ASSA ABLOY AB (publ)

Good morning, everyone, and welcome to the presentation of ASSA ABLOY's Q2 report in 2026. My name is Björn Tobell. I'm head of Investor Relations, and joining me here in the studio are ASSA ABLOY's CEO, Nico Delvaux, and our CFO, Erik Pieder. We have set aside about one hour for this call, and we will now start with a summary of the results before we open up for your questions. So with that, I'd like to hand over to you, Nico.

Thanks, John, and also good morning from my side. Q2 result for us. We can report strong numbers for Q2, where we have seen an accelerated organic sales growth, an organic growth of 4%, with strong sales growth in EMEA, good sales growth in Americas, global technologies and entrance systems, and a decline in APAC related to market conditions in greater China. And also good complementary growth through acquisitions of net plus 2%. And then a very strong operational execution with a record high EBIT and a record high EBIT margin of 17% with an excellent operating leverage of 51%. Also good balance sheet management with a very strong cash flow improvement, cash flow 16% up. and a cash conversion of 106% in the quarter. And then we continue our transition from mechanical to electromechanical. Our electromechanical products had an organic sales growth of 8% in the regional divisions. And then we completed five acquisitions in the quarter. So if you look into the numbers, a sales of almost 39.5 billion SEC, 3% up, as I mentioned, 4% organic growth, 2% net for acquisitions, and then a minus three negative currency effect. A very strong record, EBITDA margin of 18.1%, 90 bits up. The EBIT margin of 17%, we had some one-time items in the quarter. Erik will come back on the details. If you correct for that, the EBIT margin was 16.5%, so still a record for Q2. And then the EBIT at 6.7 billion SEC, 9% up. And EPS at 3.98, 12% up, also a record. If you look a little bit into the different regions, starting with North America, a plus four for us, where market conditions have remained very similar to previous quarters, where everything what is not residential, if you talk about opening solutions America, has been strong market conditions. And then in residential, we see continued more challenging conditions, especially on new-build sites where the new-build market continues to show a negative trend, where the R&R side is perhaps flat, perhaps slightly up. Also the logistic vertical is important in North America for entrance systems. There we have seen also a more flat development of the market. If you go to LATAM, good market conditions, I would say, despite some challenging political situations in some of the markets. A plus two for us, where we have seen for the opening solutions, America's division, positive growth in all the different countries in LATAM. Again, they go to Europe, a strong plus four for us. We have seen very similar market conditions as in previous quarters and very similar, I would say, to North America. Everything that is non-residential, very strong, and then residential also in Europe still more challenging, perhaps a little bit better than in North America, but definitely on the new-build side also still no improvement, but perhaps a little bit better on the R&R side. And also in Europe, the logistic vertical is very important for entrance systems where we have continue to see a negative market development. And then go to Africa, minus 12, you see Africa is a very small part of our business. It's all project related and it's timing around this project for HID, so nothing significant. If you go down to Oceania, a strong plus five, where we have seen very strong development in our core markets, as well in Australia as in New Zealand. And then in Asia, minus two, I think we should make a distinction between Greater China and South Korea on one side and all the rest. All the rest has shown very good results with good market conditions and also strong positive development for us. Whereas on the negative side, South Korea has been more challenging. To give you an idea, on the residential side, housing completion in Maine, South Korea was down 50% compared to a year ago, so very tough market conditions. And then Greater China continues to be also very challenging with the markets double digits down and also our results strongly double digits down. Some highlights from around the world. Very excited about our new product lines of padlocks for the North America markets under the Wiser brand for Canada and the Kwikset brand for the US. Very nice, comprehensive, full new range of padlocks And then a new partnership for Yale that partnership with Logify to integrate smart locks across Europe with this leading vacation rental platform. And then as a soccer fan, also a very nice application. We provided access solutions for several stadiums for the World Soccer Tournament. in the U.S. and in Canada. If you look at the numbers, so you see an acceleration of our organic growth, like I said, complemented with good growth through acquisitions. Our sales 49% up if you compare with 2021. Our operating margin now 1.12 months moving trend in the middle of the bandwidth we aim for and moving further up in that bandwidth. So at 16.5% self-moving, 12-month moving trend. EBITDA at 17.6% on a very high level. So better top line and better margin, therefore also acceleration of our operating income to a record level and 76% up compared to 21. The acquisitions, we remain very active on the acquisition side. We have five acquisitions completed in the quarter. eight acquisitions year to date. They represent an annualized sales of around 2.5 billion SEK. We also completed our 400th acquisition in Q2. That was an acquisition of Roller Door, a sectional door manufacturer in Portugal, strengthening our position in South Europe for sectional doors. They had a sales of around 640 million SEG last year. And then another highlight of an acquisition, Sentimental Dock and Door, very excited about this acquisition. It's a commercial dock and door service company based in Canada, strengthening our direct channel presence, including our service business in Canada. They had a sales of close to a billion SEG last year. If we then zoom in into the different divisions, starting with EMEA, we see a very strong performance of EMEA with an organic sales growth of plus 5%, with very strong sales growth in Central Europe and in the Middle East, India, and Africa, a strong sales growth in the Nordics, small growth in South Europe, and a stable development in UK and Ireland. And then excellent operating leverage and you can see the effect of FX and M&A. So overall, we continue to see the positive trend in EMEA. It's not three, four quarters in a row that we see an acceleration of that organic growth and therefore also very strong margin improvement. Also, America continues their successful journey. They had an organic sales growth of 4%, with a strong sales growth in North America non-residential segment and in Latin America, and then a small sales growth in the North America residential segment, I would say, despite very tough market conditions. Then a good EBIT margin at 18.7%, with an excellent operating leverage, and here also you can see then the FX and M&A effects. Then go to opening solutions, APAC, an organic sales decline of 4%. Very good sales growth in the Pacific Northeast subdivision, and a significant sales decline in the Greater China, Southeast Asia subdivision. Like I mentioned earlier, that's because of Greater China, where we have seen high double digit negative growth. On the other hand, in Southeast Asia, we have seen very good double digit positive growth. an EBIT margin of 9.2% with a stable operating leverage despite the negative organic sales growth, so good cost management. And also here we have the effects of Rx and M&A. If we then go to the global division starting with Global Tech, an organic sales growth of plus 4% with a strong sales growth in GLOBAL SOLUTIONS AND A GOOD SALES GROWTH IN HID AND A STRONG EBIT MARGIN OF 19.7% WITH EXCELLENT OPERATING LEVERAGE HERE A MORE IMPORTANT DILUTION OF FX 60 BIPS AT THE DOLLAR SEC RELATED AND THEN THE 20 BIPS ON M&A AND A LOT BUT NOT LEAST ENTRANCE SYSTEMS WITH I WOULD SAY VERY GOOD ORGANIC SALES GROWTH OF 4% DESPITE ALSO TOUGH MARKET CONDITIONS HERE on the logistics article. We had a strong sales growth in parameter security and in pedestrian, a good sales growth in industrial, a small sales growth in doors and automation, and then also good sales growth in service. And also good habit margin of 16.7% also in this division, excellent operating leverage, 60 bps up. And then dilution from FX and M&A, both 20 bps. And with that, Thank you, Nico, and a very good morning from my side as well.

As mentioned before, the sales in the quarter were up with 3%, of which organic was 4%. The net from acquisitions was 2%, and then we have a negative currency effect of 3%, but it's much smaller, as you remember from the Q1, where it was minus 10%. Now, if you look into Q3. We estimate today that it's going to be flat. However, it's going to be a slight negative dilutive impact on the margin. EBIT at almost 6.7 billion SEC is up to 9%. EBIT is at 17%, 80 base points up. However, already Nico mentioned that we have a few one-time items. If you would exclude from this, it would be 16.5%. And let's say in order of magnitude, the three ones that we have, one is earn-out reversals, two is divestment gain within global tech, and then we have a little bit of tariff refunds as well. Income from before tax, net income, and EPS are all up with 12%. As mentioned before, we had a very strong cash flow at 6.3 billion. It's up 6% versus the same period last year. Return on capital employed improved with 40 base points and operational value added increased with 5% and is now for the first time above 11 billion SEK. If we then go to the bridge, if you look on the organic part, if you look on the sales there, roughly 2% of the 4% is price and consequently then about 2% is then volume. The organic flow-through is strong at 51%. However, as mentioned before, the one-time items, if it would exclude the one-time items from the organic column, it would land at 38%. Currency, due to the weakening, the weaker, let's say, U.S. dollars, it was minus three on the top line, and it has a 30 base points negative impact on bottom line. Acquisitions there, it was 2% on top line. On the bottom line there, of course, we have the divestment gain. The divestment gain was roughly 50 million SEK. If we exclude from that and look on the rest then on the acquisition, you can see that obviously the margin is a bit lower, and that is affected then by the integration cost that we have had for the recent acquisitions. Go to the cost breakdown on direct material. It's 30 base points better than what it was last year. We have a slight positive mix, but that is offset by that we had reclassification of a cost item, which sort of impacted negatively. So if you take, let's say, the true direct material, price versus cost, that impact is 40 base points for the quarter. Conversion cost remains flat. versus last year, so the inflationary pressures has been taken off by sort of efficiency improvements. As an example, I mean, we have MFP savings in the quarter of about 130 million SEK. SG&A is 70 base points better than the same period last year, and there you can see that our good cost control has sort of managed to keep, to make that a positive number. Operating cash flow, as mentioned before, very strong in the quarter. Cash conversion is at 106%. This comes from that we have, I mean, a strong earning as well as we have been able to continue to do a very good work when it comes to working capital management. Then go to the gearing. Net debt to equity at 61%. Net debt to EBITDA. It's at 2.2. If you remember Q1, it was 2.1. But then during the quarter, despite that we have had a very strong operating cash flow, we have, of course, paid half of the dividend as well as we have been busy on the acquisition front as well. If you compare our net debt a year ago versus today, we are down with about 2.5 billion SEK. So we can sort of continue to see that our good cash generation also makes it feasible for us to continue our acquisition strategy also going forward. Last but not least, I already mentioned the number before, earnings per share was up with 12%. And with that, I hand it back to Nico for some concluding remarks.