,126	2%
Exchange-rate effects	322	3,300		14%		–3,517	10,653	13%
Operating income (EBIT), SEK M	4,013	5,152		28%		14,181	18,532	31%
Operating margin (EBITA), %	16.2%	16.2%				15.6%	15.9%
Operating margin (EBIT), %	15.7%	15.7%				14.9%	15.3%
Income before tax, SEK M	3,819	4,766		25%		13,538	17,521	29%
Net income, SEK M	3,043	3,729		23%		10,901	13,296	22%
Operating cash flow, SEK M	3,384	6,588		95%		13,265	15,808	19%
Earnings per share, SEK	2.74	3.36		23%		9.81	11.97	22%

Comments by the President and CEO

Record performance in the quarter
I am proud and happy that in 2022 we delivered a very strong organic sales growth of 12% and an operating margin of 15.3%, despite a challenging operational environment with unprecedented supply-chain issues, high inflationary pressure and Covid-19-related disruptions.

In the fourth quarter of 2022 our organic sales grew 9%, complemented by positive currency effects of 14% and by 5% growth from M&A. Global Technologies delivered very strong sales growth of 24% since we were able to significantly reduce the order backlog in Physical Access Control and saw a good recovery in travel-related areas. Americas division also delivered very strong sales growth of 11%, driven by a continued very strong demand in the US non-residential market and good price realization. The growth in Entrance Systems was also very strong at 10% and mainly driven by the US market. EMEIA reported good organic growth of 2%. Sales in Asia Pacific division declined by 10%, mainly due to Covid-19 and a very weak construction market in China, while the performance in the other part of the division was also weaker.

The operating profit increased by 28% to a record SEK 5,152 M and the corresponding margin was 15.7% (15.7). The operating leverage was strong at 22%, affected positively by lower material headwind and continued operational efficiencies. The result was impacted by higher acquisition costs. Our operating cash flow in the quarter was up 95% to a record figure of SEK 6,588 M with a cash conversion of 138% (89).

High M&A activity level
We can look back at a very strong year from an M&A perspective, having completed 21 acquisitions with annual sales of more than SEK 7 billion. These will have a carry-over sales effect into 2023 of 3% and our acquisition pipeline also remains strong. The HHI acquisition process continues and in December we announced the potential sale to Fortune Brands of Emtek and the Smart Residential business in the U.S. and Canada, conditional on the closing of the HHI transaction. We are confident that we have now eliminated all competitive concerns alleged by the US Department of Justice.

Cost-efficiency in everything we do
Thanks to our decentralized operating model, we have a strong track record of being agile and quick to respond to changing market conditions. Since the macroeconomic environment continues to be uncertain, we have prepared ourselves to mitigate any possible negative changes in the demand and to reduce our cost-base throughout the organization. We will also launch our ninth Manufacturing Footprint program (MFP9) during the spring to further increase efficiency and further optimize our operations. The Program will result in savings of about SEK 700 million over a two-year period. This will enable us to fuel investments in innovation to accelerate our long-term profitable growth.

Finally, I would like to thank all our employees for their efforts during the year and to thank all shareholders and other stakeholders for their trust in ASSA ABLOY.

Stockholm, 3 February 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: [email protected]
 

ASSA ABLOY is holding a telephone and web conference
at 09.30 on 3 February 2023 
which can be followed online at www.assaabloy.com/group/en/investors

It is possible to submit questions by telephone on:
08–505 100 31, +44 207 107 0613 or +1 631 570 561

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 3 February 2023.