* Market trend roughly unchanged from Q3 -CEO
* Emerging markets could reach 50 pct of sales-CEO
* Has "active pipeline" of acquisitions
By Anna Ringstrom and Helena Soderpalm
STOCKHOLM, Nov 16 Assa Abloy, the
world's biggest maker of locks, aims to double sales in emerging
markets to half its total revenue, a goal it will achieve after
2025, it said on Friday.
Assa Abloy, whose products range from ordinary household
locks to advanced digital entrance systems, has seen sluggish
growth in mature markets, not least in Europe where public
spending cuts have weighed heavily on demand.
"We think the potential is not the 25 percent we have today
but rather 50 percent," Chief Executive Johan Molin said during
a presentation to investors and analysts, referring to the share
of group sales located in emerging markets.
The company, a rival to U.S. groups Ingersoll-Rand
and Stanley Black & Decker with a vast portfolio of
brands such as Yale and China's PanPan, sees its expansion in
emerging markets as key for growth amid the weakness elsewhere.
After increasing its share of sales in emerging markets from
10 percent in 2005, helped by numerous acquisitions, there are
not all that many companies left to buy, Molin told Reuters.
"At a growth pace of 7-12 percent per year it will take us
quite a few years before we are there. We will surely have
written 2025 in our diaries before we are there."
Assa's shares, which have soared 30 percent this year while
the blue-chip index in Stockholm is up 5 percent, were
unchanged on Friday afternoon, roughly in line with the market.
Fellow Swedish blue chip Electrolux also said on Thursday it
aimed to increase emerging markets sales to half of its revenues
from 35 percent now, but expected to reach that level in 2017.
WEAK GROWTH AHEAD
He said in the interview that market trends were roughly the
same as in the third quarter with Europe weak, North America
clearly better and emerging markets mixed, with China somewhat
weaker than usual.
"That means, for Assa Abloy, as we said in connection with
the Q3 (report), that we think growth will be very weak going
forward, at least for a few quarters."
Amid the general gloom, recent months have seen signs of
growing activity in the long-suffering U.S. construction market.
Molin stood by targets for a 16-17 percent operating margin
and 10 percent net sales growth, of which 5 would come via
acquisitions. In the third quarter, the margin was 16.7 percent
and growth was 6 percent, of which 1 percent was organic.
He said profitability could be kept as Assa bought companies
with low profitability and then improved their earnings.
"Growth wise, these are hardly times for saying we should
grow more than 5 percent (minus acquisitions). In current
conditions I'd say we should be happy if we do."
Molin said Assa Abloy, which has bought 11 peers so far this
year, still had an active pipeline of potential acquisitions.