Segment Access Solutions AMER

Organic sales growth, slightly lower profitability

Operational performance

AS AMER achieved total sales of CHF 416.3 million in the first half of financial year 2019/20. Organic sales increased 1.4% compared to the previous year. Segment EBITDA reached CHF 87.2 million (previous year CHF 84.7 million), the EBITDA margin was at 20.9% (previous year 21.1%).

The systems and infrastructure challenges at its hollow metal door business (Mesker) continued to affect both the top line and profitability in the first half of the financial year 2019/20. While the technical issues have since been resolved, we continue to have pressure from this business as it takes time to regain customer trust, which should be achieved by end of the financial year 2019/20.

The EBITDA margin was slightly below previous year as price realization, procurement savings, a positive mix effect and cost efficiencies could not offset for higher freight costs, newly imposed tariffs and increased IT costs for the preparation and roll-out of global applications.

The segment’s overall financial profile benefited from the acquisition of Alvarado Manufacturing based in Chino (CA/USA). The acquisition was closed on 31 July 2019 and has been accretive to EBITDA margin and earnings per share from day one.

Market development

Growth in AS AMER was driven by Door Hardware, Safe Locks, Interior Glass Systems and the Lodging Systems business in North America. Unlike in the second half of 2018/19, Latin America contributed to growth as well, driven by an improvement in Mexico.

Going forwards, the segment is expected to benefit from the successful introduction of new and innovative products. The most recent example is Switch Tech, a highly durable, digitally enabled replacement for small-format interchangeable cores (cylinders), which allows electronic and mobile access through a cost-effective retrofit of already installed door locks.

The segment expects further organic growth in the second half of 2019/20 as Door Hardware, Safe Locks and Interior Glass Systems continue to benefit from their first-half-year momentum, as hollow metal doors builds back customer trust and as Lodging Systems sees increased new construction and retrofit demand. The business will benefit from the finalization of its production adjustments which will lead to higher efficiency: the segment has closed eight production sites and will continue to optimize its production footprint. This manufacturing footprint transformation has been realized by consolidating various smaller locations into major production hubs, such as Montreal (Canada) for Hospitality and Electronic Solutions, Nogales (Mexico) for high-volume assembly products, Reamstown (USA) for Entrance Systems as well as Interior Glass Systems, and Indianapolis (USA) for Door Hardware. In November 2019, the segment has inaugurated a new production building in Indianapolis that has added 18,000 square meters of floor space. The production of the Steelville plant and the US Services business will move to this new building in the second half of 2019/20.

Key figures – segment AS AMER

Segment sales (in CHF million) – AS AMER