ASSA ABLOY AB (publ)

Q2 sales were almost SEK 39.5 billion, up 3% year over year. Organic growth was 4%, acquisitions added net 2%, and currency was -3%. EBIT was almost SEK 6.7 billion, up 9%, EPS was SEK 3.98, up 12%, EBITDA margin was 18.1%, and reported EBIT margin was 17% (16.5% excluding one-time items). Cash flow was SEK 6.3 billion, up 6%, cash conversion was 106%, ROCE improved by 40 basis points, and operational value added rose 5% to above SEK 11 billion. For Q3, management said currency impact is expected to be flat but still slightly dilutive to margin. They also said full-year pricing should be around 2%, with the second half expected to be around that level as well.

Nico Delvaux described the quarter as a strong one with accelerating organic growth and very good operational execution. He emphasized the company’s transition from mechanical to electromechanical products, saying electromechanical sales in the regional divisions grew 8% organically and recurring revenue continued to rise. He also struck a confident tone on the company’s decentralized model, saying it is prepared to handle uncertain and swiftly changing market conditions.

Erik Pieder focused on the quality of earnings and cash generation. He noted that the quarter included one-time items, mainly earn-out reversals, a divestment gain in Global Tech, and some tariff refunds, and said excluding those items EBIT margin would have been 16.5% rather than 17%. He also highlighted 106% cash conversion, net debt to equity of 61%, net debt to EBITA of 2.2%, and said net debt is about SEK 2.5 billion lower than a year ago, supporting continued acquisitions.

Analysts pressed on Q3 starting conditions, pricing, residential U.S. trends, volume confidence, the SEK 100 million EMEIA earn-out reversal, and whether one-offs or price/cost dynamics would change margins. Management said July started at a similar level to June, pricing increases have been implemented and full-year price should be around 2%, and residential new-build in North America remains weak while R&R is still only modestly improving. They also said volume momentum should continue in non-residential and that the project pipeline in Global Tech should convert more in the second half.