Segment Access Solutions AMER

Flat growth, profitability below previous year

Operational performance

AS AMER generated total sales of CHF 828.4 million in the period under review. Organic sales growth was flat compared to the previous year. The segment reported an EBITDA of CHF 163.4 million, which is a 13.5% increase to prior year, and an EBITDA margin of 19.7% (previous year 21.0%). Positive EBITDA margin effects from the acquisitions of Best Access and Mesker could not compensate for merger-related Information Technology (IT) costs and the less favorable product mix caused by lower sales in the Safe Locks business and declining profitability in the Services business.

Market development

Sales growth in Canada and Latin America did not compensate lower sales growth in the US. Retrospectively, segment sales had a high comparable base in 2016/17 with organic growth of 9.1%. Growth in the US was negatively impacted by a deterioration of the weak environment for ATM locks (Safe Locks) which could not be compensated by good growth of Door Hardware. Lodging Systems reported continued good growth, which was driven by the success of the Mobile Access Solutions. Initially developed for the hotel business, this technology is now successfully leveraged in other commercial applications, where along with other new product introductions dormakaba experienced significant growth for electronic locks.

In the year under review, AS AMER was still impacted by the post-merger integration process of dormakaba and the Best Access and Mesker acquisitions. While good integration progress was made, the segment will finalize some of its merger and acquisition-related projects including IT only in 2018/19. The segment has gained several cross-selling contracts based on the new combined portfolio, including airport projects like Portland (Oregon), Austin (Texas), and DCA Reagan Washington. However, top-line synergies for the full portfolio of door hardware and access control solutions were below expectations, as the organization was more absorbed by integration efforts than expected. The business aims to increase top-line synergies by further training of the joint sales force and of specification writers for cross-selling on the combined portfolio.

The integration of Best Access and Mesker is on schedule and important milestones like the demerging of IT systems from the former parent company of Best Access were achieved ahead of schedule. Both acquired businesses have contributed positively to the segment’s profitability.

Outlook

Based on a solid order book, AS AMER expects growth driven by lodging and multi-housing as well as by the continued good development of its acquired businesses.

However, the segment does not expect any major improvement in the Safe Lock business for ATMs; in addition, a potential reduction of certain non-core and less profitable parts of the US Services business could negatively impact growth for the segment overall.

AS AMER expects to benefit from the Best Access and Mesker acquisitions, its broader product offering and its stronger position in important verticals like healthcare and education. As an example, the quality and performance of Best Access products for the education sector have been honored with the Platinum award for the product range shelter in the Lockdown and Physical Security category in the Secure Campus Awards 2018 (Campus Security & Life Safety, March 2018).

The segment will continue to develop innovative technologies and solutions, such as Ambiance, a lodging access management software solution which unifies different existing software platforms. Another example is the new Saflok Quantum Pixel lock for lodging. With its minimalistic and elegant design and its mobile access option it meets customer requirements particularly in the European and Asian markets.

AS AMER will monitor raw material prices in North America which may rise due to potential tariff policy escalations. To compensate, the segment will respond with identification of additional sourcing options and price adjustments.

The segment has launched initiatives to increase its profitability. These measures include a shared service center for finance, and investments in equipment and factory footprint to internalize external costs.

Third-party sales by segments

Key figures