Assa Abloy profit steady, faces weak Europe demand
STOCKHOLM (Reuters) - Lock maker Assa Abloy (ASSAb.ST) hopes emerging market expansion will counter weak European demand, it said after posting steady first-quarter profits on Wednesday.
Assa, the world's biggest lock maker, generates half of sales in crisis-hit Europe and another third in North America, where the market is recovering from a housing bust. It has grown rapidly in emerging markets, helped by a high acquisition pace.
"My judgment is that the outlook from the fourth quarter is unchanged, with a continuing weak world economy affected by the budget cutbacks that many countries are making," Chief Executive Johan Molin said in the report.
"It is therefore of the utmost importance that Assa Abloy should continue its expansion on the new markets, which are expected to go on growing well, and that our investments in new products and market presence are sustained."
Assa, whose products range from household locks to advanced digital entrance systems, said turnover before acquisitions was down 1 percent year-on-year in the quarter, below a forecast in a Reuters poll for unchanged sales.
Besides European market gloom, a calendar effect with fewer working days in the quarter weighed on sales, which shrank in Europe but grew in North and South America as well as Asia.
A rival to U.S. Ingersoll-Rand (IR.N) and Stanley Black & Decker (SWK.N), Assa has a 10 percent global market share and targets 5 percent organic growth over a business cycle.
Assa, which aims to double sales in emerging markets to half its revenues by 2025, said operating profit was 1.66 billion crowns ($251 million), against a forecast for 1.68 billion.
Ingersoll-Rand posted lower-than-expected quarterly revenue for a sixth straight quarter on Tuesday. Stanley Black & Decker is due to post quarterly results on Thursday.
The American Institute of Architects said earlier on Wednesday its architecture billings index, a gauge of U.S. construction activity that hints about Assa's future volumes there, continued to indicate modest growth in demand.
Assa's shares were roughly unchanged at 1030 GMT, leaving a year-to-date rise at 5 percent.
(Reporting by Anna Ringstrom)
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