Assa Abloy sees “solid underlying performance” in second quarter
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Assa Abloy sees “solid underlying performance” in second quarter

Security specialist, and the world’s biggest lock maker, Assa Abloy, reported second quarter earnings late last week that demonstrated a solid underlying business. The company saw strong organic growth, despite a difficult market in China, and received plaudits for its innovative solutions in the press. Some of those innovations include the work of Security Doors (a division of the company’s UK business), which has won multiple contracts with the London Underground.

Nonetheless, the company’s share price fell by around 3% last week as a result of an “operating loss” which was the result of a “large write down” on its Chinese business, forecast earlier this month.

Assa Abloy’s share price declined by 3% last week

graph 2307 assaabloy

SOURCE: Yahoo Finance

The company said it saw sales rise by 9%, with organic growth coming in at 5%. The aforementioned operating income loss stood at -6%, resulting in a -6% hit to both net income and earnings per share. Operating cash flow, meanwhile, increased by 11%. All of these figures are reported against the same quarter in the previous year.

Discussing China, Assa Abloy’s CEO and president, Nico Delvaux, said: “The market situation […] continues to be difficult, as previously reported. We expect the operating margin to remain low in the Chinese market for the next few years.”

However, he was eager to highlight the fact that the company itself was still well positioned for growth, and continuing to be recognized as a world-leader. He said:

“I am very proud and pleased to see that ASSA ABLOY is again on the Forbes list of the top 100 most innovative companies in the world. I am convinced that our strong focus on innovation in both products and processes is the best way for us to continue to be the leader in our industry. We have the right people and the right culture to make a difference and the organization's ability to innovate is clearly reflected in the strong demand for our new products.”

Disclosure

Dominion holds Assa Abloy in its Global Trends Managed Fund.


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