ASSA ABLOY justifies Citizen ID divestment

STOCKHOLM — ASSA ABLOY CEO Nico Delvaux said the company recently divested Citizen ID, its physical and mobile identity solutions business, because it was playing too much catch up in that market. 

“As you know, we, we constantly look at our portfolio and from time to time we decide that something does not fit the portfolio,” he said during the company’s 2024 Q3 earnings call. “I think if you look at the time that I've been here since 2018, I think we did four or five smaller divestments, so we are clearly a net acquirer. The reason now to divest Citizen ID is we always have the ambition to be No. 1 or 2 in the market. With Citizen ID we were a far No. 3.” 

ASSA ABLOY announced in October that it had signed an agreement to sell Citizen ID to TOPPAN for SEK 1,300 M. 

Additionally, ASSA ABLOY found other companies in that market were making high single-digit EBITDA margins, a financial target that Delvaux said was difficult to hit. 

“It’s very different to play a game where you are market leader versus where you are a follower,” he said. 

In its earnings release, ASSA ABLOY reported a record operating profit and currency-adjusted sales growth of 5%, driven by strong acquired net growth of 4% and a small positive organic sales growth. 

Delvaux said that a “bottoming out” of the current residential market in North America and changing interest rates hopefully indicate a turnaround by the troubled housing sector.  

ASSA ABLOY Q3 at a glance: 

• Net sales increased by 1% to SEK 37,418 M (36,881), with positive organic growth of 0% and acquired net growth of 4%. Exchange- rates affected sales by –3% (4). 

• Organic sales growth was good in Americas and Global Technologies, stable in EMEIA, while organic sales declined in Entrance Systems and Asia Pacific. 

• Seven acquisitions with combined annual sales of about SEK 4 billion were completed in the quarter. 

• Operating income (EBIT) increased by 8% and amounted to SEK 6,255 M (5,777), with an operating margin of 16.7% (15.7). 

• Net income amounted to SEK 4,033 M (3,656). 

• Earnings per share amounted to SEK 3.63 (3.31). 

• Operating cash flow amounted to SEK 6,341 M (7,177).