ASSA ABLOY Leading the future ABLOY CMD...© ASSA ABLOY. All rights reserved Agenda 1. Introduction...

79
ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience ASSA ABLOY Leading the future Capital Markets Day 2017 Johan Molin, CEO Carolina Dybeck Happe, CFO

Transcript of ASSA ABLOY Leading the future ABLOY CMD...© ASSA ABLOY. All rights reserved Agenda 1. Introduction...

Page 1: ASSA ABLOY Leading the future ABLOY CMD...© ASSA ABLOY. All rights reserved Agenda 1. Introduction - ASSA ABLOY 2017 2. Finance –Overview 3. Strategy - Our Road to the Future 4.

ASSA ABLOY is the global leader in door opening solutions, dedicated to satisfying end-user needs for security, safety and convenience

© ASSA ABLOY. All rights reserved

ASSA ABLOY Leading the future Capital Markets Day 2017

Johan Molin, CEO Carolina Dybeck Happe, CFO

Page 2: ASSA ABLOY Leading the future ABLOY CMD...© ASSA ABLOY. All rights reserved Agenda 1. Introduction - ASSA ABLOY 2017 2. Finance –Overview 3. Strategy - Our Road to the Future 4.

© ASSA ABLOY. All rights reserved

Agenda

1. Introduction - ASSA ABLOY 2017

2. Finance – Overview

3. Strategy - Our Road to the Future

4. Leading the Future

2

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Good industry to be in!

Increased demand for security

Urbanization & increased wealth

Shift to new technologies

Sustainable buildings

Change of applications and codes

3

Trends create underlying strong demand

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ASSA ABLOY Solid market position

Leading brands

Large installed base

Strong channel position

Large specification team

4

Strong barriers to entry

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Good sales and customer composition

5

Residential

End users

25%

75%

Commercial and institutional

New construction

Recurring business

33%

67%

Aftermarket

Stable sales and profit

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ASSA ABLOY divisions

6

Mech & elmechlocks, cylinders &

security doors

Electronic accessand identity

Entrance automation

Americas24%

EMEA23%

Asia Pacific11%

Global Technologies(HID and Hospitality)

ASSA ABLOY Entrance Systems

Product offering Organization % of Group Sales

58%

28%

14%

12 months until Sept. 2017

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January - September 2017in brief

Good organic growth, +4%

• Strong growth in Global Tech

• Good growth in EMEA, Americas and

Entrance Systems

• Flat APAC, despite weak China

• Continued good development for smart

door locks and electro-mechanical solutions

17 acquisitions done, +4%

• Acquired annualized sales 2,800 MSEK

7

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January - September 2017 figures in summary

Sales SEK 56,028 M +8%

• 4% organic

• 2% acquired

• 2% currency

EBIT SEK 8,982 M +8%

• Currency effect SEK 167 M

Margin 16.0% (16.1)

EPS SEK 5.63 +8%

8 340

8 982

0

2 000

4 000

6 000

8 000

10 000

12 000

0

10 000

20 000

30 000

40 000

50 000

60 000

Jan-Sep 2016 Jan-Sep 2017

Sales, SEK M EBIT, SEK M

Sales EBIT

8

Sales +8%

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Financial targetsOver a business cycle

9

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Sales growth, currency adjusted

45 000

50 000

55 000

60 000

65 000

70 000

75 000

80 000

-10

-5

0

5

10

15

20

25

2012 2013 2014 2015 2016 2017

Organic growth, % Acquired growth, % Sales in fixed currencies, SEK M

10

SEK M%

CAGR 8% last 5 years

Organic 3%Acquired 5%

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Acquisitions add further growth

0

2

4

6

8

10

12

14

16

18

20

0

2

4

6

8

10

12

14

16

18

20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

M&A growth, net, % M&A average growth, %

11

10 years - CAGR 6%

*) M&A growth, net, including divestments.

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13

14

15

16

17

18

13

14

15

16

17

18

2012 2013 2014 2015 2016 2017

Quarter Rolling 12-months

Long term target range (average)

Operating margin, %

12

Run rate 16.2%* (16.2) %

*) Excluding China write down SEK 300 M in Q4 and full year 2016 and restructuring items.

Accretion / dilution from 2017 OG, ex APAC* OG APAC* M&A currency12-months +0.4% -0.3% -0.2% +0.1%

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Operating profit, SEK M

4 000

6 000

8 000

10 000

12 000

14 000

16 000

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2012 2013 2014 2015 2016 2017

Quarter Rolling 12-months

13

SEK M SEK MRun rate SEK 12,194 M* (11,380) +7%

*) Excluding China write down SEK 300 M in Q4 and full year 2016 and restructuring items.

+66%in

5 years

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Global competitors

14

1,1

2,1

2,5*

7,7

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0

Estimated annual sales 2016, EUR Billions = Sales 2010

3.9 Bn

1.9 Bn

1,8 Bn

1.0 Bn

* Dormakaba, including Stanley Mechanical Security, pro forma

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Agenda

1. Introduction - ASSA ABLOY 2017

2. Finance – Overview

3. Strategy - Our Road to the Future

4. Leading the Future

15

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0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

0

2 500

5 000

7 500

10 000

12 500

15 000

17 500

20 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Quarter Rolling 12-months

Sales development since 2005 Substantial top line improvement

16

Sales +172% since 2005SEK M SEK M

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Growth has triggered significant changeASSA ABLOY is fundamentally different compared to 2005

17

41%23%

32%

24%

7%

11%

12%

14%

8%

28%

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

2005 2017 12-months*

Sales per division

Entrance Systems

Global Technologies

Asia Pacific

Americas

EMEA

SEK M

*) Sales for 2017 is rolling 12-months Oct 2016 –Sep 2017.

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Growth has triggered significant changeASSA ABLOY is fundamentally different compared to 2005

18

39%23%

36%

31%

6%

8%

11%

15%

8%

24%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2005 2017 12-months*

Operating profit per division

Entrance Systems

Global Technologies

Asia Pacific

Americas

EMEA

SEK M

Exluding Other. *) Operating profit for 2017 is rolling 12-months Oct 2016 –Sep 2017.

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13

14

15

16

17

18

13

14

15

16

17

18

2012 2013 2014 2015 2016 2017

Quarter Rolling 12-months

Long term target range (average)

Operating margin, %

19

Run rate 16.2%* (16.2) %

*) Excluding China write down SEK 300 M in Q4 and full year 2016 and restructuring items.

Accretion / dilution from 2017 OG, ex APAC* OG APAC* M&A currency12-months +0.4% -0.3% -0.2% +0.1%

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Operating margin (EBIT*) 2010-2017

20

*) Excluding restructuring, currency and China write down Q4 2016.

Not including margin on export from mature markets.

Emerging markets **dilution -1.4%

Mature markets accretion

Entrance Systems dilution -0.8%

ASSA ABLOY Group

6

8

10

12

14

16

18

20

2010 2011 2012 2013 2014 2015 2016 2017Sep12m

ASSA ABLOY Group Entrance Systems

Mature Markets Emerging Markets

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Acquisitions first dilute, but give long term leverage

9

17

20

8

13

18

13 12

20

16

13

17

0

10

20

30

40

50

60

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

Sales (cumulative), SEK M Sales (annual), SEK M Number of acquistions

21

174 acquisitions since 2006SEK 34 billion in added sales

SEK M

17 acquisitions done 2017

*) Including LOB and August, not consolidated.

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Company acquired 2012

22

0

5

10

15

20

25

30

35

40

45

50

0

25

50

75

100

125

150

175

200

225

250

275

2012 2013 2014 2015 2016 2017

Sales EBIT

Five years developmentSales +55%, EBIT +272%

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Company acquired 2013

23

0

10

20

30

40

50

60

70

0

25

50

75

100

125

150

175

200

225

250

275

2013 2014 2015 2016 2017

Sales EBIT

Four years developmentSales +35%, EBIT +97%

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Company acquired 2013

24

0

5

10

15

20

25

30

35

40

45

0

50

100

150

200

250

300

350

400

450

500

2013 2014 2015 2016 2017

Sales EBIT

Four years developmentSales +30%, EBIT +81%

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Company acquired 2012

25

0

20

40

60

80

100

120

140

160

500

525

550

575

600

625

650

675

700

2012 2013 2014 2015 2016 2017

Sales EBIT

Five years developmentSales +17%, EBIT -28%

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Company acquired 2012

26

0

20

40

60

80

100

120

0

100

200

300

400

500

600

2012 2013 2014 2015 2016 2017

Sales EBIT

Five years developmentSales +238%, EBIT +220%

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Operating margin (EBIT)Effects of recent acquisitions and divestments

ASSA ABLOY Group – no major

impact on reported EBIT, %

• Global Technologies

• Acquisition of Mercury (Nov) & Arjo

• Divestment of AdvanIDe

• Accretion

• Americas

• August (consolidated in late Q4)

• Dilution

• Seasonality

27

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Operating margin (EBIT)Effects of recent acquisitions and divestments

Stable EBIT, % - proforma

Adj. EBITA, % - proforma

increases

• More M&A amortization from

SEK 300 M to SEK 500 M/year

15%

16%

17%

18%

12 months 12 months + M&A

EBIT, % Adj. EBITA, %*

28

Adj. EBITA

16.6%*

Adj. EBITA

16.9%*

Pro-forma profitability

Excluding China write down SEK 300 M in Q4 and full year 2016 and restructuring items. Adj. EBITA = EBIT + M&A amortization, %Rolling 12 months figures.

EBIT16.2%

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Financial highlights

29

July - September January - September

SEK M 2016 2017 Change 2016 2017 Change

Sales 18,025 18,499 3% 51,809 56,028 8%

- Organic growth* 307 590 3% 1,308 1,956 4%

- Acquired growth 429 373 2% 1,512 1,273 2%

- FX-differences* -176 -488 -2% -810 990 2%

Operating income (EBIT) 3,020 3,080 2% 8,340 8,982 8%

EBIT-margin 16.8% 16.7% 16.1% 16.0%

Income before tax 2,844 2,910 2% 7,782 8,447 9%

Net income 2,122 2,153 1% 5,786 6,250 8%

EPS, SEK 1.91 1.94 1% 5.21 5.63 8%

Operating cash flow 2,830 2,654 -6% 5,846 6,053 4%

* The sales components Organic growth and FX-differences has been restated for 2016. No effect on sales numbers.

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Bridge Analysis – YTD 2017

Positive leverage from all divisions, except APAC, +40 bps

Dilution from China/APAC, as expected, -30 bps

Dilution from acquisitions in Entrance Systems, Global

Technologies and EMEA

30

SEK M YTD 2016 Organic Currency Acq/Div YTD 2017

4% 2% 2% 8%

Sales 51,809 1,956 990 1,273 56,028

Operating profit 8,340 371 167 103 8,982

Operating margin, % 16.1% 19.0% 16.9% 8.1% 16.0%

Dilution/accretion 0.1% 0.0% -0.2%

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P&L components have changed but stable margin

Sourcing more direct material

• Short term swings in raw material costs

Lower conversion costs due to efficiency projects

Increased investments in RnD and front sales

31

% YTD 20122017*

12-months Δ

Direct material -34.6% -36.2% -1.6%

Conversion costs -25.9% -24.4% +1.5%

Gross margin 39.5% 39.4% -0.1%

S, G & A -23.4% -23.2% +0.2%

EBIT 16.1% 16.2% +0.1%

*) Sales for 2017 is Rolling 12 Months Oct-Sep

*) Excluding China write down SEK 300 M in Q4 and full year 2016 and restructuring items.

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Target = 100% automation of processes

CAD

General Support Processes

PDM

ProductConfigurator

Order

ManufacturingPurchasing

Logistics, warehouse Shipping

Customer

Suppliers

&

Part

ners

Product development

Seamless Flow

32

22%

43%

0%

20%

40%

60%

2011 2017

E-commerce

7%

28%

0%

5%

10%

15%

20%

25%

30%

2011 2017

PDM

0%

78%

0%

20%

40%

60%

80%

100%

2011 2017

Seamless Production

16%

63%

0%

20%

40%

60%

80%

2011 2017

E-procurement

0%

46%

0%

10%

20%

30%

40%

50%

2011 2017

ERP

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Operating cash flow, SEK M

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2012 2013 2014 2015 2016 2017

Quarter, SEK M Cash rolling 12 months, SEK M EBT rolling 12 months, SEK M

33

Quarter 12 months12 months cash / EBT = 95%*

*) Excluding China write down SEK 300 M in Q4 and full year 2016 and restructuring items.

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Gearing % and net debt, SEK M

0

15

30

45

60

75

90

0

5 000

10 000

15 000

20 000

25 000

30 000

2012 2013 2014 2015 2016 2017

Net debt, SEK M Gearing, %

34

Net debt GearingDebt/Equity 53% (57)

Net debt/EBITDA1.9 (2.0)

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2,00

3,00

4,00

5,00

6,00

7,00

8,00

0,50

0,75

1,00

1,25

1,50

1,75

2,00

2012 2013 2014 2015 2016 2017

Quarter, SEK Rolling 12 months, SEK

Quarter

Earnings per share, SEK

35

12 monthsYTD EPS +8%

*) Excluding restructuring items of SEK 1,597 M for Q4 and full year 2016.Chart is restated for Stock split 3:1 2015 and excludes cost for restructuring programs in 2013 and 2016.

+66%in

5 years

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Agenda

1. Introduction - ASSA ABLOY 2017

2. Finance – Overview

3. Strategy - Our Road to the Future

4. Leading the Future

36

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Strategy

37

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Our vision – remains unchanged

To be the true world leader, most successful and

innovative provider of total door opening solutions

To lead in innovation and provide well-designed,

convenient, safe and secure solutions that give true added

value to our customers

To offer an attractive company to our employees

38

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Total door opening solutionsSeamlessly connected to the building

39

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Market presence

40

1

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ASSA ABLOY as Group brand

Leverages local and

global presence

Total door solutions

Product cross fertilization

Reduced operational costs

41

Complementing brands

70% ASSA ABLOY

30%

70%

ASSA ABLOY

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Customer focus through segmentation

The segmented approach assures customer focus and

relevance and provides us with a superior

understanding of the customer needs.

42

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SpecificationASSA ABLOY leads the industry

Global Specification force

• End-customer specifiers

• Electromechanical specifiers

BIM – Building Information

Modeling

• Configuration and simulation tool

• Architects, contractors, building

consultants & facility managers

Environmental product

declarations automatically

generated

43

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Video BIM

44

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45

Gødstrup Super Hospital, Denmark

€0.6mproject value

BIM

Solution: ARX Access Control, Master Key System, Architectural Hardware, Door Closers

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0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Sep 12m

Revenues, SEK M

Emerging markets sales, SEK M

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Sep 12m

Revenues, SEK M

46

SEK M

Share of sales from emerging markets, %. Emerging markets comprise Africa, Asia (ex. Japan), the Middle East, South America and Eastern Europe.

13%

23%

xx%

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Latin America growth

47

+103%

1 535

3 349

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2012 2017 Sep 12m

Chart TitleLatin America, Group salesSEK M

+118%

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Africa & Middle East growth

48

+103%

1 623

2 468

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2 600

2 800

3 000

2012 2017 Sep 12m

Chart TitleAfrica & Middle East, Group sales

SEK M

+52%

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Asia growth, excluding China

2 337

4 149

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2012 2017 Sep 12m

Chart Title

49

Asia excl. China, Group sales

+78%

SEK M

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China growth

50

+103%

4 304

4 978

3 000

3 500

4 000

4 500

5 000

5 500

2012 2017 Sep 12m

Chart TitleChina, Group salesSEK M

+16%

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Xinmao

PanPan Yingkou

Tianming

Langfang

HuashengGuoqiang

PanPan Wuxi

PanPan Chengdou

Jiawei

Taizhou

Shenfei

PanPan Changsha

Sanhe

DigiGuli Longdian

ASSA ABLOY in China

55%45%

2014

North South

43%57%

2017

North South

N

S

51

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174 acquisitions since 2006 Added sales 34 BSEK

Fully active pipeline

17 acquisitions done in 2017

Acquired annualized sales 2,800 MSEK – added sales 4%

Divestment of AdvanIDe 1,250 MSEK

52

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Product leadership

53

2

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Product leadership through innovation

54

Innovation

Our biggest driver for growth

R&D Investments

+200 percent since 2006

2,000 R&D engineers in 2017

Long term competitive

advantage

Continuous innovation

>25% of sales from new products

Benefits Costs Quality

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26,6

29,7

30,9

30,0

27,2

21

23

25

27

29

31

33

2013 2014 2015 2016 2017 Sep.

Sales from products launched past 3 years

55

%

Group target

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Shared Technologies & Competence Centers Global platforms & focused product units

56

Accentra™

ResidentialSDL

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Growing electromechanical market

57

2007 2017 Sep 12 months

34SEK bn

76 SEK bn

48%

19% 24%

27%

18% 27%

Mechanical locks & accessories

Electro-mechanical

Security doors

Security doors

Mechanical locks & accessories

Electro-mechanical

Entranceautoma-tion

9%

28%Entranceautomation

SEK billion 20072017 Sep

12 m Change

Electro-mechanical 8.1 20.2 +149%

Mechanical 16.1 20.8 +29%

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14%

19%

67%

Electromechanics drives growthSales excl. Entrance Systems and doors

58

*) Sales for 2017 is Rolling 12 Months Oct-Sep

25%

25%

50%

SEK 24 Billion2007

SEK 41 BillionSept. 2017*

Mechanical locks & accessories

Mechanical locks & accessories

Electro-mechanical

Electro-mechanical

Global Technologies

Global Technologies

Electro-mechanical

share of sales by division, excl. doors 2017*

EMEA 37%Americas 26%

APAC 28%

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Average annual organic growth2014 – 2017 YTD*)

0

2

4

6

8

10

12

59

*) Organic growth estimated for Mechanical, El.mech, excl. GT and Security doors.

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Accentra – for multi-family housing, vacation rentals, assisted living, etc.

Connected home

60

Yale Smart Living

Digital door viewerDoor bells, alarms

Homedeliveries

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Sales development – Smart door locks

Strong sales growth

Acquisition of August adds

market presence in the US

Local standards are critical

61

+103%

0

500

1 000

1 500

2 000

2 500

2012 2017 E

Chart TitleSmart door locks, ‘000 units

+270%

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€0.3mproject value

1,700units

Future Park Istanbul, Turkey

Solution: Smart home integration of Yale MonoblockSmart Door Lock

62

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Non-residential moving fast into digitalization, connectivity and cloudRecurring revenue >50%

Seos Aperio

CLIQ

63

Virtual ID

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Sustainability is a commercial opportunityGlobal expansion of ‘Eco products’

64

Regenerative

door operator

Energy harvesting cylinder

Energy efficient

door system

EcoFlexTM

EcoStrikeTM

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Bloomberg European HQLondon, UK

Solution: Fire-rated steel doors, door controls, locks and cylinders

€1.5mproject value

65

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3

Cost efficiency

66

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Efforts to radically reduce break-even costs

67

Manufacturing

footprint program

Professional sourcing

Lean operations

Value Analysis and Value

Engineering (VA/VE)

Robotization

Seamless Flow

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Manufacturing footprint

Status of programs launched 2006-2016

• 77 factories closed to date, 11 to go

• 116 factories converted to assembly, 33 to go

Total personnel reduction

• 12,841 FTE in total since 2006

• 364 FTE in recent quarter

• 1,626 FTE to go for all programs

SEK 1,212 M provisions remain for all programs

68

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7%

0%

-12%

3%4%

2% 2%3%

4%

2%

4%

-5%

-10%

-12%

1%

-2%

-4%-5%

-2%-2%

-3%

-1%

-15%

-10%

-5%

0%

5%

10%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD

Growth Employees

Organic growth each year, i.e. excluding acquisitions younger than 12 months, and the corresponding change in total number of employees for the same units.

Efficiency: Organic Growth vs. Headcount

69

63% difference between organic growth and headcount since 2007

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ASSA ABLOY GroupAverage employees high-cost vs. low-cost countries

38%

62%

2008

Not restated for acquisitions

46%54%

2017

High cost countries

High cost countries

Low cost countries

Low cost countries

70

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Professional sourcingSourcing is strategic & impact is rapidly increasing

Professional sourcing

Integration with R&D process

Standardization

Supplier provides sub systems

Less and stronger suppliers

Category management

Supplier agreements

Should cost process

Audited suppliers

0

5 000

10 000

15 000

20 000

25 000

30 000

2005 2017 Sep 12m

Material value

71

+283%

0

2 000

4 000

6 000

8 000

10 000

12 000

2005 2017 Sep 12m

Indirect spend value

2005 2016

+101%

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Lean implementationAPAC example

72

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Value Analysis and Value EngineeringSavings from VA/VE

0

5

10

15

20

25

30

35

2008 2009 2010 2011 2012 2013 2014 2015 2016 Target2017

73

MEUR

160 MEUR in 9

years

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Target = 100% automation of processes

CAD

General Support Processes

PDM

ProductConfigurator

Order

ManufacturingPurchasing

Logistics, warehouse Shipping

Customer

Suppliers

&

Part

ners

Product development

Seamless Flow

74

22%

43%

0%

20%

40%

60%

2011 2017

E-commerce

7%

28%

0%

5%

10%

15%

20%

25%

30%

2011 2017

PDM

0%

78%

0%

20%

40%

60%

80%

100%

2011 2017

Seamless Production

16%

63%

0%

20%

40%

60%

80%

2011 2017

E-procurement

0%

46%

0%

10%

20%

30%

40%

50%

2011 2017

ERP

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Agenda

1. Introduction - ASSA ABLOY 2017

2. Finance – Overview

3. Strategy - Our Road to the Future

4. Leading the Future

75

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Uniqueness through differentiation gives long term lasting value creation

76

A differentiated value propositionBest gets copied

Front end, catch maximum value

– security is not transparent

Uniqueness through constant innovation

and differentiation

Selective value chain – Focus on core

competencies

76

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Achieve 10% annual growth with profitability between 16-17%

Leading the futureUniqueness through differentiation

Market presence

• Brand, segmentation, specification

• Emerging markets

• Acquisitions

Product leadership through innovation

• Electro mechanics, connected homes and smart door locks

• IOT, Authentication, virtualization and connectivity

• Recurring revenue, service, software, cloud, IDs

• Sustainable products

Cost efficiency

• Manufacturing footprint program

• Professional sourcing, lean operations, VA/VE

• Seamless Flow - automation

77

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We are a true world leader

78

Operating in a growing market driven by improved wealth, urbanization and a strong trend towards

increased safety and security

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www.assaabloy.com