Published on April 24, 2018 at 8:01 AM CET.
Download the report
Sales during the first quarter of the year were slightly lower than the corresponding quarter of 2017 when several major projects were delivered. This, as well as continued challenges with profitability in France, have led to a lower operating profit of MSEK 49. Cash flow for the quarter was MSEK 39, which is a clear improvement compared to the first quarter of last year.
The strategic review of our French business continued during the first quarter. Our main focus is to reposition the business into growing segments outside the bank market, such as mass transit, high-risk sites and public and commercial buildings. Another focus area is to improve our efficiency and productivity in service execution, where changes are being implemented in both the management structure as well as in the operations.
Sales in Region EMEA decreased organically by 1% during the first quarter. Excluding France, EMEA showed a growth of 2% and the Group was flat.
A good example of the repositioning of the French business is the order we received from Nice Airport this quarter. Gunnebo will improve efficiency at boarding by installing gates for automatic boarder control. In addition, Luton Airport in the UK has ordered solutions to regulate the flow of passengers. Moreover, French post La Poste signed a major order to supply safes with electronic locks to its branches across the country.
Sales in Region Asia-Pacific increased organically by 2% for the quarter. Development has been good in most markets. In India, sales remained weak due to the continued decline of the bank and ATM market. In addition, sales of Fire Projects decreased during the quarter due to the completion of the major OKI project.
In China, Gunnebo continues to be a leading provider of entrance security solutions to the country’s rapidly expanding public transport network. During the quarter, Gunnebo’s hundredth contract was signed,this time for Subway Line 3 in Nanjing, Guangxi Province. Expansion of the public transport network has also accelerated in India. With its own production in the country, Gunnebo is well positioned to become a key player in this market. During the quarter, there were also several major orders for vaults and safe deposit boxes.
Organic sales growth in Region Americas was -9% in the quarter. Sales were good in Mexico, recovering after several quarters of lower sales. Sales declined in North America against last year's record sales, and in Brazil, sales fell as during the first quarter of the previous year, a large cash management project was delivered.
Gunnebo's operations in Mexico consist largely of a service and installation business in electronic security. During the quarter, two major service contracts were secured with the banks Santander and Banorte. In Brazil, major retail chains continued to invest in Gunnebo's loss prevention solutions and in the USA, JP Morgan placed an order to deliver deposit boxes for its premium branches.
Looking at sales by product area, the positive trend in Entrance Security has continued during the first quarter of 2018. Within Cash Management, development has been relatively unchanged at a high level. Safes & Vaults had weaker sales for the quarter, mainly due to lower sales of safes to global ATM manufacturers and continued low demand from banks in several markets. In Electronic Security, sales were lower for the quarter.
For the first quarter, we reported an operating profit excluding items affecting comparability of MSEK 49 and an operating margin of 3.5%. The work to improve our business in accordance with our strategy continues and we have strengthened our focus on our main product areas to better deliver profitable growth.
Gothenburg, 24 April 2018
Henrik Lange, President and CEO