ASSA ABLOY AB (publ)

Good morning, everyone, and welcome to the presentation of Assa Abloy's Q4 report for 2025. My name is Björn Tebell. I'm heading investor relations. And joining me here in the studio are Assa Abloy's CEO, Nico Delvaux, and our CFO, Erik Pider. We will now, as usual, start this conference with a short summary of the report and then open up for your questions. And with that, I'd like to hand over to you, Nico.

Thanks Bjorn and also good morning from my side. We can report a strong end of a very good year for El Sabloy. We had a good organic sales development in Q4, an organic growth of 4% with strong growth in global tech and Americas, good sales growth in EMEA and in entrance systems. and a sales decline in APAC, mainly again related to the pressing market situation in Greater China. Good organic sales complemented with also good growth through acquisitions, net 3%, and then strong operational execution with a record EBIT margin of 16.8% in the quarter, and then operating leverage of 80 base points. Good work done on the working capital side, also giving us a strong cash flow and cash conversion of 137% in the quarter. Also this quarter again, the shift from mechanical to electromechanical continues. We have seen electromechanical organic sales growth of 8% in our regional divisions. We've been also active on the acquisition front in this quarter with seven acquisitions completed. If we look a little bit into the numbers, sales north of 38 billion SEC, 4% organic, like I mentioned, 3% net acquisition, and then unfortunately hit in a strong way by FX, mainly weak dollar versus strong SEC, so 10% negative effect on top line, therefore sales top line minus 3%. An EBITDA margin also at record level, of 17.9%, and we see the gap between EBIT and EBITDA further growing as we continue to buy quality technology companies. So it's important to look also at that 17.9 EBITDA margin. Then the EBIT margin, like I mentioned, 16.8%, 30 bps up, and EBIT at 6.5 billion SEK. In the world, I would say I can say the same as I said in previous quarters. We continue to see a good momentum on the non-residential side, on the commercial side in our three main areas in North America, in Europe and in Oceania. As well on the normal commercial side as on the institutional side. Whereas also in all three, we continue to see more weakness on the residential side. There is two markets we have seen a pick up on residential that is in Sweden and in New Zealand. In New Zealand we see good recovery as well on new build as on R&R. In Sweden we see that recovery mainly on the R&R side, not on the new build side. That's the two markets that start to cut interest rates first. So we will have to wait a bit longer for Europe on the ECB related countries to see that recovery. And the same thing is true in the U.S., where interest rates stay around that 6 percent, and you know that 72 percent of the households in the U.S. that have a loan on their houses have an interest rate below 5 percent. So there is still that gap. On a positive note, we see – and that's an interesting statistic – that 55 percent of the houses in North America are older than 40 years. So that R&R really should start to kick in in the near future. You see the numbers per region. Another important vertical for us is the logistic vertical, where we see a recovery in North America, not really a V recovery, more U kind of recovery, slower recovery, which in a way is also easier from an operational perspective. Unfortunately, we don't see that same recovery in Europe. In Europe, as a matter of fact, we believe that the logistic market in Europe is even further down. So numbers, plus 4 in North America, plus 12, very strong Latin, and plus 3 organic growth in Europe, minus 2 in Africa, strong Australia and New Zealand, plus 8, and then a very mixed picture in Asia where we have seen good growth in the rest of Asia and higher double-digit negative growth in greater China. Couple of highlights, this new product, it's a new range of garage door openers that we sell under different brands, also under the Kwikset brand, and integrating this garage door opener in the home automation ecosystem from Kwikset together with our digital door locks. Very good collaboration between the Americas Division and the Antwerp Systems Division. And also good to see that in a more mature market with mature products, our R&D team still found ways to really differentiate. We've announced a unique security feature, so quite excited about this new product range. A couple of project wins. Cycle K in Germany. Anton Systems won a service contract from around 2,000 industrial doors. Comcast US, our new recent acquisition in view in global solutions, equipped their stores with a total of 17,000 units for secure display of their electronic equipment. And then here in Stockholm, HID, public transport, access to metro, bus lines, trains, interesting project. And just to clarify, this is not the wrong picture, it's just a picture with a lot of eyes on our reader. That's one of the reasons why we were chosen for this project, our capability for our equipment to work in extreme weather conditions. So I'm also quite happy with that project. So you see now that since four quarters we have seen an acceleration of our organic growth, also an acceleration of our organic volume growth. And we continue to complement that organic growth with good growth through acquisitions. Our sales is up 65% over the last five years. And then our operating margin, well, within the 16% to 17% bracket, and the 12-month moving trend at 16.2%. And an EBITDA margin even above that bandwidth at 17.2%. Therefore also a good operating income, 107% up compared to five years ago. As mentioned, we continue to be active on the acquisition front with seven acquisitions completed in the quarter, 23 acquisitions over the full year. They represent an annualized sales of around six billion SEK. If we highlight two of them. Sargent and Greenleaf, an acquisition for the Americas division, a U.S. manufacturer of high-security mechanical and electronic locking solutions and safe hardware, really strengthening our access portfolio for the Americas. They had a sales of 430 million SEC last year. And then International Door Products, IDP. US manufacturer of standard and custom fire rated steel door frames and doors. Also for the Americas division complementing in a nice way our door offering. They had a sales of 220 million SEK last year. If we then zoom into the different divisions starting with EMEA. EMEA had a very strong Q4 with an organic sales growth of 4%. With strong sales growth in the Nordics and in Central Europe. Good sales growth in Middle East, India and Africa. Sales decline in UK, Ireland and South Europe. UK, Ireland mainly related to delay on the commercial project because some new government legislation. And then in South Europe, mainly because of France where the residential market remains challenging. Also very good EBIT margin at 15.3% with good operating leverage, helped by FX 90 base points accretion. It's the only division that profits from the stronger SEC. And then M&A diluted 50 base points. That's mainly related to transactions of acquisitions we did in EMEA. So more you could say one-offs. Americas, another very strong quarter for the Americas with an organic sales growth of 5%. We have a strong high single-digit sales growth for the North America non-residential segment. Good sales growth in Latam and then a stable sales development for the North America residential segment. Strong EBIT margin at 17.9%. We have an excellent operating leverage of 120 base points. And then dilution, 50 base points of X, dollar sec again. And M&A dilution, also 50 base points. Also here mainly related to the acquisition-related costs for the two acquisitions that I showed earlier. So also more one-offs, you could say. APAC, an organic sales decline of 2%, with a good sales growth in Pacific, Northeast Asia. and a sales decline in Greater China and Southeast Asia. Greater China, Southeast Asia is really a mixed, different picture. Greater China, high double-digit negative growth, and Southeast Asia, high double-digit positive growth. A good improvement of the EBIT margin at 7.6% versus 5.4% last year. Excellent operating leverage, and also here hit by currency 70 base points. And we go to global tech. I would say an extreme good quarter for global tech. We have an organic sales growth of 9%. with strong performance as well in HID as in global solutions, and then also a very strong EBIT margin at 18.9% with good operating leverage, despite a strong hit of FX, 90 base points, and a small accretion on M&A of 20 base points. That's mainly linked to InView. And last but not least, entrance systems, a bit lower organic sales of only 2%. where we've seen strong sales growth in pedestrian, good sales growth in doors and automation, but stable sales in industrial and perimeter security, and good but lower sales growth in service. And then still strong execution with an EBIT margin of 18%. and a very good operating leverage, I would say, despite only 2% organic sales of 90 BIPs. FX hit us with 40 base points, and M&A has been neutral. And with that, I give the word to Eric, our CFO, for some more details on the financial numbers.

Thank you, Nico, and a very good morning from my side as well. I think you've heard a lot about the quarterly numbers from Nico, so if I focus a bit on the full year on sales, we were up with 1%, if we then dissect that, 3% organic growth for the full year. We reached our target when it comes to acquired net growth of 5%, but then we were hit by the currencies for the full year 2025 with minus 7%. You see here the FX calculation that we did end of December, where we then for Q1 thought that, I mean, when we did the calculation, it was minus 11. Now, end of January, we are for the first quarter in our calculation minus 13, and for the full year, we are at minus 8. EBIT full year we are up with 2%, EBITDA margin for the full year up with 10 base points and on EBIT we are at the same level. Income before tax net income and EPS we are up with 2% for the full year. We had, as mentioned before by Nico, we had a strong cash flow. Okay, we're a bit also there hit by the currency, so we're minus two in actual value. But of course, if you look on our cash conversion, it was 137% in the quarter. And for the full year, we were at 106%. Return on capital employed minus 20 base points year on year. We have now added, as we have talked a lot like on the capital market days about the operational value added or over. For me, I think it's a very good measurement because you combine the income statement with the balance sheet. So what you do is that you take your EBIT. And then you deduct the interest rate on your capital employed. We also include goodwill there. And our weighted average cost of capital or our interest rate there that we use are 8%. And as you can see, we are at the same level at the end of 2025 as what we were end of 2024. If we look on the bridge, dissect first the 4% organic growth, we had a weak three on price and consequentially then you get a strong one that you have on volume. The flow-through, very good, at almost 40% or an accretion of 80 base points. This comes from, let's say, the difference between price-cost, which I will show you on the next slide. We had MFP savings in the quarter of roughly 180 million, and then you have other operational efficiencies as well. The currencies you've seen on the top line, minus 10, but you also see that it has a negative impact because of the dollar versus the SEC, also on the bottom line. This quarter it was 30 base point, and this is something that will continue at least on the same level, I believe, in the quarters to come. But if you take acquisitions aside, we reached actually an EBIT margin in the quarter of 17%. The acquisitions are slightly dilutive. It comes mainly from acquisition costs of acquisitions that were closed during the quarter. If we then move to the next slide, direct material continues to sort of, we continue there to have a tailwind versus last year. So we were 70 base points better than a year ago. The mixed impact of that is roughly 20 base points. So if I call it the true impact is 50 base points. It's positive to see that the conversion cost is also this quarter better than what it was a year ago with 30 base points. You can see for the full year we are actually 20 base points better than the year before. This, of course, comes with when we can have Volume growth, you see it immediately that we can sort of have a positive conversion. SG&A negative with 50 base points, but this comes from investment in R&D as well as investments in our sales organization. Cash flow, we are now for the third year in a row, we have a cash conversion above 100%. This year it ended at 106%. We sort of continue to do a good network and capital management. If you look Between the years you would see at CapEx that it looks at it slightly higher this year than what it was a year ago. But that is due to that last year we had some divestments or we sold some buildings in EMEA as well as in APAC. But all in all, I mean, the cash conversion of 137% in the quarter is strong. If you look on the gearing, continue to sort of have a positive trend here. If you compare versus last year, we are down on the net debt to equity from 65% to 63%, and on net debt versus EBITDA from 2.3% to 2.2%. So we still have a very strong financial position, and we can continue with our acquisition strategy going forward. If you look on the earnings per share, as mentioned before, it's up versus last year. We will propose a dividend. The board has proposed a dividend that, of course, needs to be approved by the AGM of 6.4. And if you look on the dividend percentage of EPS, it's over a period since 2020. It's at 43%. And EPS yearly growth is 14%. And with that, I hand it back to Nico for some concluding remarks.