October 18, 2019 / 6:29 AM / 3 months ago

Assa Abloy profit meets forecasts, sees more uncertain markets

FILE PHOTO: An Assa Abloy lock and key are displayed in a shop in Riga, September 19, 2013. REUTERS/Ints Kalnins/File Photo

STOCKHOLM (Reuters) - Assa Abloy (ASSAb.ST), the world’s biggest lock maker, said on Friday that market conditions had become more challenging and uncertain after reporting higher third-quarter earnings in line with analysts’ forecasts and resilient sales growth.

The company said savings, price increases and lower raw material costs boosted profits, while new construction had continued to trend down in some important markets and geopolitical challenges remained.

Assa Abloy said organic sales grew 4% in the quarter, despite negative growth in China. JP Morgan analysts said in a note they had expected organic growth of 3.2%.

The company, whose rivals include Allegion (ALLE.N) and Stanley Black & Decker (SWK.N), said it had reached its acquisition target of 5% for 2020.

“Nevertheless, we will continue to work actively on our acquisition pipeline,” Chief Executive Officer Nico Delvaux said in the earnings report.

Operating profit was 3.89 billion ($400.9 million) crowns against 3.42 billion a year-ago. Analysts had on average estimated a profit of 3.87 billion crowns, according to Refinitiv data.

Shares in Assa Abloy, which also makes security doors, access control systems and hotel room locks, are up around 40% so far this year.

The Swedish group is in the middle of a shift from mechanical locks to electronic and digital alternatives ranging from fingerprint scanners to smartphone-activated systems, under brands such as Yale.

Reporting by Helena Soderpalm; editing by Johannes Hellstrom and Jane Merriman

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