July 17, 2019 / 7:46 AM / 5 months ago

UPDATE 1-Lockmaker Assa Abloy flags growing market uncertainty as Q2 profit jumps

* Q2 EBIT 3.7 bln SEK vs consensus 3.7 bln

* Q2 core sales up 3% vs year-ago 5%

* Q2 electromechanical locks sales up 20%

* Shares up 2%

* (Adds detail, background, shares)

STOCKHOLM, July 17 (Reuters) - Assa Abloy, the world's biggest lock maker, said on Wednesday weaker construction signals and geopolitical challenges had increased uncertainty in some of its markets, as it posted profit growth that matched expectations.

Operating profit grew in the second quarter to 3.7 billion crowns ($397 million), matching analysts' mean expectations according to Refinitiv data, from a year-ago 2.9 billion profit before large one-off costs related to a strategic review in China.

Assa Abloy, which has been highly acquisitive and whose rivals include Allegion and Stanley Black & Decker , said the jump came due to strong sales as well as margin growth.

Sales growth before acquisitions however slowed to 3%, from 5% in the previous quarter as well as a year earlier.

Assa Abloy said its Americas and Global Technologies divisions had strong sales growth while Asia Pacific and EMEA reported good growth, and growth in Entrance Systems was stable.

In China, a relatively small market for the group but one that it has seen as key for long-term growth, sales were stable following years of headwinds.

"Demand has generally been good in 2019, but with variations between different markets. In some markets, uncertainty has increased at the same time due to weaker construction indices and geopolitical challenges," Chief Executive Officer Nico Delvaux said in a statement, without elaborating.

Assa Abloy, which has more than doubled sales over a decade and outgrown rivals in a fragmented market, is investing in accelerating a shift from mechanical locks to electronic and digital alternatives ranging from fingerprint scanners to smartphone-activated systems.

In the quarter, sales of electromechanical locks grew 20%.

Assa Abloy's shares were up 1.7% at 0738 GMT, taking year-to-date gains to 39%, while the wider market in Stockholm was slightly down.

$1 = 9.3902 Swedish crowns Reporting by Anna Ringstrom; editing by Emelia Sithole-Matarise

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