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.

Thanks, Erik. So a good Q2 for us, ABLOY. with accelerated sales, I would say despite challenging market conditions, a good organic sales development of plus 4%, complemented with growth requisitions of net 2%, a very strong operational execution with a strong record EBIT and a strong record EBIT margin, with excellent operating leverage of 51%, good working capital management with very strong cash flow improvement, 16% up and a cash conversion of 106%. And again, it's clear that we continue to operate in uncertain and swiftly changing operating environments, but we have proven in the past that our decentralized and empowered organization is ready to address those changing market conditions and that Thank you, Nico. Yes, it means it's time to open up for your questions. And could I please remind you to limit yourselves to one question each and one follow-up, as there are some people in the queue to ask questions, and then hopefully most of you will get the opportunity.

Operator, this means we're ready to kick off the Q&A. Please go ahead.

Thank you. Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. And today's first question comes from Daniela Costa from Goldman Sachs. Please go ahead.

Hi there, it's Anastasia Frank speaking to Daniela Costa. I just wanted to ask a quick question on whether you could give us some color on the 3Q start so far and also on any commentary on pricing in 2H that you expect. Thank you very much.

I didn't get the first. Q3. Oh, okay.

So, yeah, Q2, as we mentioned, Q2 started on a similar level as Q1 for the first couple of weeks. But then we have seen a drop towards the end of April, and also May was weaker. And then we had a very strong June. Okay, June had one, one and a half working days more, but even if we correct for the working days, June was much stronger than the first two months. And then now July, it's a little bit difficult to say where July is, because July and August holiday months. Q3 is normally made in September, not in July and August. But you could say that July started on a similar level as June. And then pricing, we have said that at the beginning we said that we should calculate 1.5% or so for the year. We have then revised that upwards in a previous call to Thanks very much.

And the next question comes from Vivek Mehta from Citi. Please go ahead.

Thank you very much, everyone. Good morning. Hope you can hear me well. My main question is around entrance, zooming in on the industrial business. That was slower in the first quarter. You now said that's shown good organic growth. I was wondering if you might be able to give us more color on how you saw that developing through the quarter by region and so on. Thank you.

Yeah, so the industrial segment is the segment that is most exposed to the logistic vertical. And like an ancient logistic vertical, I think market conditions are still not good. In North America, market conditions, I think, are flattish, you could say, whereas if you look in Europe and you look at the bigger projects, I think the market is still down. We were not really helped by strong market conditions. It was more that we had still some projects in the pipeline that we then, you know, invoiced in the quarter, and then we also had a better service performance in the quarter. And then also the smaller projects and the non-directly big warehouse vertical-related projects were were better in the quarter. That explains the growth for the industrial segment.

Thank you. And my follow-up is, unless I missed it, I don't believe you commented on how your specification activity developed through the quarter. I was wondering if you could give us some color around that. Thank you.

Yeah, so the specification value was up high single digits on group level. I would say similar in the different geographical divisions. If you take year-to-date, in all three geographical divisions, spec activity is up either high single-digit or low double-digit for the respective divisions.

That's clear. Thank you very much.

And the next question comes from Andre Kuknin from UBS. Please go ahead.

Yes, good morning. Thank you very much for taking my question. Can I just start with a follow-up on pricing? You implied around plus two for the second half, but did you implement price increases during Q2?

Yes, we did. As one basic materials, at least at the beginning of Q2, continued to go up. We have, of course, still all the tariffs. We have also important logistic inflation. So we did that. I mean, what you should not forget is, of course, is that you should compare with last year. And in Q2, we started to see some compensation for the tariffs, and that came in full effect into Q3 last year. So Q3, from that aspect, is, let's say, the biggest – or the most challenging comparison was last year.

Right. And hence the last two. Great. And can I just ask, on the America's or U.S. residential market, what are the trends you're seeing there? And especially you mentioned, I think, before that there were some signs of maybe life emerging in the R&R where people started to take a view that they won't leave anytime soon with the current rates and hence starting to maybe go ahead with a bit more renovation activity on existing homes. Is that something that is kind of picking up as a trend, or was that just a blip?

So, yeah, we had a small low single-digit positive growth of our residential business in North America in Q2. I think we should, if you first look at new build, new build for single houses, we don't see an improvement. As a matter of fact, we see the market further down. and we don't expect the market to come back this year. Hopefully, that will be something for next year. You see some more activity on the multifamily side, but the multifamily is obviously a much smaller part of the business than single houses. On the R&R side, if you can believe economists that forecast the future, they believe that R&R could grow a couple of percent in the second half of the year. If that's true, that would be good news. for us because we are more exposed to R&R than we are to new build. It's clear that interest rates stay very high. They are at that 6.5% level, so we will not be helped by interest rates. It has more to come from people that start to do refurbishment on their house because at a certain moment, if your house ages, it's time to refurbish them. And people start to think, hey, let's refurbish the house. If I don't have to cancel it in a year or in two years, I will have a better resale value for my house. But we don't really see significant improvement of the market. It's perhaps a little bit different in Europe where we believe the R&R side is a little bit in better shape than in the U.S.

Very helpful. Thank you very much, Nico.

And the next question comes from Aaron Cesarali from Bank of America. Please go ahead.

Hello. Hi, good morning. Thanks for taking my question. The first one is on organic growth. It was nice to see volumes coming back 2% up in the quarter. Perhaps can you talk a little bit in terms of confidence? What confidence do you have for volumes to continue to grow perhaps in the second half? Thank you.

Yeah, we should perhaps comment on the different divisions. If you take the geographical divisions, Like I mentioned earlier, we see still very good momentum on the non-residential side, commercial side, where we have had higher single-digit growth in our different divisions, and we are confident that that continues. We have our spec indicators. There's also some external indicators that we believe that should continue. And then, like I said, on the residential side, although market conditions remain challenging in the U.S., and remain to a certain extent also challenging in Europe. The comparison, of course, becomes easier, and at least on the R&R side in Europe we are a bit more optimistic. I think also we should see further acceleration of the organic growth on the global tech side, where in Q2 we still have seen, like in Q1, that non-critical CARPEX-related industrial investments are a little bit being delayed. People have this wait and see attitude, but of course you build up a pipeline and at a certain moment that pipeline starts to roll and we are confident that that will happen in the second half of the year. We also had a bit lower hospitality business in Q2, which is just a timing issue and there also we should see an acceleration now in the second half of the year. Then, I mean, growth will not come from Greater China. That will continue to be challenging in the second half of the year. And I already commented on the challenging market conditions in the warehouse practical.

Thank you. And my follow-up would be on the 50 basis points on EBIT 1-off. Could you split out the impact from Paris refund?

So like Erik mentioned, we had three items, and the biggest item was an on-out... Reversal. Reversal, sorry. The second biggest item was a capital gain on a small divestment we did in global tech, and the terrace was the smallest one of the three. It was in the single-digit million-dollar range.

Thank you very much.

And the next question comes from Alexander Virgo from Evercore RSI. Please go ahead. Mr. Virgo, your line is open.

Yep. Good morning, gentlemen. Thanks very much. I wonder if you could talk a little bit about the EMEA margins. 16.5 is a great number to see after such a long time. So, you're obviously showing real benefits from MFP. Operating margins were, what, close to 70%. Again, really encouraging to see. So, I wondered if you could just talk a little bit about structurally where we are here, is this something now we can think about as sustainable? And then as the market recovers, actually recovers maybe at some point, then those margins can move higher still. And then as a follow-up, I wonder if you could just check, if I could just check where those gains fell divisionally and making sure we're not seeing anything in those margins in EMEA in particular that might have been supported by the earn-out or the divestment. Thank you.

Yes, so it's correct that EMEA was mainly in global tech and in EMEA that we have had the one-time item effects. So if you correct for the one-time item effects in EMEA, our EBIT margin was 15 flat and we had a volume leverage on the 5% organic growth of 38%. So I think Underlying still a very strong performance and a very strong improvement compared to the same quarter a year ago. What we have always said is that EMEA over time should come to that 16% EBIT level. We have said that two things had to happen. We had to have a stronger SEC because they had a lot of dilution from the SEC over recent years. Obviously, that problem is solved because the SEC became stronger since nine months or so. And then we said they need some kind of organic volume growth to get that volume leverage efficiency. And you've seen now since three quarters or so that EMEA has accelerated and continues to accelerate that organic volume growth. That was again the case in this quarter. And now you see that you get very good volume leverage and therefore very good margin accretion. We are confident that that will continue in the coming quarters and that they will continue confidently the Avis margin trajectory upwards.

Okay, great. Thank you.

And the next question comes from Gail Debray from Deutsche Bank. Please go ahead. Yes.

Hi. Good morning, everyone. The first question I have is, and sorry to label the point, but just a clarification on the one-offs once again. So you said that it should be around the $100 million for the ELEA division. for the reversal of the earn-out provision. And then I heard 50 million for the divestment gain within global tech, which leaves about 50 million for the tariff refunds, right? But then you talked about a single-digit number there, so I'm just trying to reconcile all these numbers. So that's the first question.

In total, it's around 200 milliseconds, the one-offs. We also had an out-reversal in global tech, so that's what you're missing in your calculation.

Perhaps if I go through, I mean, Gael, you're absolutely right when it comes to the $100 million in EMEA. So you go from, as I said before, $6.5 in EBIT down to $15. You go from an organic leverage from above $50 down to $38. The other one where you will have an impact is in global tech, and you have sort of two impacts. One is the divestment gain of, I mean, sort of starts with the numbers. If you look on their EBIT is, if you look on without anything, the margin is 17.918 flat. And then you already know the 50, sorry, that goes into the divestment gain. But then you have also earn-out reversals within global tech. So there, if you look sort of there, operating flow-through ends up at 32%. So which means that you have, okay, NECO is always rounding a bit. If you want to have the true number, it's actually 70 million that you should put in there. If you add this all together, you are about 220 million. That was sort of those effects. And then, as mentioned before, the tariffs is marginal when it comes to this.

Okay. Understood. And what are the two businesses related to the on-out reversals?

The companies you mean?

Yes. One was in EMEA in UK and the other one was in Global Solutions in the Netherlands.

Okay. All right. I'll try to find out. And then the second question I have is around the underlying margin performance. Obviously, the underlying execution was very strong again, but with different drivers. This time, maybe compared to Pier 1, it was clearly less about direct materials and rather more about SG&E efficiency. So is it Is it the beginning of a new, let's say, margin sort of trend from here? And especially, do you still expect the price cost to be positive in coming quarters?

I would say that, I mean, like Eric mentioned, we had net 40 bps price-cost gain, so I think it's still significant. It's just 10 base points less than in Q1, and we are confident that we will continue to have a good price-cost gain also in Q3. And we will see Q4 and Q1 next year, how material prices evolve and what we do with pricing. But we should continue to get help from price versus cost. Now, we should not forget that the 2% price, of course, has a positive effect on all the lines in the income statements. But it's definitely also true that if you take the residential segment in North America as an example, that we have further adjust our cost structure to the lower top line reality. And all these day-to-day cost efficiency measures, our lean initiatives in our operations, I think also good negotiation with suppliers. And then like Eric mentioned, our MFP programs that continue to kick in, all that together gives us the good efficiency gains that we've been able to see on the other lines.

Okay, that's great.

Thanks very much.

And the next question comes from Daphne from Auto Bay PHF. Please go ahead.

Yes, good morning. Thanks for taking my questions. You mentioned some pressure in Europe in global tech on project-related businesses. Can you be a bit more specific and provide some color on how you see this segment

I think you should make a distinction between, you know, projects that are really business critical. Customers have to do the project or, you know, they're out of business or they don't have a solution. And then you have other projects where they buy our products to get efficiency gains or to get, you know, improvement in the way they run their processes. And it's that second part of kind of project that are not really very urgent and very business critical that we see that perhaps people sometimes hesitate and say, let's wait a quarter, let's see how things move, how our results are before we take that decision. And there we have seen a buildup of projects in the pipeline where we are waiting for people to take a decision. But ultimately people will have to take that decision, of course, and we are confident And we have seen that at the end of Q2 that this project starts to move again, and we are confident that that's going to continue in the second half of the year. We have seen that also a bit in anti-systems. We have seen that mainly in global tech.

Thank you. And then you highlighted 900 potential targets in your pipeline. What are the main regions and segments you are focusing on?

I would argue that it's even close to 1,000, because every time you do an acquisition, that acquisition comes also with new ideas to buy other companies. I would say it's very, very widespread, and we don't really have an opinion in which division or in which geography. If it's a good project, we do it on first-come, first-based, first-off base, in the sense that for those acquisitions in the 30, 40, 50 million We are not limited by our balance sheet. So if we can do five, we do five. If we can do ten, we do ten. And it's more, we are talking to many of them, but then of course to conclude you have to agree on both sides. And when that happens, we will do the acquisitions. There's only one location where we have said that for the time being we would not do acquisitions. Thank you, Nico. And the next question comes from James Moore from . Please go ahead.

Yeah, morning, everyone. Nico, Eric, thanks for the time. Can I ask about the speed of LMEK versus MEC, either globally or by region, with or without GT? And also, if possible, where you are on the innovation ratio and your thinking there? And thirdly, where recurring demand speed was in the quarter, software versus service as well, if that's possible?

Like we mentioned, our LMAIC growth in the geographical divisions has been 8% in the quarter. And when I say that we have high single-digit growth on the commercial side, it's of course in the first place thanks to that shift from mechanical to electromechanical and digital. And we continue to see that trend moving in the geographical divisions and also in global tech. And as our installed base on electromechanical product continues to increase. We also continue to see more recurring revenue opportunities in the first place, again, in the global tech division, but also in the geographical divisions. Our recurring revenue was also up, again, double digits this quarter, and today it's more than 6% of total revenue. If you look over the last three or five years, the recurring revenue part, that solution has been the fastest growing to say product or offering in our portfolio. The third question was? The current revenue. Innovation ratio.

Innovation ratio.

If you see today products that we developed over the last three years, how much did they contribute to revenue, you know, that is one of the KPIs we follow. That's around 25%. So one out of four dollars we make or euros we make comes from a product that was developed over the last three years. So quite happy with that. We obviously want to further improve that. We have invested a lot, as you know, on R&D. I would say not only on the electromechanical side and the whole move to mobile credentials, we've also reinforced our activities on the mechanical side, also the more value segment on the mechanical side. If we take residential North America, it's a good example. I think if you take the last six or nine months in HHI, we developed or we launched more products than HHI launched over the last three years before we bought them, so that's a very good example. a clear example of acceleration of R&D activities. I think we wrote also in the comments, since I started back in 2018, we launched more than 4,000 new products of product families, and we also filed for more than 2,000 patents. I think that shows a little bit our R&D strength, and we see R&D really as a way for us to differentiate us in the market.

Thank you very much.

I have been informed that there's one left in the queue, so if you have any more follow-up questions, follow the instruction of our operator, and we'll probably have time for them.

Yes, as a reminder, if you would like to ask a question, you may press star and 1. And the next question comes from Phil Buller from JP Morgan. Please go ahead.

Hi, good morning. There's two for me, please. Firstly, just on the price increases you've been putting through, have there been any signs of free buy anywhere? And the second question is on global tech margin. Obviously, the price cost has been very well managed in Q2. Is there anything to call out in terms of phasing on the cost side or potential headwinds in H2? I'm thinking about memory prices or other inflation topics that you might have exposure to that might require further price increases in H2 in global tech, please. Thanks.

The first question was again on price increases pre-buy.

So it's not that we do all our price increases for the whole group at whatever the first of April. I mean, they're always faced and it's also not like perhaps prior to COVID that we will do one price increase per year and that's it. We have not much more regular price increases and they are much more sequence. Yes, for sure there's going to be always some pre-buy that when one specific product summary we increase the price increase, we will have some pre-buy there. But I think in the bigger picture, It's not really something that moves the needle because we have had so many price increases over time and also last year we had price increases, also there we had pre-buy. So I don't think it's something that is significant to talk about. When it comes to global tech, we have always said that we aim for first an organic growth higher than the group ambition, so a more higher single digit. and so that we want to do that with an average margin within the 17 to 18% balance rate. And I think we are delivering on that ambition. And I think that's the numbers that you should have in mind also going forward.

Thank you very much.

And the next question comes from Aaron from Bank of America. Please go ahead.

Hello, thanks for taking my follow-up. It's on cash flow. I see that Americas and global tech were the standouts in terms of cash flow. While I noticed the entrance system was a bit weak, mainly due to working capital, was it an element perhaps higher receivable that boosted organic growth that we saw in the entrance system? Is that a fair assumption?

No, I mean, on entrance system, it's also so that we We bought a building in Monroe, North Carolina, which has a negative impact. So if we would exclude for that, they would also still continue to have a good cash flow. Global tech in America is, I mean, they are, I mean, they have good earnings. They also have good, let's say, working capital management, and that sort of is just continuing. So it's nothing strange. As I said, with the exception of entrance where you have sort of that we acquired the building.

Is the building counted in CAPEX or in working capital?

It's CAPEX, yeah.

CAPEX, okay. Thank you.

And the next question comes from James Moore from . Please go ahead.

Well, thanks for the follow-up. Nick, I just wanted to dig into entrance systems and GT a little bit. On entrance systems, we obviously have some challenges after the great stay-at-home post-COVID logistics market in recent years and growth has slowed. On the industrial side of the business, Thank you very much. performance, but a strong performance in HID. Given where we are in technology cycles, do you think that the sort of speed of HID has been hampered in recent times by any internal topics? And do you see that sort of changing going forward? And where do you think you are in the HID kind of multi-year growth cycle?

When I was talking about the less or the non-critical CapEx investments in Europe that are a bit postponed, that's really why you see that in HID. And I also said that I'm confident that that will improve in the second half, so I think we should see an improvement of that part in HID. I don't think it's linked to internal issues in HID. You know, we have divested our passport business, but that was already last year. I think if you see our main business, we have a stable organization, stable performance. There's more is this CAPEX or non-critical CAPEX related decisions in Europe that have been postponed. If you take in global solutions, they had strong growth despite a weaker hospitality in the quarter. And like I mentioned, the hospitality weaker quarter is just a timing issue. With hospitality we have a better view on projects, so it's just that some of the projects did not fall in Q2 and they will come later. So I think that is also not an issue going forward. It's more a one-time effect that we have seen in Q2. And then entrance on the industrial side, our logistic vertical is around 15% of entrance systems. Industrial segment is around 40% of entrance systems Most of the industrial segment is loading, so you can calculate that it has a very big exposure to the logistics article for the industrial segment. Going forward, it's difficult for me to see where we are in the cycle. What I can say is that the market development in North America is flat. We don't believe it's going to get worse. When it's going to get better, we don't really know. What is affecting in Europe is that if you look at the bigger projects of say the Amazons and the type of Walmart, the bigger companies doing those big logistic projects in Europe, that market is still single digit down today. So I don't think it's gonna get worse, but when are we gonna see improvements? We almost all say that we don't know. Oh, thanks.

I think there are no more questions left, which means that it's time for us to round up this conference. If there are any follow-up questions later on, please feel welcome to reach out to us at Investor Relations. And with that, I guess it only remains for the three of us to wish you a wonderful day and wonderful summer, and we look forward to speaking to you again after the break. Thank you. Thank you. Thank you very much.