Swedish group Assa Abloy posted a lower than expected first-quarter pretax profit yesterday, hit by weaker European markets, but said sales and margins would both rise in 2005.

Chief financial officer Goran Jansson predicted organic growth of five per cent this year.

The world's biggest lockmaker made a quarterly pretax profit of £57 million which compared with £56 million a year ago. It owns the Yale, Chubb and Union brands and employs 950 people at two sites in Willenhall.

Last April it axed 300 jobs from Willenhall subsidiary Security Products UK.

Earlier this year Homeserve, the emergency repairs company spun off from water group South Staffordshire, sold off its Doorman Services business to Assa Abloy in a cash deal worth £6.62 million.

The turnover of the UK business last year was approximately £150 million, with 1,200 of its 1,500 employees based in the Midlands.

"France, Benelux and Germany show a weaker development," chief executive Bo Dankis said yesterday.

But sales in the company's biggest market, the US, increased by eight per cent during the quarter, he said.

Organic sales growth, which excludes acquisitions and currency effects, was two per cent in the quarter versus three per cent a year earlier.

The firm reiterated that it expected organic sales growth to continue to rise at a "good rate" in 2005 while its operating margin would rise, mainly due to cost cuts.

The group is in the middle of cutting annual expenses by about £33.5 million in a twoyear restructuring programme launched at the end of 2003 to offset the impact of lower-cost rivals squeezing prices in the lock market.

Assa Abloy aims to have cut 1,400 jobs by the end of this year.