SWEDEN. SEK M Sales Average number of employees

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1 SWEDEN Sales by units within the Swedish organization amounted to SEK 847 M (752) in 1997, representing organic growth of 12.6 percent. amounted to SEK 124 M, and other exports totaled SEK 113 M. The Swedish organization consists of separate units as Assa AB, ASSA Industri AB, FIX AB, AB FAS Låsfabrik and SOLID AB, with operations covering the entire safety products field, from advanced access control systems to building hardware for windows and doors. Assa AB markets security systems based on a complete program of lock products for the project and consumer market. FIX AB develops, manufactures and markets a broad line of hardware for windows, doors and entrances. ASSA Industri AB focuses on industrial customers, mainly manufacturers of doors and cabinets. AB FAS is the market leader in mortise deadlocks, where an extra degree of security is sought through supplementary locking. They also supply locks for safety cabinets. SOLID AB has a complete program of electromechanical products and access control systems that are supplemented by automatic door operators and mechanical products such as door closers from Abloy Oy. The rate of activity in the construction market continued at a low level in Despite a weak market, the trend for the Swedish companies was favourable. All units reported good growth, due primarily to increased exports. Utilization of capacity was higher. Overall, these factors resulted in a strong increase in earnings. It may be noted, among a number of interesting orders during the year, that the Modern Museum in Stockholm selected Assa AB to supply its total security system. As a result of the Group s efforts in new markets, Assa AB has focused its development program on among other products cylinder locks for various export markets. Assa Industri AB has had success in the American market with its industrial locks for gambling machines. The company has also noted a gratifying trend of sales for its high-security products in such new markets as the Far East. In addition, the company s OEM customers in the door and window industries increased their exports during the year, with a resulting favourable impact on ASSA Industri. FIX AB also reported substantial export successes and exports now account for 50 percent of the company s sales. Security products are occupying an increasingly prominent position in the Swedish market. The need for good security products, as well as the interaction among suppliers, security managers and users of security products, are becoming increasingly important in achieving sound, cost-effective security systems. The demands for reliable evacuation and resistance to intrusion, which partly conflict with each other, were an area in which attention was focused in During the year Assa AB launched a new line of products, panic bars, that combine reliable evacuation with a high degree of resistance to intrusion in a new way. The new program has attracted a great deal of interest and is expected to become one of Assa AB s more significant products in the future. COMPANIES Assa AB Mechanical and electromechanical lock products. President and country manager: Hans Johansson ASSA Industri AB Lockcases, hinges and cabinet locks, with a focus on industrial customers. President: Hans Johansson TRENDS IN SWEDEN Sales of employees AB FAS Låsfabrik Market leader in mortise deadlocks. President: Jerry Pull FIX AB Espagnolettes and window fittings. President: Stellan Svensson SOLID AB Access control systems and electric striking plates. President: Håkan Wolgast Other companies in the Swedish organization are Assa Säkerhetsgruppen AB, Assa Portuguesa LDA, ASSA ABLOY Romania Srl and Assa Balt Ltd. Mechanical locks, lock systems and accessories, 59% Electromechanical locks and electronic locks, 14% Industrial locks, 6% Door and window hardware, 21%

2 FINLAND Sales by units within the Finnish organization amounted to SEK 744 M (620) in 1997, representing organic growth of 19.2 percent. amounted to SEK 155 M, and other exports totaled SEK 137 M. ASSA ABLOY s operations in Finland are conducted by Abloy Oy, which manufactures and markets mechanical and electromechnical locks, lock systems, door closers and hardware under the ABLOY, AVA and PRIMO brand names. Locks and lock systems are distributed in Finland through ABLOY-authorized A-Quality locksmiths. The door and window hardware is sold via whole-salers and OEM customers who also constitute an important sales channel for industrial locks. The many new products in 1997 included ABLOY EXEC ID, the new intelligent lock cylinder system in the Construction Locks unit, a new series of solenoid locks for wooden doors and a new automatic door closer in the Electromechanical Locks unit. Abloy s high-security cylinder, the ABLOY EXEC, was launched in export markets by the Industrial Locks unit together with a number of new PRIMO door and window handles. The Door Closer unit developed a new range of door closers in cooperation with Sargent Manufacturing, the sister company in the United States. A new door closer plant for the first jointly produced product was opened at the end of the year. UNITS IN THE FINNISH ORGANIZATION Abloy Oy Lock cylinders, mechanical and electromechanical locks, door closers and building hardware. President and country manager: Matti Virtaala Abloy Oy s business units: Construction Locks BU-manager: Kari Mononen Industrial Locks BU-manager: Jouni Pitko Electromechanical Locks BU-manager: Matti Ahola Building Hardware BU-manager: Kyösti Sormunen Door Closers BU-manager: Markku Kuivalainen Abloy Oy Eesti Filiaal, Estonia Markets and sells Abloy s products Manager: Jorma Luikku Abloy Security Ltd. Pty., Australia Markets and sells Abloy s products President: Joe Lahoud OOO ASSA ABLOY, Russia Markets and sells Abloy s, Assa s and VingCard s products. President: Ahti Ovaskainen The domestic market continued to grow due to a strong upturn in the building sector and the economy in general. The after-sales market also continued to increase as a result of an active retrofit market and the trend towards higher security. In export markets, the expansion in the telecommunications field, in particular, boosted sales of industrial padlocks as well as electromechanical locks and mechanical lock cylinders. Abloy Oy is now the world s leading manufacturer of lock products for radio base stations and related telecommunications applications. The recent years sales successes in this area are expected to continue. Abloy Oy is the world s leading manufacturer and developer of products in the field of electromechanical lock technology, which is expected to continue to show strong growth. Exports of door closers rose 60 percent in This strong rate of increase is expected to continue, based in part on the cooperation with Sargent, the sister company in the United States. The Finnish organization is responsible for sales to customers in Russia and the Baltic States, which rose by approximately 40 percent for the third year in a row. During the year ASSA ABLOY opened a new sales company in Russia in order to further strengthen its marketing program there. Exports as a percentage of total sales are increasing steadily and currently account for approximately 40 percent of total invoicing. This increase imposes continuously higher demands on quality, delivery times and service. An important step in Abloy s environmental program was taken during the year when the company was certified in accordance with the ISO standard. Important orders in 1997 included contracts to supply mechanical and electromechanical locks for the Hermitage in St. Petersburg, complete lock systems for Nokia s head office in Helsinki, and locks for Ionica, a British telephone company. Finland has experienced a growing trend towards higher security throughout the 1990s. In 1997, approximately 85 percent of all new lock systems included the ABLOY EXEC high-security cylinder. In the export sector, the trend towards high security involved a successful introduction of ABLOY EXEC products. TRENDS IN FINLAND Sales of employees Mechanical locks, lock systems and accessories, 43% Electromechanical locks and electronic locks, 21% Industrial locks, 14% Door and window fittings, 22%

3 NORWAY Sales by units within the Norwegian organization amounted to SEK 531 M (346) in 1997, representing organic growth of 8.7 percent. Exports to Group companies in other countries amounted to SEK 8 M, and other exports totaled SEK 41 M. The units within the Norwegian organization have been reconstructured in The reconstruction work has now been performed. The new Norwegian structure consists of TrioVing a.s., which manufactures and markets security products to customers in the domestic project and consumer market, Grorud Industrier a.s., which produces mainly fittings for OEM markets, and Låsgruppen a.s. Låsgruppen consists of eight important retailers of security products who market and sell primarily TrioVing s line of products. TrioVing is the leading brand in the Norwegian lock market. The company operates with a large portfolio of both its own and Group products as a means of offering total solutions for end users. Grorud manufactures hardware for doors and windows, as well as a broad program of so-called snap-in hinges that simplify the assembly of doors at the building site. Two new products of importance were introduced in the American and Japanese markets during the ASSA ABLOY s Norwegian units were concentrated in Grorud Industrier, which thereby nearly doubled its volume of parts made of zinc. The proportion of zinc castings is expected to grow in the future, due to the demand for increasingly complex systems of door and window hardware, in various markets. Låsgruppen and 40 other locksmiths are part of TrioVing s chain concept, the TrioVing Sikkerhetssenter (Security centres), in which the participants cooperate regarding technical solutions and marketing. Based on their documented professional skill, these locksmiths ensure good quality in terms of the delivery and installation of lock systems, and in promoting security concepts. TrioVing Twin, a new cylinder program, was introduced during The program offers the highest degree of security and will effectively meet future requirements involving patented key control and reliable protection against damage and manipulation. The investment in the TrioVing Security Centres has improved the conditions for a sharper focus on high-security products. The Norwegian market is very strong and TrioVing is working with a number of large projects, including Rikshospitalet (National Hospital) in Oslo and parts of the Gardemoen Airport project outside the city. Demand is expected to continue to be strong in During the year, casting operations in various parts of UNITS IN THE NORWEGIAN ORGANIZATION TrioVing a.s. Total supplier of locks and security products to the Norwegian market President: Tor-Arne Jensen Grorud Industrier a.s. Manufactures fittings for doors and windows. President: Tore Glenne Låsgruppen a.s. Markets and sells locks and fittings. President: Björn Haugsvaer TRENDS IN NORWAY Sales of employees Mechanical locks, lock systems and accessories, 68% Electromechanical locks and electronic locks, 6% Industrial locks, 3% Door and window hardware, 23%

4 DENMARK Sales by units within the Danish organization in 1997 amounted to SEK 288 M (268), representing organic growth of 7.4 percent. Exports to Group companies in other countries amounted to SEK 28 M and other exports totaled SEK 35 M. ASSA ABLOY s operations in Denmark are based on both A/S Ruko s products and other Group products. The interest in other Group products, which accounted for approximately 35 percent of sales in 1997, is increasing in the Danish market. Ruko s product program focuses on locks and cylinders. Ever-greater interest is also being directed to high-security products, electromechanical products and systems with integrated access-control. The three regional departments in the Ruko Service A/S subsidiary are responsible for shipments with short delivery times, for system development and for after-sales market. The FIX A/S subsidiary in Silkeborg has been reorganized and is now responsible for all sales of Group products to customers in the door and furniture industry in Denmark. The Danish market was characterized by continuing substantial construction and renovation activity in 1997 and Ruko maintained its high share of the market. More intensive cultivation of the market and active programs of consulting on large projects resulted in an increase of approximately 11 percent in sales (including invoicing via FIX A/S), compared with sales in Excluding sales via FIX A/S, the increase was 7 percent. The sales program was carried out in cooperation with the largest wholesalers in the market. This resulted in increased sales of both high-security products including electromechanical products and other Group products. Ruko is expected to be able to maintain both its growth in sales and its high share of the market. In addition, the new FUNXION stainless steel line of fittings is expected to contribute to higher sales in both Denmark and export markets. Ruko s exports constitute approximately 20 percent of its total invoicing, with half of the products going to ASSA-Ruko in Germany. ASSA-Ruko GmbH is incorporated in the Danish organization, but operates in Germany. Ruko s strong brand name provides a solid platform that was further strengthened in November when the company received environmental certification in accordance with the ISO standard. Part of Ruko s steady growth in sales is attributable to successful cooperation with insurance companies and public agencies. In this connection, the company has conducted an active press campaign with special emphasis on the importance of replacing old lock systems with new ones offering higher security. The campaign was also supplemented with material profiling Ruko and ASSA ABLOY as world leaders in high-security systems and products. UNITS IN THE DANISH ORGANIZATION FIX A/S Sells FIX products in Denmark. President: Keld Madsen A/S Ruko Total supplier of locks and security products to the Danish market President: Otto Hansen Ruko Service A/S Markets locks and security products in the Danish market. President and country manager for Denmark and Germany: Otto Hansen ASSA-Ruko Sicherheitssysteme GmbH Markets and sells Assa's and Ruko's program of lock products in the German market. President: Otto Hansen TRENDS IN DENMARK Sales of employees Mechanical locks, lock systems and accessories, 77% Electromechanical locks and electronic locks, 4% Industrial locks, 9% Door and window hardware, 10%

5 GERMANY Sales by units within the German organization in 1997 amounted to SEK 533 M (501), representing organic growth of 2.3 percent. amounted to SEK 0.1 M. Other exports amounted to SEK 134 M. ASSA ABLOY s operations in Germany are conducted through IKON AG and BAB-IKON GmbH, as well as the sales companies Ambouw B.V. in the Netherlands, Dupéray S.A. in Belgium, and IKON Cully S.A. in Switzerland. The ASSA-Ruko GmbH unit is incorporated within the Danish organization, but operates in Germany marketing and selling Assa s and Ruko s products. Dörrenhaus, the second-largest German lockcase manufacturer, was acquired in January This was a first step toward broadening of the product program in line with ASSA ABLOY s strategy in other countries. IKON manufactures cylinders and lock systems with an emphasis on high security. Most of IKON s sales are to institutional and industrial customers. Distribution takes place through traditional channels: wholesalers, security experts and locksmiths. Industrial locks are sold directly to OEM customers. BAB is a manufacturer of smaller systems and standardized products which are made in series. Security cylinders account for 70 percent of IKON s sales. Complete lock systems constitute the base of the product program. Other important product areas are electromechanical products, industrial cylinders, security locks and fittings and products for access control systems. The German market was weak in 1997 and declined by some percent. No appreciable increase is expected in The low rate of new construction has been offset by stable and substantial sales to the after-market. IKON has become more efficient and has regained some customers it lost earlier. Sales have generally been stable and the company s share of the market has increased slightly. Sales of new lock systems are increasing as a result of greatly improved deliveries and a higher degree of service, combined with more active marketing and sales. IKON has also been responsive to growing environmental demands and was certified in accordance with ISO during the year. The full impact of the comprehensive rationalization program implemented in recent years is now beginning to pay off and IKON has achieved a significant earnings improvement during The company is expected to report favourable profitability in BAB-IKON has also implemented structural changes, with resulting lower costs and increased productivity. The trend of sales has been good and is expected to continue in Favourable trends of business were also noted in Dupéray, IKON Cully and Ambouw. The integration of Ambouw, which was acquired in 1996, proceeded according to plan. Some of the year s most important orders were received from the Allianz insurance company s Treptower office in Berlin, the Hoechst AG chemical group in Frankfurt and Westdeutsche Rundfunk in Cologne. The trend of German business is being determined by increased awareness of the need for security. There is an increasing demand for combinations of electronic and mechanical security products as well as for improved mechanical systems. UNITS IN THE GERMAN ORGANIZATION BAB-IKON GmbH Schliesstechnik Manufactures and sells smaller lock systems and standardized series products. President: Eero Leskinen IKON AG Präzisionstechnik Manufactures and sells high-security cylinders and advanced lock systems. President: Eero Leskinen TRENDS IN GERMANY Sales Number of employees ,038 Ambouw B.V., The Netherlands Markets and sells locks and hardware in the Dutch market. President: Bernd Zierleyn Dupéray S.A., Belgium Markets and sells a complete program of lock products, mainly from IKON, in the Belgian market. President: Frans Quix IKON Cully S.A., Switzerland Markets and sells IKON's and BAB-IKON's products in the Swiss market. President: Ugo Zanolari Mechanical locks, lock systems and accessories, 87% Electromechanical locks and electronic locks, 2% Industrial locks, 5% Door and window hardware, 6%