Dormakaba reports slight first-half net sales miss, confirms outlook

By Amir Orusov and Anastasiia Kozlova

(Reuters) -Swiss security group Dormakaba confirmed its full-year outlook on Tuesday after coming in slightly below first-half net sales forecasts hurt by currency effects.

It posted group net sales of 1.38 billion Swiss francs ($1.56 billion) for the half-year ended December 31, up 3.9% organically but below the 1.41 billion expected by analysts, LSEG data showed.

Dormakaba shares were down 1.9% by 0842 GMT.

Price increases contributed 3.1% of the organic growth, while volumes added 0.8%, said Dormakaba, whose products range from entrance systems to safe locks.

"Pricing will be on a similar level in H2," CEO Till Reuter, who took the helm in January, told Reuters.

CFO Christina Johansson added, however, the group does not exclude the possibility of increasing prices, depending on inflation.

Dormakaba has been raising its prices and cutting costs to mitigate the impact of high inflation and higher costs.

China, not a core market for Dormakaba, has not demonstrated strong growth momentum post-COVID, though the company expects its potential to pick up again in near future, Reuter said.

Dormakaba focuses on commercial market, with the residential market representing less that 10% of the group sales, Johansson said.

The company achieved a "sound" revenue growth and its lower exposure to the ailing residential construction market helped it outperform its competitors, said Bernd Pomrehn, a Vontobel analyst said. Swedish peer Assa Abloy reported a smaller-than-expected rise in fourth-quarter operating profit, after a decline in residential markets slowed its sales growth. Dormakaba posted an 8.7% rise in first-half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to 200.7 million Swiss francs, 2% ahead of Vara consensus cited by Jefferies. Its adjusted EBITDA margin increased to 14.6%, topping a consensus estimate of 14.1%.

The company confirmed its guidance for 2023/24, citing a good order pipeline. It expects organic sales growth to reach its mid-term target of 3-5% and profitability to improve versus last year.

($1 = 0.8852 Swiss francs)

(Reporting by Amir Orusov and Anastasiia Kozlova; editing by Kim Coghill and Jason Neely)