Quarterly Report Q3 2024

Record operating profit

Third quarter

• Net sales increased by 1% to SEK 37,418 M (36,881), with positive organic growth of 0% (1) and acquired net growth of 4% (11). Exchange- rates affected sales by –3% (4).
• Organic sales growth was good in Americas and Global Technologies, stable in EMEIA, while organic sales declined in Entrance Systems and Asia Pacific.
• Seven acquisitions with combined annual sales of about SEK 4 billion were completed in the quarter.
• Operating income[1] (EBIT) increased by 8% and amounted to SEK 6,255 M (5,777), with an operating margin of 16.7% (15.7).
• Net income1 amounted to SEK 4,033 M (3,656).
• Earnings per share1 amounted to SEK 3.63 (3.31).
• Operating cash flow amounted to SEK 6,341 M (7,177).

Sales and income

	Third quarter					January-September
	2023	2024		Δ		2023	2024	Δ
Sales, SEK M	36,881	37,418		1%		103,746	110,586	7%
Of which:
Organic growth	144	91		0%		3,259	–1,020	–1%
Acquisitions and divestments	3,733	1,579		4%		7,079	9,111	9%
Exchange-rate effects	1,184	–1,133		–3%		5,530	–1,251	–1%
Operating income (EBIT)1, SEK M	5,777	6,255		8%		16,462	17,767	8%
Operating margin (EBITA)1, %	16.7%	17.7%				16.6%	17.0%
Operating margin (EBIT)1, %	15.7%	16.7%				15.9%	16.1%
Income before tax1, SEK M	4,876	5,377		10%		14,774	15,229	3%
Net income1, SEK M	3,656	4,033		10%		11,079	11,422	3%
Operating cash flow, SEK M	7,177	6,341		–12%		17,918	15,042	–16%
Earnings per share1, SEK	3.31	3.63		10%		9.99	10.28	3%

[1] Excluding items affecting comparability. Please see the section “Items affecting comparability” in the report for further details about the financial effects in 2024. For information about items affecting comparability in 2023, please see the Year-end report 2023, available at assaabloy.com.

  

Comments by the President and CEO

Record operating profit
In the third quarter, we report record operating profit and currency adjusted sales growth of 5%. The sales growth was driven by strong acquired net growth of 4% and a small positive organic sales growth, while currency effects were –3%. The North America non-residential and Latin America segments contributed to good organic growth of 4% in the Americas division. Global Technologies delivered good organic growth of 2% with very strong growth in Global Solutions and Physical Access Control in HID returned to growth. Sales growth was stable in EMEIA, with good growth in Central Europe and the Nordic region. Entrance Systems and Asia Pacific reported negative organic growth in the quarter. Weak demand in the logistic vertical as well as in the residential market affected Entrance Systems negatively. Asia Pacific was affected by a worsened development in the Chinese real estate market.

Despite a challenging market, we delivered strong operational execution during the quarter. The operating profit increased by 8% to SEK 6,255 M, which corresponds to an operating margin of 16.7%, up 100bps versus last year. The operating profit and margin improvement is driven by price realization, effective cost management and synergy realizations in our acquisitions. The operating cash flow totaled SEK 6,341 M in the quarter, with a cash conversion of 118%.

Further opportunities to improve the underlying performance
Since the pandemic, we have achieved significant improvements in our operating margin. In the last twelve months, the operating margin has been 16.6%, excluding the acquisition of HHI. However, we have further opportunities to improve the underlying performance. For example, in our EMEIA division we see opportunities from a recovery in the currently weak residential markets, particularly in the Nordics, and from the implementation of further MFP measures. There are also opportunities in Entrance Systems from growing the service business. In Americas, we see opportunities from an improved underlying demand in the residential segment and from realizing further synergies in HHI. Global Technologies has potential to accelerate its growth as we see Physical Access Control turning positive. The Asia Pacific division will improve its performance with a recovery in the residential market as well as through efficiency measures. While we clearly have opportunities to further improve the underlying performance in all divisions, we will continue with our acquisition strategy and continue to invest in innovation, hence, the target level of 16-17% operating margin remains unchanged.

High acquisition activity
During the quarter, we closed seven acquisitions representing annualized sales of about SEK 4 billion, including SKIDATA and Level Lock. SKIDATA is an international leading provider of access solutions for parking and mobility as well as sports and entertainment. Their operations are in close adjacency to our core and enable us to offer a fuller range of solutions to our customers. Level Lock is an exciting technological addition, strengthening our digital offering with its innovative smart locks that are invisibly embedded inside the door. We see great opportunities to use this technology in the commercial segment in Americas as well as in Latin America. Going forward, our acquisition pipeline remains very active.

Lastly, thank you for your continued trust in ASSA ABLOY. 

Stockholm, October 23, 2024

Nico Delvaux
President and CEO

Further information can be obtained from:

Nico Delvaux,
President and CEO, tel. no: +46 8 506 485 82

Erik Pieder,
Executive Vice President and CFO, tel.no: +46 8 506 485 72

Björn Tibell,
Head of Investor Relations, tel. no: +46 70 275 67 68, e-mail: [email protected]

  

ASSA ABLOY is holding a telephone and web conference at 09.00 on October 23, 2024 which can be followed online at assaabloy.com/investors.

It is possible to submit questions by telephone on: 08–505 100 31, +44 207 107 0613 or +1 631 570 5613

  

This information is information that ASSA ABLOY AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08.00 CEST on October 23, 2024.