February 6, 2018 / 2:16 PM / 5 months ago

UPDATE 2-Assa Abloy says smart locks the key to faster growth

* Q4 EBIT 3.4 bln SEK vs consensus 3.3 bln

* Q4 organic growth 5 pct vs consensus 4 pct

* Shares rise despite global stock market rout (Adds CEO, analyst comments, shares)

By Anna Ringstrom

STOCKHOLM, Feb 6 (Reuters) - Assa Abloy, the world’s biggest lock maker, predicted a pick up in sales growth this year as customers increasingly switch from mechanical locks to hi-tech alternatives ranging from fingerprint scanners to smartphone-activated systems.

The Swedish company beat quarterly profit forecasts and flagged plans to cut more costs, helping to boost its shares on Tuesday despite a rout on global stock markets.

“I am confident that the majority of all private residences will be converted to smart door locks during the next decade. A gigantic market is opening up,” CEO Johan Molin said.

Molin, who is stepping down next month, told analysts on a conference call he saw core sales growth in the first half of 2018 above the 4 percent achieved in the same period last year.

While declining to give an exact figure, he said his expectation for the full year was slightly higher than the 2-4 percent guidance he gave ahead of 2017.

Fourth-quarter operating profit was 3.4 billion crowns ($421 million), up from a year-ago profit before restructuring charges of 2.9 billion and beating a mean forecast in a Reuters poll of analysts for 3.3 billion.

“Demand was positive for nearly all regions and business units, with strong demand for our electromechanical products and smart door locks,” Molin said.

“On most markets, especially in Europe, there is a positive trend, but on some markets, such as China and Brazil, demand remains weak.”

Quarterly sales growth before acquisitions accelerated more than expected to 5 percent from 1 percent a year earlier.

“This is a decent quarter (and...) a very strong quarter for Global Technologies which delivered 9 percent organic growth,” said Barclays analyst Lars Brorson, referring to a division that sells mainly electronic access control systems and hotel locks.

Brorson has an “overweight” rating on Assa shares, which were up 2.6 percent to 175.80 crowns at 1340 GMT.

Assa said sales in China, where demand has been falling following a building boom, stabilised in the quarter. China is a relatively small market for the company, but one where it is looking to grow over the long term.

Assa, which been has been outgrowing rivals helped by acquisitions in a fragmented market, said it would present new efficiency measures this year as it integrates recent purchases.

The company has recently inked partnerships with retail giants Amazon and Wal-Mart, which are seeking entrance systems that can speed up home deliveries.

It proposed a slightly higher dividend than expected of 3.30 crowns per share.

$1 = 7.9768 Swedish crowns Reporting by Anna Ringstrom; Editing by Niklas Pollard and Mark Potter

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