Ladies and gentlemen, welcome to Assa Abloy and the first quarter reporting. A good quarter again for Assa Abloy, which I feel very good about. Let's now dive into the numbers as such. We saw a good start of the year, very much driven by Americas, that continued in a strong way with strong growth. Good growth in EMEA and Entrance Systems. Entrance Systems is a mix of Americas and Europe primarily. We saw growth in Global Technologies despite very strong growth last year, negative in APAC, as we have been used to see, mainly due to, or only due to China more or less, which continued weak in the quarter. Of course, this quarter, as we have talked about earlier, it was a little bit shorter in number of working days due to Easter.
Turnover increased by 4% or SEK 15.9 billion on the back of 3% organic, 3% acquired growth, and a -2% currency. Now we see that the currency that was so positive last year starts to turn slightly negative. EBIT also follows suit by growing by 4% to SEK 2.4 billion, and we had here a negative currency effect of SEK 76 million. Earnings per share increased by 1% to SEK 1.47, and this was due to that we have saw somewhat higher interest rates, mainly on the U.S. side. Carolina will give a little bit more highlights on the interest later on. Underlying tax rates remain stable on 26%. Turning now to the market. Here I always get excited, and this time is no different. We had a big show in the U.S., and we got six number one prizes.
I will not go through all of them, even though I would love to do that, we have no time for it. Number 2, the GoID virtualized identity platform. That is in fact what I think will happen in the future. A lot of what you have in your thick wallet will move into the mobile phone, and in this case it's about driving licenses and other IDs or national IDs and car licenses, et cetera, that will move into the mobile phone and that will become either complementary or the only device where you identify yourself. This is something where Assa Abloy has taken a lead in and has been seen also by the market as something very interesting. Looking in also to the other things like KESO 200 and M380, some strange names. I will come back to that on another slide.
Here we talk about the green wave that is taking place in our industry. We see there is a lot of demand building up for green solutions. Of course, we have then on the innovation side, started to come out with a complete range of products that will meet that kind of demand. I'll come back to that. We saw also strong growth of door closers. Those of you who have followed us for a long time, three, four years ago, we launched door closers for the first. Now we see that it is really growing, has been growing for several years. The last addition to our range was in fact a small closer for hotels mainly, but also other environments where you can't take noise.
This closer, even if you slam it, will never make any noise because it has a dampener built in. That is an innovative thing where we have a nice patent on, which we think will become a big product in environments like hotels and hospitals and the kind. The other one is a completely green door closer, which is in fact a small battery backup inside the box that you see there. Otherwise, it's a genset inside. Every time you go through the door, the door is generating power. When you have a handicapped person coming, he pushes the push bar on the wall, the door goes up, and it uses the power of the non-handicapped people. It's a rather clever solution. Unless you have many handicapped, because then the battery needs to support the evolution.
It's a very nice, smooth solution for the market as well. We saw also strong growth in pedestrian door automation. We have been developing a completely new range, very good features relative to what the market has today. We see a very strong pickup of demand. Growth is coming very strongly on pedestrian doors in recent time. The whole range has been renewed, by the way, so it's really an exciting evolution. Then I mentioned ECO hardware, so let's turn into that. Here we see to the left there, it looks like a mirror, or perhaps not a good picture here, but it is like a mirror. Beneath that mirror or black panel is a solar panel.
This lock is something that you install and forget, provided that you have a reasonable light in your corridor, because it lives from the light of the corridor. This again, is something for hotels and the kind where you sort of have a long-lasting time and you don't want to have maintenance. This is a sort of maintenance-free lock. If you cannot trust the power of the corridor, you can also add induction to it. You put some power induction, like your stove at home, and the lock will operate eternally, so to speak. You see then the door operated with a genset. Again, something where you don't need power, it's very exciting evolution. We also have this EcoFlex lock. It won the prize again. It saves 99% power when you install it in a building.
Principally, it has only 1% power consumption left, so to speak. Strikes are also a source of powered things. The strike in this case will save something like 90% plus energy when you install this new strike. A magnet, especially those of you who come from England, when you have a magnet, it always stands on power, and it only goes off power when you open the door. That means that you're consuming power all the time. In this case, we have turned it. It only goes on power when it feels that you approach the door. It's a sensor that feels your proximity of you. Then it closes the door unless you have access rights. This one saves more than 80% power, also very interesting evolution.
In principle, we have created a total door opening solution in the U.S. in this case, but Europe has similar products, which means that we can take a total door opening solution, where we are close to no consumption of power. Quite a revolutionary thing for green buildings. Turning now to turnover. We saw in the quarter strong and good growth in the U.S., 7% organic growth. Europe had a little bit less, 2% altogether, where EMEA was growing 3%, and then APAC 0%, and mainly due to Australia had a weak start of the year, while New Zealand is doing very well. We see still the picture we had from last year where the mature markets are really driving growth on a global scale.
Europe is, of course, due to the 2%, is due to that we have Easter effect much stronger in Q1, three-tenths that down. Considering then that we did quite some acquisitions in Brazil in Q4 last year, we're going to see some dilution during this year. I'm very pleased with the evolution of USA, considering also that we have some heavy load from Brazil, where we went in a situation where the main economy is in recession. A positive situation. APAC, flat evolution like we've seen for several years. Also very pleased with, because it's not easy in China, I can tell you. Very heavy price pressure, we have now reduced workforce with close to 50% since three years back, a little bit more than three years back, because we started before the downturn hit us.
In fact, that is what saves us and it mitigates, really, the decline as such. On growth side, we saw South Asia continue to grow strongly, Also New Zealand, while Australia, as I already mentioned, was a little weaker, North Asia was also weaker. North Asia last year had very big exports into home automation, which was less in this quarter, which drove growth quite a bit. As I mentioned, then China was, of course, not an ideal situation. For the group, it was -6%, For APAC was also of the same magnitude. Global Tech. Here, every time I stand here, say, "Oh, we sold more projects." That is low margin. That means that we have some dilution effect here. Global Tech as such, 16.9% down from 17.4% last year.
Here also, we acquired Quantum Secure, Those of you that know that you acquire tech companies, you have a lot of depreciation in those. The EBIT is okay. Sorry. The EBIT is not. We measure EBIT here. We had quite some dilution from Quantum Secure as well. In fact, without those things, Global Tech was in a good shape in the sense that despite then only 1% growth, we kept the margin intact, not accounting then this acquisition of Quantum Secure. Hospitality, last year we had Starwood, We came in at the same number, more or less, a little bit growth relative last year, despite that we had a very big spike in our invoicing. A very good evolution here as well. Profit-wise, I'm rather pleased. Things develop as they should.
You can see there on the decline side that GovID is among, again, on the negative. We see now is that some of these countries where we had problems to get money seems to get money liberated because they like to have passports and national IDs. Is no wonder, but some of them have decided not to have it for a while. I think hopefully, this is the last quarter we see decline, because order intake on GovID has been very positive in the last 4 quarters. It should start to follow. I probably have to eat it up next time when we meet. It looks good from that point of view. That's a reasonably profitable business. Entrance Systems, here again, fantastic leverage, 0.9%. Again, we see the consolidation gives very good results.
From 12%-12.3% EBIT improvement, despite the heavy dilution from acquisitions, in this case, 0.6%. We add in quite some body mass to Entrance Systems. Strong growth in the North American sector, just like Americas, strong growth in Forefront, Amarr, which are American. High-speed doors, also partly American. Door automatics, also partly American. All growing strongly in the U.S. market, while we saw flat EU in all areas, weaker there. No wonder, if you look to industrial companies reporting, most of them, if not all of them, have negative growth in the industry. We also feel that on the industrial door side. Apart from that, a very positive picture and good leverage from our consolidation efforts. That concludes my overview. I'd like now to hand over to Carolina that will take you through the financials. Thank you.
Thank you, Johan. Good morning. Well, a good beginning of the year 2016 for Assa Abloy. Especially proud of the 3% organic in a rather shaky world. With that, I will move into the financial highlights. If we look at this 3% organic growth, we estimate it to be 1% net price increase and 2% volume. We also have one working day less due to the Easter effect being in the first quarter this year. As Johan mentioned, quite some difference on the different organic growth in the different divisions, with Americas being the strongest and APAC still having a tough time in China. Acquired growth, 3%. It's a little bit lower than I said last time.
We estimated it to be 4%. The reason for that is that we have divested Car Lock, the net effect is then plus 3% on acquired growth in the quarter. Then currency, last year's big hitter. You can see last year we had average of 13% impact for the full year, but we had quarters with up to +20%. Of course, that was a big change to this year, where we have a slight minus, -2% on the quarter for currency here. Overall top line up 4% also the operating income up 4%. I think very impressive as well, the margin basically flat, that is including the dilution that we have both from currency and acquisitions. Good margin development there as well. Cash flow.
While cash flow in the first quarter is seasonally weak for us, this was no exception, it is basically in line with last year, almost SEK 500 million in cash flow. EPS up 1% to SEK 1.47. The difference here between the EBIT and EPS is that we have a higher financial net, I will come back to that during my presentation. From the highlights to the details, looking at the bridge, here the most important one on the organic one, really comparing like for like. Here we see 3% organic growth, normally we would need 3% sort of just to keep our margin to balance off the inflation that we see in the world. With 3%, we actually managed to improve our margins with 40 basis points.
We saw really good results, specifically in Americas and Entrance Systems, both 90 basis points up here. Both thanks to the growth that they have had, also really good efficiency savings that they both saw. We also see Global Tech. Global Tech had only 1% growth and basically flat on the margin. I must say that is not bad considering how high improvement they had last year, plus that they still have a lot of those project sales that come and go, in this quarter they were there. Good margin efficiency. We have the investments and inflation sort of on the other side.
How should we think about ahead when hopefully we have a higher organic growth only on the day effect, so to speak. Could you keep this so we could expect a higher leverage with higher organic growth?
We have kept it, we try to go in balance, that is what we always aim at. If we think it is going to grow more, we are probably going to allow ourselves to add a little bit more body mass in specification people and in R&D. Last year, we opened two new tech center, that is where we thought we would have some growth, we saw we had some savings, we are not intending to go to 70%, 80%, 90% there. We would rather grow the business. We have shown over the years that innovation is really a carrier for growth. I think that is much more worth for us, that is why we always have savings, it is also why we always add cost if we can.
It's very difficult to pedal and balance those things, so far, we've been reasonably successful on that.
30% leverage, with a lower threshold in the need for organic growth is the answer then. Okay, I'll get back in line. Thanks.
Yeah. Andreas.
Thank you. Andreas Koski, Asset Management. A question on the direct sales for Entrance Systems. I find it very interesting you increasing focus there. How big could that become? Could that, over time, double the size of Entrance Systems in the U.S.?
They are in a market. If you looked at the total market which they're addressing, they have something like 10% world market. Of course, much bigger in Europe and Americas. In America, the end user segment is quite big, much bigger than the indirect scene for obvious reasons, because you have margin in between. We talk of a multi-billion growth potential here when we move forward.
Wonderful. Thank you.
Perfect. Let's jump into the telephone conference. Operator? No? I can do one more question from my side then. If we look at China, it continued to drop 6% organically in the quarter. How do you see this progressing? You have previously been quite cautious on China and the outlook for that country actually throughout 2016. Is this still something? Has this changed incrementally from last quarter, or? When I listen to our people, they're always optimistic. When I listen to them at the end of the quarter, they're less optimistic. My own personal view is I think we are in for a decline of some 40%, and we've seen, to our estimation, something like 20, 25. Will it come now or later?
We don't know, because the government is every now and then stepping in, putting more money into the fire, it goes for a while. In recent time, they have put some more money into the fire, hopefully we see some easing. I think they have a very, very high degree of investment in infrastructure, including housing, therefore, I think it's only natural that they fall down to a more an emerging market level, which is, in fact, in my estimation, some 40% less than when they were three, four years back in time. It will probably leak a little bit. The question is then, will we leak? We hope not to, because we are really doing a lot of efforts in order to grow the business. We will see. It's very tough right now.
Heavy price pressure, a lot of irrational activities, still, we feel rather pleased because we dropped, in our opinion, less than the market has done.
While we're on it, you talk about irrational behavior. Can you elaborate a bit about the rest of the world in terms of competition? We've had some mergers in Europe, and you have a U.S. competitor, which is quite large. Is it a different situation in Europe? Has it-
Well, I think you're referring to dormakaba. They are right now going to merge towards the middle of this year, I think they are busy doing what they do It will take some time. Of course, I think it's not bad in consolidating economy if two becomes one. I think it's not bad for a company like us. It's a better situation, in my opinion
It's easier then to measure how your competitors, where they are relative to yourself. We are a good citizen in the sense that we are not trying to push prices down, but we work in a stabilizing environment. Since we are market leaders, we normally also take the lead on increasing the price when necessary.
Perfect. Should we try the telephone conference again, please?
Yes. Our first question comes from Marcus Almerud, Kepler Cheuvreux. Please go ahead.
Hi, Marcus Almerud here. I'd like to dig into specific markets in Europe, if I can. France and also the U.K. France seems to have turned a corner. Can you just elaborate a little bit on that? Is it something that you think is sustainable or is it a full start again? In the U.K., the U.K. seems to be having problems on many areas. Is that also temporary? Is it Brexit or is it something else? Thank you.
First, France, we see the residential sector has started to pick up in recent time if you look at the statistics. I think that is what we see in our numbers, that they are not going down as they used to do. Will it start to grow? I don't know. With France, you better be cautious. We've seen many years of flattish, at best, evolution. If you take the U.K., it's the opposite situation. In the last 12 months, we've seen quite a weak residential construction cycle. We are quite big in the U.K. on the DIY side. We have felt that decline. It's two different explanations, I would say. We still on the non-residential side in the U.K., we have a very good cycle right now, a very good growth. We believe that sector is rather robust.
The end product has been that the U.K. has only grown with by a few % in the last year.
Okay. Thank you. Then if I can just follow up, if you could just help us with, as you usually do, about the trading, how trading has started in April, please.
April looks like a month around in the region of 5% organic growth. It's difficult to say because it can be more, it can be less, simply because at least my experience is when our companies are forecasting, they forget that they have this one extra working day. Sometimes you have a positive surprise. I hope I will get this positive surprise, but right now it looks like 5%.
If you look at the daily sales rates in March, where we had the Easter, was it fairly stable throughout March, or did you see an acceleration and deceleration throughout March?
January was a slow Mass, I think for most industries. Very slow. It was a little bit scary. While February, March were solid. That is the way it looked in the quarter. We had growth. January was, in fact, I don't remember if it was negative, but it was a surprisingly weak month.
Okay. Thank you very much.
Our next question comes from Guillermo Peigneux-Lojo from UBS. Please go ahead.
Sorry, I was laughing at my name. Yes, Guillermo Pena from UBS. I wanted to ask a question to Carolina first, FX. You suggested that the bottom line, at the end of the year, won't have any dilution from the currency. Is that on a Q4 basis or on an annual basis? Meaning that if it's on an annual basis, you will have to offset the dilution you have with accretion towards the end of the year. Am I correct?
Yes, it is on an annual basis. We have to say that -20 basis points in the quarter and similar in the second one doesn't mean a big plus in the second half to make it flat, though. It is an estimate for the full year that we will be basically flat and no margin dilution for the full year on currency.
Thank you very much. Then hospitality. Could you comment a bit on the growth you've seen in Q1? I know, I understand there's top comps, so just want to see how much is declining or what are the rates there. Actually, what do you see towards 2017 in terms of pipeline?
Well, we don't have much visibility since hotels are ordered and shipped in a few months' time, so it's very difficult. What we do know and see is that China is weakening, like in every other industry. We see a weakening in a number of emerging markets. Apart from that, it looks good, and we have new technology that is very popular. We should remember that we've grown this business tremendously in the last few years, and therefore we are, of course, meeting very high numbers. The first quarter now was a few % growth. I don't know, we normally never give forecasts, but I'm not negative to the outlook. Of course, cautious in the sense that we have seen a very robust hotel market for years now. By experience, I know that it's not robust eternally.
Somewhere we hit where it starts to peak. I'm not sure if we're there now. Orders were very good in the first quarter, I'd like to add, so hopefully we will see some improvement in the second quarter. We are meeting very high numbers of last year.
Thank you. Last question, regarding Mobile Access Solutions. Obviously, all the conversation is focused on hospitality, but I wonder when are we going to see office and commercial or non-residential construction starting to be part of this growth angle for you?
Well, on the mobile side, we run a number of test installations with governments in several locations, that looks rather positive. Of course, it's an evaluation that most of them are going through. When it comes to virtual keys for office buildings, we see a robust demand picking up now, many companies are preparing. We see very strong sales of Seos readers, which are the ones that are suitable for this type of applications. We have launched full SDKs for all our partners so that they can start selling volumes of these solutions. So far it looks very good, I don't think we should expect it to explode, I think it's going to be definitely a complementary solution to opening the door next to the white card that you use or the ID card that you use.
I use it myself since a year back, I must say I never pick up my card anymore. Unfortunately, that might be that the cards disappear, it's because it's extremely handy. Very handy.
Yeah, that's very interesting. When would be material for you to start to comment on kind of revenues and growth trends? I'm just wondering. Thank you.
Could you repeat that question? It was a little bit scrambled.
Yeah, sorry. This is very interesting. I just wonder when would be material enough for you to start commenting any kind of revenue impact, even though I guess at the beginning, minor and growth prospects.
Well, it's already several million SEK coming in. It is material even though in the total of Global Technologies does not have a very strong effect yet. We see definitely it's picking up at a high pace. On the hotel side, it has grown quite a bit. For us, if you look to Global Technologies as a whole, it has an impact on the margin already.
This is very interesting. Thank you.
Our next question comes from Andreas Willi, J.P. Morgan. Please go ahead.
Yeah. Good morning, everybody. I have two questions, please, more on the numbers side. If we look at APAC, where we have the declining trends in China and improve elsewhere, maybe you could comment a little bit on margin developments in the two blocks separately for us to better understand kind of the mix impact versus the operating leverage impact. Are margins kind of stable to up in outside China, therefore the margin is all an impact of China or is there also something else going on? Secondly, on the working days, it was in Europe, you had the Easter effect, but most companies say Q1 globally had about the same working days as last year, given the 29th of February and two working days more in China this year.
What do you expect for Q2 in terms of year-over-year working days on your calculations? Thank you.
Okay, maybe start with the APAC margin there. We have very healthy margins, I would say, outside of China. Yes, there is a mix effect by having lower China sales. Also in the first quarter, of course, China with the Chinese New Year is low overall from a sales perspective. Within China, with the drop we see there, we see pressure on the margins as well. Part of that is mitigated by deficiencies, but they're not managing totally to hold up on that. The second question was on working days. Well, we estimate an effect of one working day less in the first quarter, but that again is more in Europe and less in other parts of the world. For the second quarter, it's probably one, maybe two working days more, compared to last year.
Again, a little bit differently in different parts of the world.
Thank you.
Our next question comes from Ben Maslen, Morgan Stanley. Please go ahead.
Thank you. Morning, Johan. Morning, Carolina. First, just on Americas and the strong growth you see there. You call out the residential market as being very strong. I just wonder what you're seeing across your non-residential business, particularly segments like healthcare and education. Thank you.
Healthcare is the weakest sector right now, and it has been so for all the time. In fact, it has never really picked up strongly. It's in the positive territory, but not growing very much. Looking to institutions, it has been a similar situation, but we see an improved trend there. We think it looks good, so to speak. On the quote level, we still see good, healthy, robust increases of our quotes. That means most likely that we will see some improvement, going forward also on growth. It doesn't mean in % more, but it may mean more rather that we continue to grow the business.
Thank you. Then on the GoID virtualized identity platform that you launched at ISC West, just maybe a comment on just who are the main competitors in this market? It sounds like you move outside of your normal competitive environment. How fast can this industry develop, do you think?
Well, right now there are not many competitors because it's a new thing. Seos is very unique in this sense. It's a three-layer encrypted transaction you can have. It's similar to the virtual key system, in fact. Since we started a few years back, we don't see so many yet. Of course, there will be competition like any other market in that field as well. For the time being, I think it can become big. It's much more practical to have it, and things you don't think about, like some countries, they're going for instance, car registration, where they have many car thefts.
They go for car registration, where you have your car ID rather on a virtual than you have it on a piece of paper that you normally have in your car that is stolen with the car, by the way. It's very difficult to forge these things. Then the policeman or whoever is an official, he has it in his unit as well. You have as an instant check, and you can put biometrics in as well, if you like. It's a rather strong authentication system that you can put up.
Thank you. Then a final one, just to follow up. The kind of early turn maybe you see in markets like France, Spain, just where are your sales in those countries relative to where we were at the peak of the construction cycle back in 2006, 2007? How far below are they that level?
Oh, you ask my memory here. You put it on hard strain, pressure. France is probably around 15%-20% down in absolute value. While Spain, if you look to the domestic market, we do a lot to export out of Spain as well, is probably more down like 40%, 35%-40%.
Got it. Thank you very much.
One more questions from the conference, then we jump back to the venue here in Stockholm, okay?
Operator?
Next question comes from Sebastian Kettler, BNP Paribas. Please go ahead.
Hi, good morning. A question on China first. I'm just trying to understand what is the lag time between the Assa Abloy business in China and the housing stock data if you look at historically the performance of the business. Are we talking about a few quarters, or could it come quicker than that?
I'm not sure if I understood you rightly, normally, if I understood your question, because it was a bit scrambled. It's a lag from sort of money comes into the economy of something like nine, 12 months, sometimes 15 months, depends on how land is allocated to the construction company or not. There's a lot of preparatory work to put up a building. Sometimes, if you take the Western world, but you asked about China, they can take three, four years because you have all these protests about buildings that are regular in the Western world. It's not the same in China. It's much faster. Still, lag time is probably average 9-12 months, at least.
Okay. Thank you. On the green solutions, it's a new growth story for Assa Abloy. Just trying to understand, what is the average payback you have on those product? What is the electricity consumption in the total life cycle cost of the product? Is it meaningful to trigger a replacement cycle from your customer, or we are talking mainly about new buildings, greener buildings?
Almost all new buildings under construction are looking for a green certificate, and a lock of this kind gives you LEED points if you are in the U.S.A. In the U.S.A., they calculate 55% on new constructed buildings this year or more will be green, that means that there's a very high demand for these type of solutions. We have also launched the doors as such. In Europe, that percent is probably more the 30%, but it varies between the markets. In China, even there is now in excess of 20% expected to be in 2016. That means if you have these kind of products, they sort of differentiate you from anyone else. It's a very important add-on to our portfolio. The monies are not bad.
It should not trigger a replacement cycle, I mean, in existing buildings, or does it make sense to change the product with a greener one in existing buildings? Given the payback you offer.
If you ask me and I had an existing building, I would not hesitate. It's like LED lighting, you save some SEK 15, SEK 30 or per year per lock, if you have a full power lock on the front door. You save that money in a few years' time, you have your lock back. It's worth quite some money to have that saving. Apart from then that you get LEED points. If you renovate, at least I would recommend anyone to take those solutions.
Understood. Thank you.
Let's jump back to the venue here in Stockholm. Peder?
A couple of questions related to China, if I may. Firstly, could you update us on the sort of write-down, earn-out net that we saw for the first time in the fourth quarter? Anything to comment upon this one?
Yeah. No write-down and no earn-out, so no effects in this quarter. I mean, that said, collection in China is really tough, and it continues to be tough, and we continue to monitor it as hawks. Even Johan is involved because it's not sold until it's really collected, and the days are on roughly 150 days now.
50. Up from 100.
You have to look at the seasonality. Year-over-year, it's 25 days more.
Okay. Good luck there. On the sort of China strategy, we could read the report and listen to you, Johan, that despite you being sort of a bit cautious on China as such, you continue to want to invest in emerging markets and effectively in China as well. What's the strategy there? Maybe we could start the answer by giving us a view of your exposure in tier 1, tier 2, tier 3 cities.
Well, on the rural areas, the demand has more or less gone away. It's bigger cities or mid-size cities that are enjoying growth in China. Of course, we are concentrating on those. When it comes to our manufacturing footprint, we have presently 22 facilities in China manufacturing, because our type of products are rather local. There we are looking then to synergies, which are quite big, and we're also automating. I'm rather optimistic in what we do, and hopefully also corruption in China in the way we know it, that some companies are competing outside of the book, so to speak. They're not on equal terms. I think with the present government in China, hopefully we get many more companies following the local regulations when it comes to taxes and other things. Then I think we will become very competitive.
Right now we are competitive, but of course, we are not always competing on equal terms. I'm optimistic in China. Remember, 1.3 billion people, emerging markets, fantastic, 85% of all world population, they're all getting wealth, even in these difficult times. Growth will be there. It's a matter of positioning yourself there and be ready.
Thank you. You answered that the rural areas demand is basically gone. That needs to imply that you have a quite strong standing in the big cities still. Maybe we could look at that from a year ago or so. Are we talking about an 80/20% split in terms of revenue distribution back then? If I look at the year-on-year organic decline, the couple of quarters, I am a bit surprised that your decline has not been larger since you have been-
Me too.
No, I mean, your exposure in rural-
I am also surprised.
Yeah.
What I can say is on the door side, we've done fantastic. The only area where we have really seen quite some loss is in the north, where you have the heavy industry. For the rest, we've been able to compensate with bigger cities, where we have had fallen demand. On that side, out of six sites, five have been growing in the last year. We've been very pleased with that. The sixth one is the one that's in the north. On the lock side, on the other side, where we do OEM to other competitors, we have seen quite significant decline. That tells us that the market is probably quite weak. We have been able to compensate.
I think one thing, we have changed all our names to Assa Abloy, and I think big Chinese corporations, they like to work with strong brand names that will be there tomorrow. Unfortunately, they don't pay us as fast as we would like, but at least they are there, and they are buying from us.
Sorry about all these questions, but if this demand situation is still there for the remainder of the year, and with this credit situation, would we see a reversal of earnouts versus what you have booked?
Well, it's an estimate of what we believe. I think it's more looking of what we go forward, because the earnouts are staged year after year. You do an estimate as you go, of course there would have to be a big pickup to reverse the previous one. I think important now is to look forward and see if they manage the, well, what we believe they will manage.
It's a potential that you actually need to less cash out for 2016 as a full year?
If they don't perform, but I would rather that they did perform because it's better companies and I pay for it.
Okay. Thanks a lot for all of those answers. Thanks. Time flies, but I think we have time for one more question from the telephone conference or no? Unfortunately not. Peder, it's your fault. Thank you very much, Johan and Carolina.
Thank you everybody for coming. As you can see from my smile, I'm rather happy with this quarter. It's another quarter of stability from Assa Abloy with good growth. I'm looking forward to the continuation of the year. Thank you.