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STOCKHOLM (Reuters) -Assa Abloy, the world’s biggest lockmaker, on Wednesday posted an unexpectedly big jump in third-quarter profits on the back of strong sales and currency effects, but warned demand may be set to slow.
The Swedish group said operating profit grew 47% from a year earlier to 4.97 billion crowns ($453 million) in the three months to end September, against a mean forecast of 4.65 billion in a Refinitiv poll of analysts, with double-digit organic sales growth in most markets.
Assa Abloy (OTC:ASAZY), whose products range from security doors and automated entrance systems to electronic and mechanical locks under brands such as Yale, said net sales were up 33% to 23.9 billion crowns. Favourable exchange rates accounted for 16% and acquisitions 3% of the growth.
Chief Executive Nico Delvaux however warned demand may slow, and said focus on costs would remain critical.
“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,” he said.
“We will continue to act in response to possible changes in market conditions,” he said in a statement.
Shares in Assa Abloy, whose rivals include Allegion (NYSE:ALLE) and Stanley Black & Decker (NYSE:SWK), were up 3% in early trade.
Analysts at JPMorgan (NYSE:JPM), with a “neutral” rating on the stock, said in a note neither market trend described was 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 U.S group 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.
($1 = 10.9640 Swedish crowns)
