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Assa Abloy Expects Crawford Integration, Efficiency Cost Of SEK 1.33 Bln

Shares of Assa Abloy AB (ASAZF.PK) are currently trading around 5 percent lower in Stockholm, after the Swedish lockmaker said Thursday that it currently expects costs of 1.33 billion Swedish kroner for the integration of Crawford, part of recently acquired Cardo, along with the accelerated program for efficiency improvements in the rest of the company.

The company expects one off pre-tax effect of 900 million kroner to be charged in full in fiscal 2011.

While announcing the public offer for Cardo in December last year, Assa Abloy had conveyed its intention to consolidate Cardo Entrance Solutions in its Entrance Systems division and to sell the other businesses, i.e. Cardo Flow Solutions and Lorentzen & Wettre, that do not long term fit the company's operations.

It was on July 29 that Assa Abloy completed the sale of Cardo Flow Solutions to Switzerland-based Sulzer Ltd for 5.90 billion kroner on a cash and debt free basis. In early July, Assa Abloy agreed to sell Lorentzen & Wettre to Swiss engineering group ABB Ltd. (ABB, ANN.L) for 750 million kroner on a cash and debt free basis.

The company today noted that the divestments of Cardo Flow Solutions and Lorentzen & Wettre will soon be successfully finalized, and that net gain on the sale is estimated to amount to 430 million kroner.

Further, the company said the acquisition and integration of Crawford, the part of Cardo which is being consolidated into Assa Abloy, is performing better than expected, and that it shows both growth and good profitability. Identified synergies are also expected to exceed previous estimates.

'The cost for implementing the efficiency programs will therefore be somewhat higher than previously communicated and amount to approximately 380 million kroner, the company said.

In addition, Assa Abloy said it has initiated a new analysis of the production structure in the rest of the company, and has identified further potential for efficiency improvements. According to the company, it is even more important to accelerate the efficiency programs on the mature markets amid the current uncertain economic outlook. The company said the cost for the implementation of efficiency programs would be 950 million kroner.

The company also plans closing or reshaping 17 production units and 2 administrative units. In February, regarding its ongoing restructuring programs, the company had noted that a further 1,030 people would leave in the next two years.

Meanwhile, the company in early September agreed to buy Angel Metal in Korea, which offers locks and hardware on the Korean market both in the residential and commercial segments. In May, it acquired Portafeu, the French provider of customized fire doors.

In Stockholm, Assa Abloy shares are currently trading at 140.20 kroner, down 6.80 kroner or 4.62 percent, on a volume of 2.24 million shares.

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