July 17, 2020 / 6:37 AM / 22 days ago

Lockmaker Assa Abloy beats expectations despite 44% profit fall

STOCKHOLM (Reuters) - Sweden’s Assa Abloy reported a better-than-expected 44% fall in second-quarter operating profit on Friday as the world’s biggest lockmaker forecast a gradual recovery.

Operating profit fell to 2.10 billion crowns ($231 million) from 3.73 billion a year earlier but topped the 1.68 billion expected by analysts in a Refinitiv Eikon poll.

Net sales fell 15% to 20.0 billion crowns and its profit margin to 10.5% from 15.9% a year earlier.

CEO Nico Delvaux said on Friday the group had been helped by significant cost savings and improved demand after some countries in May started easing restrictions put in place to fight the coronavirus pandemic.

“If there are no significant new negative events, we expect the financial performance to continue to gradually improve,” Delvaux said.

“The attractive fundamentals of our industry are intact and therefore our financial targets remain valid,” he said, noting the company had sustained investment in product development during the quarter.

Shares in Assa Abloy were up 2% in early trade.

All of Assa Abloy’s factories around the world are currently operating, he said, after more than 30 closed amid lockdowns and a slump in demand.

Assa Abloy, which competes with Allegion and Stanley Black & Decker, had warned in April that sales and profits could shrink substantially versus the first quarter when its profit fell 15% to 2.75 billion crowns.

Earlier in April it had announced cost-cutting measures such as reduced working hours, temporary and permanent layoffs, travel bans, curbs on the use of consultants and delays to projects.

($1 = 9.0806 Swedish crowns)

Reporting by Anna Ringstrom; editing by Edmund Blair and Jason Neely

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