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UPDATE 1-Assa Abloy Q2 profit rises as sales stabilise in Europe
July 19, 2013 / 6:56 AM / 4 years ago

UPDATE 1-Assa Abloy Q2 profit rises as sales stabilise in Europe

* Q2 organic sales +3 pct vs consensus +1.8 pct

* EBIT 1.97 bln SEK vs consensus 1.94 bln (Adds detail, background)

STOCKHOLM, July 19 (Reuters) - Assa Abloy, the world’s biggest lock maker, said on Friday its core sales had stabilised in the weak European market as it posted a rise in second-quarter operating profit that matched expectations.

Assa, whose products range from household locks to advanced digital entrance systems, said turnover before acquisitions was up 3 percent year-on-year, beating a forecast in a Reuters poll for 2 percent, after a drop in the first quarter.

“It is particularly pleasing that North and South America and Asia showed good growth, while Europe stabilised at around zero,” Chief Executive Jan Molin said in a statement.

In the first quarter, core sales shrank in Europe.

The Swedish group 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 assessment is that the outlook is unchanged, with a continuing weak world economy affected by the budget cutbacks that many countries are making,” Molin said.

“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.”

Operating profit rose to 1.97 billion crowns ($299 million) from a year-ago 1.89 billion, against a forecast 1.94 billion.

A rival to U.S. Ingersoll-Rand and Stanley Black & Decker, Assa, which aims to double sales in emerging markets to half its revenues by 2025, targets 5 percent organic growth over a business cycle.

The American Institute of Architects’ architecture billings index, a gauge of U.S. construction activity that hints about Assa’s future volumes there, indicated a modest growth in demand in May. ($1 = 6.5988 Swedish crowns) (Reporting by Anna Ringstrom; Editing by Alistair Scrutton)

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