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Locks are the heart of
every security solution
Since Securitas and Wärtsilä merged their lock businesses in 1994, ASSA ABLOY has grown through a combination of organic growth and acquisitions, and has improved its earnings at the same time. Today ASSA ABLOY is the world's leading lock Group. Over the last eleven years ASSA ABLOY has increased its sales from SEK 3 billion to SEK 27.8 billion. The Group currently comprises more than 150 companies with operations in over 40 countries.
Vision
"ASSA ABLOY will be the most successful and innovative company on our markets by placing locks at the heart of security and providing safe and secure solutions that give true added value to our customers. Our solutions make people around the world feel safer and more secure, creating more freedom in their lives."
Business Concept
"ASSA ABLOY provides safe and secure solutions that
are well-designed, convenient and cost-efficient. Through customer relevance and innovation, our solutions create superior value for businesses and for people at work, at home and at leisure."
Financial objective
ASSA ABLOY's primary financial objective is that return
on capital employed should exceed 20 percent. During the acquisition phase of the Group's strategy, substantial amounts of goodwill were added, which have reduced return on capital employed. The Group's stated goal now is to achieve its financial objective by 2008 at the latest.
  • Sales should, on average, grow organically at about 5 percent a year over a business cycle.
  • The EBIT margin should be improved to 16–17 percent. This should be achieved mainly by exploiting synergies within the Group.
  • The long-term positive trend in ASSA ABLOY's operating cash flow should be maintained.
  • Capital employed should be maintained at the present absolute level, which means a relative improvement after considering organic growth. Measures to make production more specialized are reducing capital tied up in inventory. Given the potential to increase utilization of current production capacity, capital expenditure can be maintained at today's level – below current depreciation.

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    Strategy
    For some years ASSA ABLOY has followed a strategy model based on three phases of development:
    1. Global platform. Build a worldwide presence and steadily add new areas of expertise.
    2. Leverage synergies and develop the Group's strength.
    3. Customer value. Increase organic growth by creating value for customers.
    The refined business strategy
    This strategy has been refined to enable ASSA ABLOY to realize the Group's Vision, Business Concept and financial objective. The refined strategy is based on three overriding themes subdivided into seven main activities. Implementation of the refined strategy has been in hand since its introduction in 2004.
    Theme 1. Grow our core business
    1. Lead the specification markets
    ASSA ABLOY's goal is to strengthen the Group's collaboration with architects and security consultants, who play an important role in choosing security solutions for new construction projects. Today's large-scale office and factory buildings have highly complex security requirements, and by helping architects to specify security solutions, ASSA ABLOY contributes to more secure buildings. During 2005, work on project specifications of security solutions was intensified and the number of specifications grew satisfactorily, especially on the US market.
    2. Develop channels to market
    More than 90 percent of ASSA ABLOY's sales go through fragmented local distribution. The Group's goal is to develop and strengthen collaboration with existing and new distributors by means of education, sales support and improved logistics and administration. At the same time ASSA ABLOY is working to simplify end-users' choice of security products for different areas of application. During 2005 the coordination of marketing and sales forces under the main ASSA ABLOY brand name was initiated.
    3. Develop the door and window OEM markets
    On many geographical markets ASSA ABLOY makes limited sales to Original Equipment Manufacturers of doors and windows. The Group's goal is to improve ASSA ABLOY's ability to meet the specific requirements of these important customers. During 2005 ASSA ABLOY has strengthened its positions on local OEM markets by working actively with the customers on their product development.
    Theme 2. Expand into new markets and segments
    4. Capture and develop consumer opportunities
    Today the consumer segment of the security market is fragmented, and consumers are looking for many different security solutions. ASSA ABLOY's goal is to increase the Group's presence in the consumer segment through a variety of channels and to create a new consumer category – home security. ASSA ABLOY will offer relevant products and services that make it possible for the consumer to create a safer, more secure daily life. Yale is currently being positioned as ASSA ABLOY's worldwide consumer brand, and Yale Security Point stores are a franchise concept that ASSA ABLOY has launched during the year.
    5. Grow electromechanical door solutions
    There is a rapid pace of growth in the electromechanical door solutions segment. ASSA ABLOY's goal is to increase the total market by reducing the installation costs for end-customers. This is being achieved by using open communication standards such as Hi-O, a platform for intelligent communication between the various components of the door environment, which simplifies installation. In order to expand the market, these products are also sold through additional sales channels such as installers of electronic security systems.
     
    The new CEO has initiated a review of future restructuring measures. The results of this review may affect the long-term financial objective.
    organic growth, %
    * In 2003, organic growth was 0 percent.
    Operating margin (EBIT), %1
    Operating cash flow / EBIT 1
    net capital expenditure /
    depreciation 1
    1 1996–2003 have not been adjusted for IFRS but amortiziation of goodwill has been excluded.