Sweden's Assa Abloy, the world's biggest lockmaker, reported a 25 percent rise in operating profit for the first quarter helped by strong sales growth in the United States and an expanding portfolio of high-tech products. America showed positive economic signals while Europe stagnated and Chinese demand fell in the quarter, the supplier to the construction sector said.
Demand for its products has recovered in the past year mainly in the United States, but in recent quarters it also had seen a positive trend in Europe, where the debt crisis weighed on demand for years. Assa Abloy, which has been growing steadily through acquisitions in a fragmented industry, said organic sales growth in the quarter was 5 percent, above a mean forecast in a Reuters poll of analysts for 3 percent.
Organic growth at rival to Stanley Black & Decker and Allegion was 8 percent in its Americas division, 3 percent in Europe, the Middle East and Africa (EMEA) while the Asia Pacific region contracted by 3 percent. Operating profit rose to 2.33 billion crowns ($271 million) from 1.86 billion a year earlier, matching analysts' expectations.
Assa Abloy, whose products range from ordinary household locks under brands such as Yale to advanced digital entrance systems, wants to expand in emerging markets where it sees better long-term growth prospects. It is also pushing to broaden into advanced high-tech solutions such as locking doors digitally via internet. "New products, and especially electromechanical products, make up a steadily increasing share of our sales," Chief Executive Jan Molin said. Shares in Assa Abloy, which has outperformed the Stockholm bourse in recent years helped by growing demand and acquisitions, trade at 24 times 12-month forward earnings.
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