Segment Access Solutions APAC
5 min.Stagnating organic sales, profitability slightly lower
Operational performance
AS APAC achieved total sales of CHF 230.5 million in the first half of financial year 2019/20. Organic sales were 0.3% below previous year’s level. Segment EBITDA reached CHF 35.1 million, which is slightly lower than a year earlier (CHF 36.8 million). The EBITDA margin continued to be on a high level at 15.2% (previous year 15.6%) due to effective cost management, and as efficiency improvements and a favorable product mix have almost offset the effects of lower volume.
Market development
As in the second half of 2018/19, sales were impacted by the ongoing trade conflict between China and the US, which affects the OEM business for the US market. The business has already initiated countermeasures, such as starting to shift capacity to Chinese domestic customers and insourcing production to compensate top-line shortfall. In addition, the segment has introduced a cost reduction plan focusing on initiatives to reduce material and labor costs for its Wah Yuet business.
The segment continued to experience strong demand in the China region, with double-digit organic growth rates despite a significant slowdown in Hong Kong due to political tensions. There was good growth in the commercial sector in China, driven both by the expansion of high-end solutions and offerings as well as the continued success of cost-effective mid-market products. In addition, the residential business improved and experienced good growth as the digital door locks business gained market share.
Growth in India was impacted by delays in project business. However, the segment anticipates that growth will strengthen during the second half of 2019/20, when these projects are expected to be executed.
Sales in the Pacific region were above prior-year level due to a strong Services business, despite a slowdown in the economic environment. As in the second half of 2018/19, growth in South East Asia was negatively impacted by a weaker construction market in several countries and therefore sales were below previous year. However, the segment believes in the medium- and long-term growth potential and continues to invest in this region.
AS APAC recorded double-digit growth rates for Safe Locks, Electronic Access & Data, Services and particularly for Entrance Systems.
In principle, the business expected a better growth dynamic for the second half of 2019/20 due to the relatively low comparable base from previous year, project execution in India and internal measures to counteract the effects from the trade conflict at Wah Yuet. However, these good business opportunities are overshadowed by the impact of Covid-19. While we already see a negative impact for our China domestic business, we currently lack visibility on the extent of impact on our supply chain, and on our partners and customers. Mitigation of the situation has our full management attention.
Key figures – segment AS APAC
CHF million, except where indicated |
| Reporting half-year ended 31.12.2019 | % |
| Reporting half-year ended 31.12.2018 | % |
| Change on previous year in % |
Net sales third parties |
| 217.2 |
|
| 222.6 |
|
| –2.4 |
Intercompany sales |
| 13.3 |
|
| 13.9 |
|
|
|
Total segment sales |
| 230.5 |
|
| 236.5 |
|
| –2.5 |
Change in segment sales |
| –6.0 | –2.5 |
| –1.6 | –0.7 |
|
|
Of which translation exchange differences |
| –5.2 | –2.2 |
| –7.3 | –3.1 |
|
|
Of which acquisition (disposal) impact |
| 0.0 | 0.0 |
| –7.3 | –3.1 |
|
|
Of which organic sales growth |
| –0.8 | –0.3 |
| 13.0 | 5.5 |
|
|
Operating profit before depreciation and amortization (EBITDA) |
| 35.1 | 15.2 |
| 36.8 | 15.6 |
| –4.6 |
Average number of full-time equivalent employees |
| 3,329 |
|
| 3,328 |
|
|
|
Segment sales (in CHF million) – AS APAC
