Assa Abloy shows growth in Q3, commits to HHI acquisition

STOCKHOLM – This week lock maker and security giant Assa Abloy presented its Q3 financial results, with strong growth despite signs of a market slowdown.

The conference call opened with remarks from Assa Abloy President, CEO & Head, Global Technologies Division Nico Delvaux. The company experienced an organic sales growth of 14 percent which Delvaux credited to Entrance Systems and the America’s contributions, as well as Global Technologies. Net sales have increased 33 percent with an EBITDA margin improvement of 15.6 percent.

All in all, positive numbers for Assa Abloy. The one region where the company saw poor results was in the Asian region. “If we then take Asia, minus one. I think, a very different picture between Greater China and the rest of Asia,” Delvaux said. “The rest of Asia has shown very nice positive high growth. And then in Greater China, we have seen a significant double-digit negative growth. And in Greater China, we continue to suffer from the construction crisis and then are also not helped by the continued zero tolerance when it comes to COVID in that country. But overall, I think still a very positive picture.”

The CEO was also pleased with the outcome of several products coming to fruition including the release of the Yale Assure Lock, which Delvaux called their newest flagship for smart locks in the U.S. At home in Sweden Assa Abloy recently signed a partnership with DHL for eCommerce in-home delivery and the company celebrated the launch of a new SMARTair wireless electronic lock.

Delvaux also ultimately addressed the question on their recent acquisitions including German door intercom manufacturer DoorBird, Control iD in Brazil, and the yet unresolved HHI acquisition blocked by an anti-trust lawsuit from the U.S. Department of Justice (DoJ).

“We, together with Spectrum Brands, are now contesting that DoJ position in court,” Delvaux stated. “We will have our case in court somewhere second quarter next year. And as a result of the concerns DoJ had on the acquisition, we have also initiated a sales process to divest our EMTEK business in the U.S. and our smart resi business in U.S. and Canada. Together, they represent sales of around $350 million last year. It's (sic) very nice businesses. It's unfortunate we have to divest them, of course, conditional on approval by the judge of our HHI acquisition. But also with that divestment, we still are very convinced on the HHI acquisition and the strategic rationale behind it. And we reconfirm the $100 million EBIT synergies in year 5 after the acquisition. That figure remains valid also after the potential divestment of these businesses.”

Assa Abloy began the formal process to divest themselves of their Emtek Products and Smart Residential businesses in the U.S. and Canada last week. Assa Abloy has stated the acquisition would be a boon to their residential segment. Whether the offering will allay the DoJ’s fears and provide a path forward for the acquisition remains to be seen.

A copy of the presentation for the webcast can be found at www.assaabloy.com. Assa Abloy also issued a press release with all the relevant quarterly stats.