Assa Abloy: faster growth will come from smart locks
The world’s largest lock maker released fourth quarter earnings for 2017 this week, beating analysts’ expectations on profit and painting a clear picture for the future of the industry. Assa Abloy said it saw organic growth through the quarter of 5% - beating out consensus estimates of 4%. It also beat the analysts when it came to profit, reporting earnings before interest and tax of $3.4 billion crowns ($421 million) against expectations of 3.3 billion crowns.
Assa Abloy’s share price has appreciated by 6% so far this year
SOURCE: Yahoo Finance
The company has predicted a pick up in sales this year, as customers will start to move from traditional locks to hi-tech alternatives including fingerprint scanners, smartphone-activated systems and more. This trend – a powerful example of the Internet of Things – is already in clear evidence, but Assa Abloy, which is a leader in the field, thinks that it will accelerate significantly in 2018.
The company’s CEO, Johan Molin, is standing down next month. Nonetheless, he was happy to opine on the future of the industry, telling reporters “I am confident that the majority of all private residences will be converted to smart door locks during the next decade. A gigantic market is opening up.”
Demand was “positive for nearly all regions during the quarter," Molin told the press. And a very encouraging point for investors to note is the fact that the Chinese market has stabilised. Chinese demand has been weak over the past few quarters, as the country recovers from a building boom. The country is not a big market for Assa Abloy, but it’s one that the company hopes to plumb for growth in the near future.
Dominion holds Assa Abloy in its Global Trends Managed Fund.
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