Assa Abloy, the Swedish lock maker, has announced its plans to purchase a 98.5% stake in Evolis, a French manufacturer of ID card printers, in a deal worth approximately 224.9 million euros ($252.6 million). This strategic acquisition aims to strengthen Assa Abloy’s position in the market and expand its product offerings.
Strong Financial Performance in Q2
In other news, Assa Abloy reported a net profit of 3.57 billion Swedish kronor ($349.3 million) for the second quarter, up from SEK3.15 billion in the same period last year. The company’s sales also saw a significant increase of 17% to reach SEK34.47 billion.
Consensus Fall Short of Profit Forecast
Despite the impressive financial results, the FactSet consensus had predicted a higher quarterly profit of SEK4.13 billion on sales of SEK33.68 billion. However, Assa Abloy’s adjusted operating margin rose to 16.6% from 15.5%, indicating improved profitability.
Divestment of Emtek and Smart Residential Business
Assa Abloy recently completed the divestment of its Emtek and smart residential business in the U.S. and Canada to Fortune Brands, which resulted in a gain of SEK3.66 billion in the second quarter. On the other hand, one-off costs of SEK2.27 billion were incurred due to impairment of goodwill and other intangible assets in global technologies.
Focus on Cost Reduction and Manufacturing Footprint Program
To mitigate the impact of lower residential construction levels, Chief Executive Nico Delvaux stated that Assa Abloy has implemented short-term cost measures to protect profitability. Additionally, the company is expecting around SEK900 million in short-term cost reductions by 2023, on top of the existing manufacturing footprint program. Assa Abloy has also accelerated this program, anticipating savings of SEK800 million this year.
Assa Abloy’s continuous efforts to streamline operations and optimize costs position the company for long-term success in the competitive market.
