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Lockmaker Assa Abloy sees demand slowing after forecast-beating quarter
© Reuters.
By Marie Mannes and Anna Ringstrom
STOCKHOLM (Reuters) -World no.1 lockmaker Assa Abloy (OTC:ASAZY) warned of slowing demand in some markets and said it was taking cost-cutting measures after on Wednesday posting a jump in third-quarter profits, helped by strong sales and currency effects.
"Demand remains strong in most markets, but due to weaker demand in some European markets in the quarter (mainly the UK, France and Benelux), some local organizations have initiated cost-reduction actions to protect their profitability," Chief Executive Nico Delvaux said in a statement.
"We will continue to act in response to possible changes in market conditions."
The Swedish group said operating profit grew 47% to 4.97 billion crowns ($453 million) in the three months through September, beating the 4.65 billion seen in a Refinitiv poll of analysts, with double-digit organic or self-generated sales growth in most markets.
Assa Abloy, whose products range from security doors and automated entrances to electronic and mechanical locks under brands such as Yale, said turnover was up 33% from a year earlier to 23.9 billion crowns.
Favourable exchange rates accounted for 16% and acquisitions 3% of that.
Shares in the company, a rival to Allegion (NYSE:ALLE) and Stanley Black & Decker (NYSE:SWK), were up 3% in mid-morning trade.
JPMorgan (NYSE:JPM) analysts, who have a "neutral" rating on the stock, said in a note that market trends described by Assa Abloy were not a surprise, "given peer reporting and the macro (environment), and local cost actions are being taken in the impacted businesses".
Assa Abloy is in the process of buying Spectrum Brands' home improvement and door hardware division for $4.3 billion. It is working to sell its Emtek and smart residential business in the United States to resolve antitrust issues that are holding up the deal.
The U.S. justice department has opposed the deal in court. Delvaux told analysts in a call he expected a ruling in the second quarter.
($1 = 10.9640 Swedish crowns)
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