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UPDATE 1-Lock-maker Assa sees emerging markets slowing
July 27, 2012 / 8:13 AM / 5 years ago

UPDATE 1-Lock-maker Assa sees emerging markets slowing

* Sees continued weak growth in mature markets 2012

* Sees further slowing economic growth in new markets

* Q2 EBIT 1.89 bln SEK vs consensus fcast 1.85 bln

* Q2 core sales +3 pct vs +3 pct in Q1 (Adds detail, background, analyst, shares)

STOCKHOLM, July 27 (Reuters) - Assa Abloy, the world’s biggest lock maker, said on Friday mature markets were weak and growth in emerging markets was slowing, as it reported second quarter results in line with market expectations.

Assa, whose products range from household locks to advanced digital entrance systems, has been squeezed by cuts in public spending across Europe with growth mainly driven by expanding emerging markets such as China where growth is now slowing.

Construction markets, not least in Europe and the United States, are sluggish.

“On the mature markets stable economic development with unchanged weak growth is expected, while economic growth on the new markets is expected to be less strong than last year,” the company, which generates the bulk of sales in mature markets, said.

Core sales, keenly watched by analysts because of a steady flow of acquisitions that boosts the overall sales figure, was up 3 percent, unchanged from the preceding quarter but down from 5 percent a year earlier, matching expectations in a Reuters poll.

The rival to U.S. groups Ingersoll-Rand and Stanley Black & Decker said operating profit grew to 1.9 billion crowns ($275 million) from a year-earlier 1.6 billion, roughly matching expectations in a Reuters poll, helped by newly acquired companies and restructuring measures as well as recovering growth in some American markets.

Assa’s shares were roughly unchanged mid-morning, in line with the wider market in Stockholm.

Analysts said solid performance in other business units compensated for weak performance in some European markets.

Organic sales at the EMEA unit, which includes Europe, were unchanged and profit and margin lagged expectations.

“It’s entirely in line at group level, it’s EMEA that sticks out,” said Swedbank analyst Niclas Hoglund. “That is fully compensated for, and a little more, by good growth and margins in (access systems unit) Global Technologies and somewhat stronger Americas and Asia.”

Assa, which makes locks under brands such as Yale, repeated a long-term outlook for good organic sales growth and operating margin development.

$1 = 6.8670 Swedish crowns Reporting by Anna Ringstrom

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