Assa Abloy Aktie

Good morning, everyone, and welcome to the presentation of ASSA ABLOY's first interim report in 2026. My name is Björn Tibell, I'm heading Investor Relations. And joining me here in the studio are ASSA ABLOY's CEO, Nico Delvaux; and our CFO Erik Pieder. We'll start this conference now with a short summary of the report, and then we will open up for your questions as usual. And we have set aside about 1 hour for these event.

So with that, I'd like to hand over to you, Nico.

Thanks, Björn. Also good morning from my side. We can report a good start of the year with a continued strong execution in the quarter. We had a good organic sales development of plus 2%. The good sales growth in Americas, Global Technologies and EMEIA, but a stable sales in Entrance Systems and APAC. Then net organic sales complemented with growth through acquisitions of net 2%. And then a strong execution with a strong EBIT margin improvement, 40 basis points better than last year, and EBITDA at 15.3% with an excellent operating leverage of 51%.

And then again, cash flow also highlights this quarter, a very strong cash flow, 30% up compared to last year. Electromechanical organic sales continues to outgrow the rest of the business. We had a 6% organic growth for electromechanical products in the regional divisions. And then we complement the 3 acquisitions -- or we completed 3 acquisitions in the quarter.

So if we look in numbers, sales of almost SEK 36 billion, 2% organic growth, 2% net acquired growth, but then hit in an important way by FX, minus 10%. So top line, minus 6% in total. I'm very happy with the EBITDA margin evolution, 50 basis points better than last year at a strong 16.4%. And we have the EBIT margin, like I mentioned, at 15.3%, 40 basis points better than last year. And EBIT in absolute value close to SEK 5.5 billion.

If we look a little bit in the market conditions. And perhaps I'll start to comment for the opening solutions geographical divisions in the 3 main markets. I would say there is no difference compared to previous quarters as well in North America, as in Europe, as in Oceania, we continue to see a very good strong momentum on the nonresidential side, on the commercial side, and we continue to see a more challenging situation on the residential market.

If I comment for those 3 markets for the other divisions. For Global Tech, mobility is important, and we still continue to see very good mobility in all 3 regions. So it's good market conditions for Global Tech. The deviation is perhaps in Entrance Systems, where we see in North America, Europe and Oceania, good momentum for everything that is retail related. We see good momentum for our perimeter security business in North America. But we see more challenging market conditions for the residential garage doors. They are linked to residential market conditions. And then we have seen also a slower recovery of the logistics vertical in North America than anticipated.

And we don't see that recovery yet in Europe. As a matter of fact, we see the logistics verticals further going down in Europe. We've seen in Europe also a little bit slowness, I would say, on, let's call it, industrial CapEx-related decisions for project business, mainly in Entrance Systems, also a bit in HID. So that gives us then the plus 5% organic growth for North America, the flat development in Europe and the plus 3% in Oceania.

Very good market dynamics in LatAm, where we have seen a very good growth in all our markets, a plus 2% organic growth. Africa is a very small part of our total business, minus 8%. That's mainly related to a difficult comparison with projects that we took last year for HID and Global Solutions.

And then the plus 2% in Asia, a very mixed picture between Greater China, where the market continues to be double-digit down. And then the rest of Asia, where we see good momentum, and where we also ourselves see a very good high single and double-digit organic growth.

If we then go to the highlights for the quarter. Some project wins. HID was able to secure a solution offering mobile first access via Apple and Google Wallet, with kind of hybrid support for physical credentials for Buró Property, a big important customer for us in LatAm.

Kwikset continues to launch new products on the digital side, the Kwikset Aura Reach Smart Door Lock, a connected deadbolt enabling hands-free intelligent home access with Bluetooth and Matter connectivity. So another, I would say, product launch in that field. Very happy with that.

And then on DoorBird introducing the world's first IP video intercom system with integrated 5G, enabling flexible and cable free access to residential and commercial buildings. Very excited about that new product launch as well.

When I look a little bit at the sales growth, 2% organic, 2% acquisition, a bit lower than the previous 4 quarters, but you see that our 12-month growth trend continues. Operating margin at a good level, but hit because of the currency on the top line. And then -- sorry, operating margin -- sorry, at a good 16.3% and then operating income on a good level, but hit by the currency on the top line. Nevertheless, [ 73% ] up compared to 2021.

We continue to be very active on the acquisition side with 3 acquisitions completed in the quarter. They represent an annualized sales of around SEK 550 million. And now in the beginning of April, we announced another acquisition, that's our 400th acquisition since we were born 32 years ago. Very happy also about that acquisition. It's a residential garage door company in Portugal serving South of Europe, so complementing also our residential offering in Europe.

If we zoom in on one of the acquisitions of Q1, Sennco is a U.S. provider of asset protection technology and solutions for retail security. So really complementing our InVue offering in that vertical. A very nice complement to an exciting vertical. They had a sales of around SEK 330 million last year.

If we then go into the different divisions, starting with EMEIA, a very good start of the year for EMEIA with an organic sales growth of 3%. Strong sales growth in Central Europe, the Nordics and the Middle East, India, Africa region, but in a sales decline in U.K., Ireland and in South Europe. Also a very good improvement of the margin, 14.8%, 100 basis points better than last year. You see that, that organic volume growth continues to boost the bottom line. Strong operating leverage of 40 basis points and then also helped by FX, the only division actually did that this bottom line held by FX, 80 basis points, M&A dilutive 20 basis points.

Also Americas, a very good start of the year with an organic sales of plus 4%, with strong sales growth in North America, nonresidential segment and in Latin America, and then a sales decline in North America Residential segment. Also here, a very good EBIT margin improvement at 17.9%, 80 basis points better than last year. We've also here excellent operating leverage and hit by currency and acquisition, 2 times, 30 basis points.

APAC, a flat organic sales development with good sales growth in Pacific, Northeast Asia and sales decline in Greater China and Southeast Asia, where we see a big difference between Greater China, double-digit down; and Southeast Asia, double-digit up. Nevertheless, despite a flat organic sales development also here, nice EBIT margin improvement, 100 basis points better than last year at 5.1%. Also here, excellent operating leverage and then hit by currency, 30 basis points.

Global Technologies, an organic sales growth of plus 4%, with strong sales growth in Global Solutions and a good sales growth in HID and a strong EBIT margin for Q1 at 15.3%. We've also here, excellent operating leverage hit in a very important way by FX, 100 basis points dilution, and helped by M&A, 40 basis points. That's mainly the divestment of Citizen ID business last year.

And then last but not least, Entrance Systems, a flat organic sales development, with strong sales growth in Perimeter Security and in pedestrian, but a sales decline in Doors & Automation and in the industrial segment. And a good sales growth in service. Despite a flat top line development and therefore negative volume, we managed to support a very good EBIT margin at 16.1% with a stable operating leverage. And then FX and M&A dilutive, respectively, 40 basis points and 20 basis points.

And with that, I give the word to Erik for some more details on the financial numbers.

Thank you, Nico, and also a very good morning from my side. You've heard a lot of the numbers before, but sales were, in total, down with minus 6%, with plus 2% in both organic as well as acquired net growth, but were hit in an important way by the currency, minus 10%. Of course, I mean, as you probably are aware of, there is quite a lot of movements in the currency.

So if we look into Q2, right now, we sort of foresee that it's going to be a minus 2% impact for the second quarter. EBIT was -- in value, was 3% down. If you look on EBITDA, up with 50 basis points. EBIT was up with 40 basis points and then a little -- we're a little bit helped by the interest rates. So both income before tax, net income as well as EPS is at a similar level as what we had a year ago.

Cash flow, as mentioned before, was very strong at SEK 3.1 billion, 30% up versus the same period last year. We also saw an improvement in return on capital employed, up with 20 basis points. As we introduced in the last quarter, operational value added, which is EBIT minus the interest cost that we have for our capital employed, there we also were able to improve that with 1% in absolute value.

If you look on the bridge and dissect the organic part, on price was a strong 2%, which means that volumes were flat. You see an excellent flow-through of 52%, where you can see that, okay, there is a bit of a positive mix, but also we have positive tailwind that comes from price cost, MFP savings of about SEK 120 million as well as other operational efficiencies. The currency hits us both on top line as well as on bottom line, 10% on top line and then a dilution of 30 basis points on the bottom line. And then there is a small dilution this quarter of 10 basis points that comes from acquisitions and divestments.

Cost breakdown, direct material, positive with 90 basis points, out of which about 40% -- sorry, 40 basis points comes from mix, which is predominantly mix within the divisions. So let's say, the true impact is 50 basis points from price versus cost. We see, of course, now that raw materials are increasing, but we're mitigating that with price actions. Conversion costs due to the lack of volume was down with 40 basis points. SG&A was flat despite that we continue to do investments in R&D as well as in sales, but we were able to offset that with efficiencies within our administrative expenses.

Operating cash flow, as mentioned before, 30% better than the same period last year. Conversion was about 60 -- cash conversion was about 60%. And if you look on the last 12 months, our cash conversion is at a very high 110%, and we have had an operating cash flow positive of about SEK 23 billion. And that, of course, has an impact on our gearing and our net debt. If you look at net debt to equity, it's going down. So now it's about 60%, net debt to EBITDA is at 2.1. And if you look on the lower bar, that we have reduced our net debt with more than SEK 6 billion, where if you remember in Q4, it was a lot related to currency. Now the currency has a much smaller impact. And you can see that our cash flow is really paying off in reducing our debt. So we continue to have a very strong balance sheet, so we can continue the acquisitions that we want to do in line with our strategy.

Last but not least, from my side, EPS, as mentioned before, was at the same level as previous year. If you look on dividend, we have since 2021, paid out SEK 27 billion. And if now the AGM approves this afternoon, we're going to pay out another SEK 7 billion.

With that, I hand the word back to Nico for some concluding remarks.

Thanks, Erik. So like I said at the beginning, a continued strong execution in the quarter with a good organic sales development of plus 2% to 2.3% to be exact, and good complementary growth through acquisitions, net 2%. A strong EBIT margin improvement, 40 basis points better than last year, EBIT at 15.3%, with excellent operating leverage of 51% and then a very strong cash flow improvement, 30% better than last year.

Can I repeat what I said in previous quarters, we live in a very uncertain world where things are also changing day by day. And we are still convinced that our decentralized model, where we will empower people in the local markets close to the customer really gives us a competitive advantage. And through that, we are also prepared for whatever operating environment, economic environment comes to us.

Thank you. And with that, I'll give the word back to Björn for Q&A.

Thanks, Nico. Well, that means it's time for us to open up for your questions. I think you know the rule. So please limit yourself to one question each and a follow-up. And then if you can put in your interest again for another question.

Operator, this means that you can kick off the Q&A. Please go ahead.

[Operator Instructions] The first question comes from Ines Lefranc, Goldman Sachs.

I just wanted to ask, could you give us some color on the impact from weather and the impact from the Middle East in the quarter, please?

First part was the weather and the Middle East, okay. So yes, we mentioned after the Q4 call that January started a little bit slower because of bad weather, mainly in the U.S. And for sure, construction customers have lost some days in some parts of the world through that. And that also is an explanation why our year starts a little bit slower. I would say if you look at the total quarter, that is not really something that moves the needle. So I think it's not really an explanation for the results we have.

If we then go to the Middle East, the direct impact is rather small in the quarter because, as a matter of fact, January and February, very good in the Middle East. We only start to see a decline for the Middle East in March. And also Middle East is a relative small part of our business, it's only around 1.5% of total sales. Then of course, there will be and there is some indirect effects of the Middle East situation when we talk about oil and gas prices, about logistics, which drives inflation. And like Erik said, we, of course, will compensate that inflation through further price increases in the market.

The next question comes from the line of Andre Kukhnin.

I just wanted to ask about how the Q2 progressed so far versus that sort of relatively slower start of the year with a few things that you highlighted. And then I've got a follow-up on that on Global Tech, please.

So like I mentioned, in Q4, January started a bit slower because of weather and perhaps other things. But also February continued to be rather slow. So the move -- we were a little bit concerned, but then we had a very good March, giving us the results that you have seen for Q1. We can say now that April has continued on a similar level as March.

That's very helpful. And just on Global Tech, Nico, can you help us with thinking about the sort of the quarterly cadence of growth there. I know in the past, you said the stars were aligned and you printed 9% growth in 2025 Q4. Before that, we had only 3% in Q3, again, high single digit in H1. Is 2027 going to look like that, in your view, from what you can see right now from the order book from customer indications? And we just had one of those kind of slower quarters? Or do we need to kind of rethink Global Tech, 7% growth potential for the year?

Indeed, Q3 was plus 3%. Q4 was plus 9% before stars aligned, and now we have again plus 3%. So it goes a little bit up and down. We have always said that Global Tech is a division that should grow faster than our 5% ambition. We should have ambition for Global Tech to grow higher than single digit. And we're still convinced that, that is the case over a business cycle, but you will continue to see this ups and downs quarter by quarter.

This quarter, all the stars were not aligned. We've also seen a little bit of hesitation, I would say, on the project side. But similar, like I mentioned, for Entrance Systems in Europe where I would say noncritical CapEx, industrial CapEx related decisions are perhaps taking a little bit longer because people want to understand a little bit better what is going to happen with the world around us. But again, I'm confident the long-term drivers continue to be strong for Global Tech. We stay with our statement that this is a division that should grow higher single digits over a business cycle.

The next question comes from the line of George Featherstone, Barclays.

I just want to start with a question on Entrance Systems, if possible. I just wondered -- like it's basically a division that has been lagging, I guess, the group for some time now. And I just wondered, in your assessment, how much of this is just purely cyclical effects and how much of it might be structural and whether or not you're reviewing any parts of the portfolio in terms of whether they are suitable for the long-term ambitions of ASSA ABLOY. That's the first question.

I think perhaps we can take a little bit per segment. If we start with the smaller segment perimeter security, the fencing business, which is for us only a North American business. I would say this is a very strong business that has performed on a very high level for the last years with a very strong positioning in the market.

If you then take pedestrian, perhaps to some of you are surprised, we really like retail business and the retail business like it is going today. Because yes, it's perhaps true that there is less shops being built, but the shops are upgraded to more nicer shops. And so all the manual doors disappear and you get more sliding doors. So that's good business for us. And pedestrian also has performed very good in Q1 and the same -- it continues the same trend that we have seen for several years.

Then we have our residential segment, which is today mainly a North America segment, and that's very linked to residential market conditions, on which I commented quite a lot this quarter and also previous quarters. But we don't see that recovery on the new build side and where the R&R recovery is also rather small.

And then last but not least, the industrial segment. The Industrial segment depends very much on the logistics vertical, where we start to see a small recovery in North America, where people start to invest again in new warehouses, but perhaps a smaller recovery than we had hoped and anticipated for. And that recovery, we don't see yet in Europe, that logistic vertical market is further down in Europe, and that hits our results in Europe. That together with what I mentioned earlier that in Europe, we see a little bit of hesitation on noncritical industrial CapEx-related decisions.

So I think what we are in today with Entrance Systems is really market related. We don't have any ambition to change our portfolio. We believe that the 4 segments are very good segments to be in from an equipment perspective and also from an aftermarket perspective, we have continued to see relative good growth on the service side. It's just a matter of time for the -- in the first place, logistics market in Europe to recover, to see again, stronger organic growth for Entrance Systems.

Okay. And just a follow-up on the pricing comments. You've obviously made reference to some inflation pressure. So can you let us know a little bit about whether you've already taken some proactive action on price? What kind of levels are we talking about? And whether or not you see incremental headwinds from any Section 232 changes as well, please?

You see -- and Erik also commented on the accretion price versus cost. The 90 basis points were 50 basis points is pure price versus cost. So we are doing well in compensating to a price increase, but also through operational efficiencies, negotiation with suppliers to compensate for that higher inflation.

And then it's true that recently, we have seen material prices further going up. You can name whatever, steel, copper, zinc, aluminum, everything is up. On top of that, we have the logistic cost inflation, labor inflation, general inflation. So yes, we continue to increase prices. We have increased price at the end of last year, beginning of this year, and now towards the end of Q1 and now also in April, we have further increased the prices.

So when I mentioned earlier that we could reckon with a price between 1.5% and 2%. For this year, we can inflate that number a little bit depending on how successful we will be with the price realization of the recent price increases that we announced. But I think if we should calculate now with a price increase north of 2% for this year. With that remark now, of course, in Q2 that you should not forget that the price carryover from the tariffs of last year is gone. We had very nice price carryover in Q1 because last year, there was no tariffs yet. And then in Q2, obviously, those price for tariffs started to kick in.

The next question comes from the line of Gael de-Bray, Deutsche Bank.

Can I just follow up on the pricing side and especially regarding the residential segment for you. Obviously, it's been fairly weak for a number of quarters now. But I was wondering if there is any need to adjust the pricing perhaps based on the lower demand or at least the need to absorb internally a bigger part of the inflationary pressures.

So I suppose you talked specifically about residential North America or residential in general?

Yes, North America.

So our North American Residential segment had a small single-digit negative growth in the quarter. But if you then take price into account, of course, volume was negative. So only price will not help us or will not do the trick to further improve margins.

So we also have taken more cost measures in the residential segment. We unfortunately had to let go quite a lot of people. I think we have -- if you take the last 18 months, we, unfortunately, had to let go more than 1,700, close to 1,800 people in that segment to adapt the costs to the new top line reality. But that led, together with the further realization of the synergies in residential that led to continued margin improvement for Q1 now compared to Q1 a year ago.

And yes, we also increased prices on the residential side. Yes, it's true that it's more challenging in a DIY segment and for, let's say, a relatively smaller end customer. But we realize also prices for residential direct and also through the introduction of new products where we have really accelerated the new product development for residential in North America.

The next question comes from the line of Rizk Maidi, Jefferies.

Nico, your commentary around March being stronger than January and February. Do you think there's an element of prebuying because you've been obviously implementing few price hikes? Also seeing lending rates creep up. Does this change your view on the sort of recovery in U.S. resi and the Nordics?

So one on prebuy, no, I don't think it's something that has moved the needle in the sense that we have increased prices also in November, December, January, February, March, April. So it's an ongoing exercise, and we did the same year before. So that is not something that moves the needle.

The second part, interest rates, yes. Yes, I think we see interest rates going up again a little bit in North America. That's obviously not helping a faster recovery on the residential side. Like I mentioned earlier, I think R&R is -- has bottomed out and is growing again or recovering again from a low level at a low speed, but we don't see that recovery on the newbuild side yet. If you look at 12-month moving trend for new single-family houses in the U.S., I think it's 14% down. So the new build recovery will not happen in -- on the shorter term.

Think interest rates are important. Disposable income, of course, for the average American is also important. And then on one side, we have, of course, the inflation and the higher inflation and the higher gasoline prices on that plays on the other side, also perhaps lower taxes. So we'll have to see how that plays out going forward.

And then just price cost, 50 basis points, now the carryover is lower in Q2. How should we think about price cost over the coming quarters, please?

Again, it depends a little bit on how much of the price we will realize now in Q2, but we are confident that we will get good price realization. Therefore, I think you should calculate with another good accretion price versus cost in Q2. Perhaps a bit -- slightly lower than in Q1, but still a good significant occasion. And then Q3, Q4, we will see where material prices go and what we further do with prices.

The next question comes from the line of Aron Ceccarelli, Bank of America.

The first one is on your P&L. Gross margin was up 60 basis points and strongly up, and SG&A was flat. I believe in the past, you mentioned that you're expecting for the full year, SG&A expected or sales to be up year-over-year. Can you maybe help me understand, if you change your view today, what should we expect on SG&A? You think that you can, in fact, offset increase in R&D full efficiency for the rest of the year, please?

I don't remember saying that we expect SG&A to go up. It's real if you look over the last couple of years, most of the accretion has come from price versus cost on the material side because we have continued to invest in sales and in R&D to boost that organic growth.

In this quarter, the SG&A has been neutral, and that is despite the fact that we have continued to invest in R&D and that higher sales cost for the people that we invest on the sales side is in the books. Explanation is on the operational efficiency gains that we realized, especially on the admin side. We are working a lot on lean in -- not only in our operations -- physical operations, but also lean in our offices. And then, of course, we start to see the first results in our finance from the AI activities and other automation activities that we are carrying out on the admin side.

A follow-up would be on Global Technology. Before, you mentioned customer hesitating a bit. Could you help me understand what type of visibility you have in this type of business that -- in terms of backlog, please?

It depends very much our visibility. It depends for the different businesses we have in the group. If you take residential aftermarket in Europe or in the U.S., you would say -- you could say that our visibility is a couple of weeks because we have delivery times over a couple of days. Now of course, if you go to a new project on the commercial side, you have a little bit longer visibility.

The longest visibility we have is for loading docks because there, I mean, if you get an order today, you deliver in 6 to 9 months. HID is a little bit in between. They have a lot of day-to-day business for the aftermarket, I would say, is the major part of HID, but then they have a project business in Identification Technologies and in IMS, where we have obviously a bit longer visibility. And I would say the same is true on Global Solutions where there is a lot of day-to-day aftermarket and then the projects, like for hospitality or for Marine and the other verticals, we have 3 to 6 months, sometimes 9 months visibility.

I can maybe just signal to those of you who are in the queue, we had just had 2 people in the queue. So if you have more questions, there might be a possibility to ask questions.

The next question comes from James Moore, Rothschild.

I wonder if I could, Nico, ask some growth rates on specification globally, regionally and Elmech and software, just understanding how all of that lot growing in the quarter?

So still continued good momentum on the specification side. We had a high single-digit growth of specification in Oceania, Australia, New Zealand. We had double-digit specification growth in EMEIA. We had low single digit in Americas. And before you start to it, something negative in that, that was mainly in education and health care verticals, the 2 main verticals for us, and that was mainly because of a very difficult comparison with a year ago. So as a matter of fact, also in North America, we don't see any slowdown on the specification business for our commercial segment. So that continues to be strong. We continue to see a shift from mechanical to electromechanical on the specification side. And in Europe, we also continue to see a shift to more request for sustainable offerings.

Would it be possible to talk about the speed of Elmech versus mech growth in the quarter at the group level and also, how your software business is developing in here?

So if you take the Elmech growth for the geographical divisions, that grew with 6% in the quarter. If you include Global Tech, if you take the global -- or the total group, we grew Elmech with 7%. And the division is also partly explained by the higher growth of Software as a Service recurring revenue part, which sits for the main part in Global Tech, in HID and in Global Solutions. Today, our recurring revenue part is more than 6% of top line. So it's our fastest growing, you can say, product or solution.

And I wondered if I could just come back on your comments on HHI or U.S. residential. You talked a bit about some new product launches. And I wondered if you could put any kind of numbers to that in terms of innovation ratio or number of products like what you did in the past? And like has that impacted sales in the first quarter? Is that a benefit that's yet to come? And do you see it shifting market share and shifting growth relative to the market?

I think if you look at market share, you should look over a longer period, everybody can say that they grow market share in 1 quarter. But we definitely believe one of the ways to improve our relative position in the market is through new product development. That's why we accelerated new product development as well on the mechanical side, where we also extended our product offering with some new exciting families, but definitely also on the digital offering for Kwikset where we came, I think with 4 or 5 new platforms of digital door locks.

As a matter of fact, I think we launched, over the last 9 months, more products for Kwikset that they launched over the last 3 years before we bought them. So true acceleration of new product development. Same is true on the Baldwin side where we extended our offering in a very nice way and as well for national hardware. So if you look a little bit under the hood, I think we see definitely in those subsegments, on the digital side, for instance, those new product developments helping on boosting the sales, yes.

The next question comes from the line of Andre Kukhnin, UBS.

Can I just kick off the M&A? How much do you have now for the year from the acquisitions that you've announced? And how is the pipeline looking for the rest of the year at the moment, please?

If you look today, it's about 2% that we have already acquired. And we have a healthy pipeline. You heard from Nico before that we already have closed acquisitions in April. So I think it's pretty healthy.

Great. And yes, sorry for another technical, but just on FX, you mentioned 2% for Q2. I just wanted to make sure I've got that right. And what are we calculating for the full year at the current rates? Just making sure I got the right number.

I mean we sort of calculated with 2% for Q2 and it is, I think, 3% then for the full year. But remember, I mean, this is period end as a margin. I mean there is some fluctuation in this, but that was sort of be, as I said, 2% for Q2 and 3% minus then for the full year.

The end of March rates or the current rates?

End of March rate.

End of March. That's great. Can I just follow up on pricing, it's a bit more interesting question. So you mentioned that you're continuing to push price increases, but the U.S. tariffs carryover is kind of done as of end of Q1. But from where I recall last year, the tariff-related price increases were kind of prolonged through kind of -- from obviously, the Liberation Day, it took a while to get that going from beginning of April, and then there were kind of variations in tariffs that were kind of also reflected subsequently. So it sounds a little bit strange to see that tariff was done already in Q1, and there's nothing for Q2 or the rest of the year given how gradual it looks during 2025. So I guess the bottom line question is, you've indicated more than 2% price for 2026. It sounds like we can get quite close to 3 or am I miscalculating something there?

Well, we want to stay to our statement that it's going to be more than 2%. It's true that we will still get some carryover in Q2 from the tariffs. I want to explain that in Q1, we had 0 carryover -- so sorry, we had 0 in Q1 and that therefore, we had full carryover, that in Q2 will be significantly less. But yes, there will be still some carryover in Q2 and even in Q3, yes. You're correct.

The next follow-up is from Rizk Maidi, Jefferies.

Just maybe on the savings, I think MFP, Erik, you said it was SEK 120 million. Can you just talk about what are the other initiatives? I continues to be surprised by how strong the organic drop-through is.

No. But if we first talk about MFP, as you know, I mean, we had SEK 120 million then for Q1. Right now, based on what we have today from MFP, we will be a little bit shy of SEK 120 million, but we are also initiating an MFP 11. So I think we're also going to see projects coming in from that.

The other part, which is, let's say, non-MFP related is what Nico talks about, for instance, when we talk about HHI because there, of course, they do let's say, personnel reductions, then where you don't need to have restructuring money, like if you do in the U.S. and like you do in some places where they have the factories. So those are the other things that are then kicking in and helping us from an operational efficiency.

And you also saw an admin as well where we talked about that. We also see efficiencies then in admin, where -- I mean, Nico talked about, let's say, efficiencies in the processes. Those kind of things also helps, in order then to get a good, I would say, operational efficiency.

But I would add that also, I think our operations teams are doing a very good job and day-to-day operational efficiency improvements to automation, amortization and to good negotiations with our supply chain. I think that's also an important part of the -- that explains the volume leverage together with mix and a lot of other things, of course.

And then secondly, maybe just -- I probably missed this on the call, but how should we think about sort of M&A dilution from the second quarter? Whether there is any seasonality in the businesses you're acquiring?

I mean if you look on Q1, I think you see it more in Q1, where let's say, the larger -- I mean, you see, InVue has a seasonally weaker Q1, and you see that in Global Tech. Also SKIDATA is also weaker in Q1, even though I must say that they have improved their result year-on-year, but it's still negative. So I would say those would be the 2, let's say, larger acquisitions that we have done, which have a seasonal impact.

The next follow-up is from Gael de-Bray, Deutsche Bank.

I wanted to ask about your exposure to Section 232 and specifically, the proportion of your business that has a metal content that is greater than 15%. So that's the first one.

And the second one was on the M&A side. I mean, how does the M&A pipeline look today and whether you're seeing an increase in competition on the transactions?

On the first one -- okay, we are still finalizing the calculation as you understand, it's another complex matter. We believe it will not really move the needle for us. It's most probably will be slightly higher cost. If it's a slightly higher cost, we will, of course, compensate through price increases in the market. But it's not really something that will move the needle.

When it comes to acquisitions, we are very happy with the pipeline we have, like we always say, happy, but not satisfied because we can always do more. But we are confident that there is several more acquisitions coming now in the coming months. And then we have a good sales pipeline of people we are talking to.

When it comes to competition, we don't really see any difference as compared to a year ago. As you know, very often, the acquisitions we do are acquisitions where we have been talking to the other side for a long time. And often, these are one-on-one discussions with this acquisition targets. So no real difference as compared to previous quarters.

[Operator Instructions] The next follow-up question is from Aron Ceccarelli, Bank of America.

I have one on [ resi ] demand in the U.S. I think you said that demand is bottoming out. I was wondering, firstly, if volumes have started to expand again? And secondly, as demand improves, do you see consumer leaning towards mechanical products or more sophisticated Elmech products?

I didn't understand the beginning of the question.

The first one is demand in the U.S. Volume demand rate, right?

For residential?

Volumes have actually started to expand again.

For residential, you mean?

Yes.

No, like we said, we had a smaller single-digit negative organic growth for the residential segment in North America. So that means if you take the positive price out, that we had a negative volume.

And second question, is it the mix between mechanical and Elmech and so forth?

And we see -- like I explained before, we have invested as well new products on the mechanical side as on the digital side. We see a relative better performance on the digital side and on the mechanical side because of the product launches that we have done in that field.

There are no more questions at this time.

Excellent. Well, that means it's time for us to round up this conference. If you have any follow-up questions later on, please feel welcome to reach out to us at Investor Relations as usual. In the meantime, we thank you for your interest and participation, and we'll meet many of you in the coming months. We look forward to that, and have a good day now. Thank you.

Thank you.

Thank you.

Hello, everyone, and welcome to ASSA ABLOY Sustainability seminar in 2026. My name is Bjorn Tibell, and I'm heading Investor Relations. Before we dig into today's agenda, a word about safety, please ensure that you know where your nearest emergency exit is located in case something unexpected happens where you are located.

Four days ago, we published ASSA ABLOY's annual report for 2025, including our second CSRD report. Today, the objective is to go through our sustainability outcomes in 2025 and also discuss our new sustainability program, which will finish in 2030.

Our first speaker is ASSA ABLOY's CFO, Erik Pieder, and he will give you a high-level overview of our work with sustainability. Erik will then hand over to Charles Robinson, our Head of Sustainability, who will discuss the outcome of our sustainability program to 2025. Allan Cooper, Chief Human Resource Officer, will then discuss our HR-related outcomes in the 2025 program and also talk about the target set for 2030 before Charles Robinson will come back and go through our new program to 2030 in some more detail.

Our new sustainability program to 2030. In that program, we have introduced a new target relating to innovation, which Anders Fosland, our Head of Product Sustainability will go through before we will round up the presentations. In total, we expect these presentations to take around 50 minutes. And after then, we will open up for your questions. You can submit your questions through the chat function that you see at the bottom of the webcast window, and you can start to submit them already now. All speakers who you will see now, they will be ready and available to respond to your questions when the Q&A session starts.

So with that little introduction, I would like to hand over to Erik Pieder to start. Erik, please go ahead.

Thank you, Bjorn, and good morning, good afternoon or good evening, wherever you are in the world, and thanks for taking the time of participating in our seminar. If we look a bit sort of how our approach is to sustainability. We don't want to consider sustainability to be, let's say, outside of our normal operations.

We sort of be integrated because we believe that when we integrate it, we can also unlock both, let's say, sales growth potential such as, I mean, say, related to, let's say, regulations, EPDs, which would then sort of mean that the customers are willing to -- let's say, to pay a premium or to use light products or it should be, let's say, from a cost perspective, where by using less material or using less energy, we would be able to reduce our operational costs. So in reality, if you put these 2 together, we see sustainability as a part of accelerating our profitable growth.

As I started with, I mean, sustainability is integrated in the ASSA ABLOY's strategy. If you look at our strategy house, it is one of the fundamentals that we have in the house where we clearly mark our sustainability. But on top of that, it floats into a number of the areas where we work, okay, within the mission and the vision. Of course, this also helps us with the financial targets.

But also, if you look on strategic objectives, like, for instance, growth through customer relevance. If we are relevant within the sustainability area, we're also relevant for our customer, which will also help us, let's say, as I talked about before in our growth is the same when it goes to, let's say, cost efficiency in everything we do is just another example or evolution through people.

As you saw in the video, we have now successfully completed, I would say, our fourth program, but this goes back way back. So I mean our first program was started in 2007, and now we're up to the fourth program. And today, Charles will also talk about the fifth program that we're now launching. I think a very important part, which we did already 2020 was that we committed ourselves to science-based targets.

And as I'm sure that you're all aware, you know that the science-based target is also related to the Paris agreement, where within the Scope 1 and 2 we should have an emission reduction of 50%. Scope 3 is about minus 28% by 2030. And then we should be net 0 by 2020. It's one thing here, which I mentioned before that it's integrated.

And one thing here is that we consider, let's say, funding through, let's say, when we do a CapEx investment we sort of use the same rule when it is sort of more a sustainability funded CapEx -- sustainability CapEx as we do on the other ones. So once again, the message is that it's integrated and we believe that we get the best traction if we consider it to be a normal practice or normal operation within our companies.

How far have we come so far? If you look by 2025, if you look on the Scope 1 and 2, I think we have delivered according to our promise. So that by sort of so far, we are minus 34%. So we are sort of on our way to reach the 50%. Scope 3 emissions, as you know, that one is a much more broader and also, I would say, a little bit more difficult. But at least you can see sort of by 2025, we're halfway. And as you sort of -- as you will see later on, we have, of course, plans and ideas in how to reach the target then for 2030.

Now I'll briefly mention this, Charles will come back to it. As I mentioned before, we have successfully completed the FORWARD program. And now we're sort of launching the fifth sustainability program. You can see that it's more, I would say, embedded with the science-based targets where you see clearly that we have that as a part of this on the 1, 2 and 3. And that is the way that we want to drive it. On top of that, I would say, in order to reach these goals, we need to increase our ambition level, and that is something that we clearly will show when you see sort of the targets that we have for this program.

Finally, as you've heard me allude to, I don't know, how many times already, sustainability is integrated into strategy, innovation, operations, et cetera. And I think sort of we are setting also the long-term foundation for successful, sustainable growth for the future. One thing that -- and you've heard me say this before, if there is one thing that you should take with you is the slide that is sort of the diagram that you see in front of you. Where it is feasible to increase our sales, but at the same time, lower our admissions.

You can see that in this period, we have increased the sales with 62%, simultaneously then we have been able to achieve a reduction of 34%.

With that, I sort of have done the introduction, and I hand it over to Charles for a bit on the sustainability program 2025. Go ahead, Charles.

Great. Thank you very much, Erik. Hello, everyone. I'm Charles Robinson, VP and Head of Sustainability for the group. As Erik touched on in this section, I'll give you an overview of how we progress against our sustainability program 2025.

So as a reminder, our program was based on a 2019 baseline year across 3 different areas of operations, supply management and people. So taking a little bit of a closer look specifically on our operations. So in broad terms, we had, on average, a 25% reduction target against our 2019 baseline.

When it comes to carbon footprint here for Scope 1 and Scope 2, very much linked with our science-based targets. The majority of our Scope 1 and Scope 2 carbon emissions come from our energy consumption. So our Scope 1 and 2, our carbon footprint is very closely linked with our energy intensity, and I'll come back to that shortly on an update on our science-based target specifically.

We then take a look at our water intensity target, a 25% reduction target. We reduced by a whopping 59% against our baseline. So this is where we carried out infrastructure upgrades and increase the efficiency of our most water-intensive processes. And I'll come back with an example and case study of that shortly.

When it comes to our waste, so both for our hazardous waste, nonhazardous waste, making good progress where we again exceeded our target. For organic solvents, we had an ambitious 50% reduction target, and we realized a 69% improvement against that. So there are 2 key areas where we drove that improvement. One is for our components and parts degreasing and washing processes. We've reduced the solvent component as part of that decreasing process, but also for our painting processes predominantly for our doors, we switched from solvent-based paint to water-based paint, and that's allowed us to achieve that significant reduction.

When it comes to ISO 14001 Environmental Management certificate and program, we had a very ambitious goal to have 100% of our relevant manufacturing sites certified by the end of 2025. Now we did realize 88%, so quite a significant improvement against 2019. We did have some challenges in some of our more recent acquisitions where we needed to prioritize turning the business around. We are firmly committed to getting those sites certified over the next year or so.

With that one on how we realize some of these targets, we have a short video to take you through on our most recent solar PV installation at our site in Guli in Chongqing, China. Please play the video.

[Presentation]

So as we saw there in the video, our solar installation at our site in Guli, the largest in the ASSA ABLOY Group by over 4x compared to our significant arrays. As we continue to roll out the implementation of solar PV that, of course, helps us to reduce our carbon emissions, helps us to reduce on our energy costs as well, but it also helps to reduce our risk exposure to volatile energy markets, which we've seen over the last couple of years and indeed to today as well. So it helps us to become a little bit more energy independent, at least to a base level, which helps to reduce business risk.

Another example, as I alluded to earlier, is that our Porto Feliz factory in Brazil within our Americas division. So a little background. The site was consuming in the region of 50 million liters of water per year at a cost of nearly USD 0.25 million. So this is the first time where I've seen such a combination of different technologies in order to reduce. At first, they implemented a reuse system, specifically on their plating line, the water-intensive process. They then couple that with a reverse osmosis system. And then we're able to implement an upgrade to an ion resin exchange and lastly, couple that with a vacuum evaporator as well. So by doing so, they were able to reduce the water consumption by a whopping 98%, saving about $240,000.

But in addition, it also reduced the amount of chemicals needed for the process as well. So all in all, total saving of almost 100% of the water consumption but from a financial perspective, saving USD 0.5 million as well. So a true win-win project.

In each of the seminars over the last 5 years, we've taken a deep dive look at one of our largest, most intensive factories, and that's Ameristar in Tulsa, Oklahoma as part of our Entrance Systems division. So back in 2021, we had a video and overview with Kristian Uldall Director of Sustainability locally. Kristian and the team have been doing an incredible job to drive sustainability initiatives locally.

And we can see on the bottom right hand of the screen that the company has grown by 81% and over the 5-year period, but at the same time, managed to substantially reduced their water consumption by 38% and their solvent consumption by 81% as well. So an incredible achievement substantial growth while also reducing the footprint of the site as well.

And a brief update on our science-based targets commitment. So for our Scope 1 and Scope 2, we have the target to reduce by 50% in absolute terms against our 2019 baseline. We have our 4-pronged standardized strategic approach, which we use across each division, each segment, business area, business unit and then down to site level.

This then rolls back up in that standardized way to make sure that we have a good overview and controls to ensure that we're on a good track to be able to realize that. And as I mentioned earlier, the majority of our Scope 1 and Scope 2 emissions are principally driven by our energy consumption. So as we substantially increased our energy effectiveness and efficiency that one helps to reduce our energy cost, reduces our risk exposure and also our Scope 1 and Scope 2 emissions.

So we've made a 34% improvement against our 2019 baseline. We're ahead of target, something we're incredibly proud of. But it's important that as we head towards 2030, it's going to get more and more difficult to realize the balance of that 50%. So we need to continue to push to be able to realize our targets out to 2030.

A little on our Scope 3. So as Bjorn had mentioned earlier and as well from Erik, Scope 3 makes up 95% of our total footprint. So quite a substantial heavy lift there. We're making strong progress against our targets, just about halfway towards that 28% reduction. Again, we see on the bottom right hand of the screen here, we have the same standardized four-pronged approach to be able to realize our Scope 3.

We're making good progress against the baseline but I believe that we can continue to do more, and we need to accelerate. We have a great pipeline of projects identified. We now need to accelerate the implementation of those projects.

Wrapping up the sustainability program 2025. From a supply management perspective, we had a target to carry a supplier sustainability audits for 95% of our direct material spend. This is a mature process that's been in place for over 12 years, and we carry out over 700 on-site audits with our own auditors each year with our most material suppliers.

We also had a target then to have all of our suppliers to sign and adhere to our code of conduct for business partners. And when I say all there, I mean both our direct suppliers and our indirects. So we had a target to have 95%, we realized 89%. I think it's important here that when we had our 2020 targets, it was for direct material suppliers only, so in the region of around 9,000 suppliers.

In our 2025 program, we then added in indirect suppliers. So adding in 50,000 additional suppliers. So that was quite a heavy lift from where we were in 2020. Although we didn't quite realize the 95%, we came from a 68% to 89%. So something that we can be proud of, and we continue to push in our future program to 2030.

From a people perspective, we continue to make strong progress, in particular for health and safety and a very good improvement on gender diversity. But to take us into a little bit more detail about our approach to our people I'd like to hand over now to Allan Cooper, our Chief Human Resources Officer.

Allan, over to you.

Thank you so much, Charles, and hello, everyone, and thank you for joining the Peoples section. I'm Allan Cooper, the Chief Human Resources Officer here at ASSA ABLOY. And being part of the leadership team. My focus is to ensure sustainability is embracing all aspects of our culture and organization.

At ASSA ABLOY, we're proud to be the global leader in access solutions, driven by a clear purpose helping people feel safe, secure and experience a more open world. And people are the foundation of everything we do and the engine behind our success. So today, I'm pleased to share the strong progress we've made and the commitments that will guide us and move us forward confidently towards 2030.

So let's start with that strong progress we've achieved over the past 5 years. Safety is a clear priority across all our operations. Over recent years, we've consistently advanced our together, we are a safe program, which brings together standards, processes, procedures, training and a strong focus on behaviors and culture.

A key driver of this progress has been the effective integration of newly acquired businesses into our safety framework. As a result of these collective efforts, we've reduced our injury rate from 3 to 2.2 over the past 5 years, demonstrating measurable, sustained improvement.

At the same time, we've worked on the 2025 targets to strengthen diversity within ASSA ABLOY. Through transparent merit-based practices and development initiatives, we see an increased representation of women. This progress helped us foster diversity of thought and build teams that better reflect the markets and the communities we serve.

Internal mobility is a top talent priority for us. And here, we've also made strong progress in strengthening our internal talent pipeline by increasing our focus on internal mobility and providing career advancement opportunities we've encouraged more employees to grow their careers within ASSA ABLOY.

So as we successfully closed our 2019 to '25 sustainability program, we're well positioned to take on the next phase of our journey. I'm proud to introduce our new people strategy towards 2030, anchored in a simple belief, people make it happen. The people strategy is designed to deliver the new ASSA ABLOY's strategy towards 2030. Our people vision is to empower individuals to reach their full potential, enable a safer and more open world. This vision is brought to life through the 3 core focus areas: culture, talent and social responsibility.

At ASSA ABLOY, our people are united by a shared purpose and a strong culture. This is why we've developed together we, a program that combines our common culture, rooted in the values empowerment, innovation and integrity. This shared culture connects us across the organization and across borders is something we'll continue to actively live and strengthen every day. It serves as the foundation for successful collaboration acts as a compass that aligns our diverse global workforce. This enables us to grow and succeed together.

Talent is a powerful enabler of sustainable growth. We start to be a place where people can develop, grow and build meaningful careers. By attracting, developing and retaining the skills and capabilities we need for the future, supported by strong leadership continuous learning and a stronger focus on internal mobility, we unlock potentials of individuals and prepare our organization for what lies ahead.

When it comes to our third strategic pillar within the people strategy being social responsibility, this acts as our guiding compass in how we operate and make decisions. By prioritizing safety, well-being and the diversity of thought, we create fair, merit-based growth opportunities for all our employees, fostering inclusive and supportive workplace. In doing so, we contribute to long-term social sustainability and a stronger future for both our people and our business.

So looking ahead, we've set ambitious goals for 2030 that directly support our long-term sustainability journey. We aim to continuously strengthen employee engagement while creating more internal mobility and growth opportunities. Our safety aspiration together to 0 reflects our unwavering commitment to ensuring that every employees goes home safely every day. By 2030, we're targeting a further 20% reduction in injury rates, building on the strong progress already achieved.

We also aspire to create environments and leadership teams that foster broad thinking, innovation and inclusion. It's about unlocking stronger, more resilient decision-making through building and nurturing diverse teams. Together, these ambitions reflect our firm belief that sustainability is ultimately achieved for our people, enabled by a strong culture, leadership and a continuous commitment to improvement.

So in conclusion, our sustainability journey is partly a people journey. The progress we've made and the ambitions we set for 2030 reflect a clear belief the sustainable success is built through strong culture, responsible leadership and empowered people. By continuing to invest in safety, engagement, talent and the diversity of thought, we are not only shaping a resilient organization, we're creating an environment where people can thrive, grow and contribute to a safer, more open world. This is how we turn commitments into impact, and this is how together we'll create a safe and open future.

So thank you again for the opportunity to share the people update with you. And of course, feel free to read all about our achievements and future ambitions in the annual report.

And now I would like to hand back to Charles.

Great. Thank you very much, Allan. So I'll take you through a little bit on our new sustainability program 2030. So as Erik mentioned earlier, we had our first program back in 2007. In 2010, we set our first set of 5-year targets. And since then, we have continued to build on the momentum and success of each program.

Leading out to 2030, I'm pleased to say that we are again raising our ambition level. I think this demonstrates our commitment and our willingness to lead our industry to a more sustainable future. And in addition, in the new program, we have also included product sustainability, which I think is a fantastic inclusion.

So a little bit on the program itself. In the top swimming lane we have there our climate. So this is the one set of targets where the baseline year is 2019. In short, our climate targets are our science-based targets out to 2030 and then net 0, no later than 2050. For each of our other targets as part of our program, 2025 is our baseline year.

As I mentioned, we've included product sustainability and innovation, and Anders will take us through that in a little more detail shortly. From an operations perspective, we've again raised our ambition level where we have our 30 by 30. So that's where we're targeting a 30% reduction by 2030, which includes energy, water, waste to have at least 30% of our energy coming from renewable resources by 2030 and that's both purchased and on-site renewable energy and then to have 95% of our sites, a relevant manufacturing sites certified to ISO 14001.

From a supply management perspective, we have retained the same level of target. So to have 95% of our direct material spend to be audited with our supplier sustainability audits and have 95% of both our direct and indirect suppliers to sign and adhere to our code of conduct for business partners. And then as Allan touched on, from a people perspective, we want to further reduce our injury rate and injury lost day rate by an additional 20% to help and keep our people safe and sound.

So how can we realize some of these targets? One of the approaches that we have within our operations is to use the Kaizen methodology. Kaizen comes from lean manufacturing. It means ensure continuous improvement. So what we do is we leverage on our lean manufacturing skill set.

And instead of looking at typical waste that we would from a lean perspective, whether it's movement, materials, time, et cetera, one is to look at energy waste, water waste or the creation of actual waste in itself. It's a systematic process that typically yields between 50 and 100 improvement projects, and these vary anything from low cost, no cost to projects that require some investment but may have a rapid payback of a year or less. And then everything in between then to the projects that may have a long payback.

We -- also we encourage all ideas within this brainstorming process. And the reason being, just because something might not have a payback now, it may do in the future. So when it comes to technology improvements, we've reached that price parity where it makes sense to invest in that technology. We're doing this in the right way, it substantially contributes to a strategic objective, cost efficiency in everything we do. By reducing our resource consumption, we reduce our costs, reduce our risk and improve our profitability as well.

Another approach that we have to help to realize our targets is where we have updated what we call our Green Team playbook. We launched a Green Team playbook 10 years ago within ASSA ABLOY. The purpose of the Green Team playbook is to enable any site anywhere across the group to get to a foundational level of sustainability. This is realized by what we call our Green Team maturity tree. So across several different areas of how teams locally can increase their maturity or get to a more advanced level of sustainability. So the Green Team playbook serves as a very clear guide for our teams to be able to realize that.

We have a short video to give you an overview of the Green Team playbook. Please play the video.

[Presentation]

So as we saw there, our Green Team playbook brings us to that foundational level across the group. So there's no one single approach on how we can realize our sustainability targets out to 2030, it's a multipronged approach.

In addition then, a key focus for ASSA ABLOY this year and looking forward is on the circular economy. Now the linear economy, take, make waste has served us ASSA ABLOY incredibly well over the last 100 years or so. we need to further explore and understand opportunities of how we can make our products and solutions more circular.

How can we keep that closer relationship to our customers? Is there an opportunity to upgrade our products to extend their useful lifetime to provide additional value add for our customers, want to help them to reduce their sustainability footprint and also to extend the useful lifetime of our products.

In October last year, we appointed our first Director and Head of Circular Economy, Louis Ericsson; and Louis has 3 key focus areas for this year. One to further develop a circular economy strategy for ASSA ABLOY to establish a framework for all of our divisions so we can all pull in the same direction.

And then on the other hand, to -- from a circular economy, education and awareness perspective to help our colleagues to understand what does the circular economy mean, how is it relevant for me. And then to identify circular economy pilots and opportunities and to accelerate those to drive growth initiatives.

We're convinced that if we embrace circular economy in the right way, it can boost our growth accelerators. So as to further generate recurring revenue to increase our service penetration to actively upgrade our installed base.

As I mentioned earlier, we've included product sustainability and innovation to the sustainability program 2030, but I'd now like to hand over to Anders Forslind, VP and Head of Product Sustainability to give us a bit more of an insight as to what that means. Anders, over to you.

Thank you, Charles. So my name is Anders Forslind, and I'm VP and Head of product sustainability. And I will talk about how innovation and product sustainability will contribute to the sustainability program 2030.

Going first into looking on the actual target where we have product sustainability process for science-based target Scope 3 reduction and this process should be applied on 80% of the revenue.

And what does this really mean? We have an internal development process and in combination with tools where we -- that helps us to understand where do we have the carbon footprint hotspots in product, in product portfolios and also within the divisions. By that, we can find the levers, the levers we want to use to ensure that we have initiatives on those areas that enables us to reach the targets in 2030.

And when it comes to the 80% of revenue covered, it is really to ensure that we are targeting the areas that is relevant for our customers. So going more into details and starting most to the left, what do we actually do on a lower level when it comes to this. When it comes to the product and the product portfolio level, it's really to understand what can we do in the products and in the portfolios.

When we come to the portfolios, we are multiplying the product carbon footprint with amount of sold units and this is to focus development and sourcing efforts on the products with the highest carbon-reduction potential.

Aggregating this, up to the additional level, we get much more insights how to ensure that we are reducing the right business entities and establishing our carbon-reduction road maps on the additional level.

Going further on then to the ASSA ABLOY levels. Here, we can see that we very clearly addressing the levers that makes us reach the science-based targets, Scope 3 reduction goals. So it's a model where we go from lowest detail up to the highest top and the more to the right, we move in this picture the more strategic we get.

Besides the science-based target, we are also looking into 4 areas where we will work a lot up until 2030. Especially, as we had mentioned before here, the strategic support to science-based targets Scope 3. We have our tools. We have our internal process.

We will continue to develop these tools to ensure that we support the organization in the best of ways, so they understand where they should focus activities. And we also have tools for ensuring that we are developing sustainable solutions. Those that have been in these meetings before recognize the sustainability compass. And during this year, we will come with a new release on that one.

Then when it comes to commercialize sustainable products, it is to ensure that we support sales and marketing with sustainable sales material. And one of those things that really support sales is environmental product declarations. And here, we are introducing an internal process to ensure that we can develop those fast and efficient.

Last but not least we have a product sustainability compliance area. And here is really to ensure that we have a robust product sustainability compliance to reduce regulatory risk and highlight commercial openings.

We have been using the sustainability compass since 2016. And it's really to ensure that we have -- we are using environmental data early in the development process. Since 80% of the carbon footprint is determined in the early phases of design and the sustainability compass creates sustainability awareness and guides towards sustainable solutions. And what we do in the sustainability compass is always that we compare existing solution with a new solution. So we know that we have a continuous improvement when it comes to our development.

Looking then on the new sustainability compass 2.0. The first bullet is same as in the old one, ensure that we are guiding development towards sustainable solutions and also aligning with the goals science-based target and also ensuring that we are compliant with the regulations at hand. Then when it comes to competitiveness free market differentiation, there we are looking into how it actually looks in the market, where do you want to place our products, where are our competitors when it comes to carbon footprint and also delivering value propositions so that customers understand what they are buying from a sustainability point of view.

The last one is to support what Charles mentioned just before here when it comes to circularity and to ensure that we are bringing this into our both business models and into our products. So here, we will have support for both the business model part and design guidelines to ensure that the products that we develop today will be possible to have circularity on in the future.

Then when it comes to environmental product declarations and to start with what is an environmental product declaration. An environmental product declaration is a standardized third-party verified disclosure of products environmental performance across its life cycle, providing credible and comparable sustainability data.

So what can we use in EPD, Environmental Product Declaration to? Of course, we see a lot of new upcoming regulations. For instance, digital product Passport. There we would need a carbon footprint data that is very fine. So there it will fit very good and also to enable our customers to get certification, both in LED and REA and also to be able to show our customers, what kind of carbon footprint level we are at. And to be able to create EPDs on a very fast efficient way, we have introduced an internal EPD process where we work a lot now to take this from external consultants and do it in-house instead. And by that, having both faster and more efficient process.

Then to summarize when it comes to our strategic focus to 2030. It is to support the science-based target scope free, ensure that we develop sustainable solutions and utilize this when it comes to commercializing on sustainable products and also that have the product sustainability, compliance and all the regulations in our headwind we are developing the products. And then when it comes to the new target, it is to focus our efforts where they create maximum impact, targeting the areas with the greatest potential for science-based target Scope 3 reductions.

And by that, I hand over to Erik.

Thank you Anders. For some key takeaways. I mean, I think that -- I hope that you have seen that we have shown that sort of that we sort of are on a good way of reaching, let's say, the targets that is set up for the science-based targets. We have now completed the fourth program. And as you have seen, we have shown a number of examples.

We have also shown the way that we work in order then to be able to comply or to sort of to fulfill the promises that we have made and that you've also seen in our ambition level, which we're raising then for the 2030. You can also read in our annual report where now the CSRD report, we are actually on the second one. So I think that we were early in the process already last year. Now we have refined it for the second year.

And sort of what you have seen also both, I think, from Charles, Allan and Anders is you can see how it's integrated in everything we do. And especially then if you go to Charles and Anders, you see that you have seen examples, both ways of, let's say, this on the EPDs when it comes to helping to increase our sales as well as from Charles, when you have seen this on the solar panels in Guli or the part on Ameristar then to reduce the material that we're having.

So once again, I show you my favorite diagram when it comes to sustainability that it is possible, and we have shown it, and you can see it by fact to increase our sales at the same time to reduce our Scope 1 and 2 emissions. And we're also in a very good way when it comes to reaching our target for the Scope 3, which is, as mentioned before, which is the most difficult one.

So with that, I thank you, and I presume then we go over to Bjorn, who will then lead the Q&A.

Thank you very much, Erik. Yes, it's time to open up for questions now. And we have received questions, but feel welcome to continue to submit your questions through that chat function that you have at the bottom of webcast screen. So I'll start now from the first question we have received and work myself down the list.

So the first question goes like this. Have you been able to decouple sales from emissions in Scope 3 as well? And I think I'll hand that one to Charles to start with.

Yes. Thanks, Bjorn. Yes. So I think we've seen from Erik's last and favorite slide, if I believe you to tell, Erik, where we demonstrated our decoupling of sales in Scope 1 and Scope 2. So if we were to benchmark Scope 3 in there as well. So over the same period, we've reduced our Scope 3 footprint by 14%, while we've driven growth in the region of 62%. So in short, yes, we've demonstrated that we can decouple our Scope 3 reduction as well as our Scope 2.

Now I think it's fair to say it's not at the same magnitude, whereby we reduced Scope 1 and 2 by 34%. Scope 3 in comparison is down by 14%. But I'm convinced if we can continue to accelerate and remain focused on our Scope 3, we can further decouple that while obviously, we're committed to growing the organization at the same time.

Thank you, Charles. We can then continue to the next question. And this one will be for you, Allan. Congratulations on great achievements between 2019 and 2024, lovely decoupling of Scope 1 emissions and sales. Welcoming the 2030 program, in particular, the enhanced strategy on product sustainability.

All targets included in the 2030 program are highly relevant, but please elaborate around the decision to not proceed with the target for gender diversity and management positions as well as how we, as investors, can follow up on the people's strategies ambitions around diversity of perspectives, what indicators will we be able to follow, Allan for you.

Okay. Thank you. Thank you so much for your question. Firstly, I'd like to assure you that in no way have we lowered our ambition when it comes to diversity. Our commitment to an inclusive workplace remains completely unchanged. And gender representation, gender pay gaps will continue to be tracked and transparently disclosed through our CSRD aligned reporting.

We have refined our approach to strengthen our focus on fostering an inclusive work environment and -- based on our progress, I see a strong pipeline of female leaders, especially from an early talent perspective, where we have ratios of 40% and plus. So therefore, the strategic challenge really in the 2026 to 2030 is more on sort of structural merit-based talent practices that really support sustainable progress.

Operating with our decentralized organization, so many different legal contexts as well. But we see if we can convert that pool of talent into senior leadership, we'll continue the good progress that we've seen so far.

Thank you, Allan. We'll continue with the next question then. Over 90% of emissions are in Scope 3. At what point does supply climate performance start to affect sourcing decisions preferred supply status or commercial terms. I think we hand that one to you, Charles.

Yes, for sure. I mean, super relevant, absolutely spot on. More than 95% of our Scope 3 emissions are in Scope 3. 72% of that is within our category 3.1. So that's purchased goods and services, which sits directly in our supply chain. So we've already started the process to work with our suppliers from a science-based targets perspective.

So we have carried out multiple rounds of science-based targets summits. Last year, we held 4 different summits at different stages, 3 sessions in English and 1 in Chinese then for our suppliers in China as well. So we clearly set out our agenda in terms of here's what our commitment is that we would like our suppliers to get to the same level, to the same commitment level and in particular, for our preferred suppliers that we work with them to support them from a maturity perspective.

So to give some context, we already support our suppliers from a lean manufacturing maturity, quality maturity, health and safety. So by working closely with our suppliers to improve their maturity, so to help them with their Scope 1 and 2, can we make their -- help them to become more energy efficient. Then looking at their Scope 3, can we help them to reduce their materials to switch to low-carbon materials as well.

That, of course, will support us from a Scope 3 perspective. But it also helps -- we're not the only customer who has sustainability on the agenda. So for our suppliers, if they can embrace that in a good way, it also helps them to be more competitive with their other customers as well. And if they can do it, leverage on sustainability in the right way to reduce their costs, helps to make them more profitable as well as more competitive.

And so for sure, our supply chain incredibly important when it comes to Scope 3. We continue to work on that relationship that we have to work with and develop long-term partners and preferred suppliers.

Thank you very much, Charles. Let's continue with the next question then. Do you have any variable remuneration targets relating to sustainability? And I think we'll start with you, Allan.

Yes. Okay. Thank you. Yes, we certainly do. Climate and other sustainability-related targets are factored into variable remuneration for all members of our executive team reporting to the CEO as well as many management tiers throughout all the divisions. These targets are usually linked with decreasing our energy consumption, which is a key driver, of course, for decreasing our Scope 1 and 2 carbon emissions.

The reduction targets aligned to our annual emissions reduction as part of our science-based targets. This and other sustainability-related targets such as health and safety, employee engagement are typically in the form of our sort of short-term variable remuneration and usually 3% to 5% of the total short-term variable remuneration targets.

Thank you, Allan. Erik, did you want to add anything on that? Or shall we continue?

No, I think that Allan summed it up quite well. And I mean, as you heard, everybody reporting to our CEO has qualitative target related to sustainability.

Thank you. And the next question is like this. How does sustainability influence product development in practice, Anders I think this is for you.

Thank you. Yes. As I showed before, when it comes to how we work with sustainability on the product level, we use the sustainability compass to guide us towards the right direction. We know that we take different areas in consideration when developing our solutions. But in addition to that, we also have easy carbon footprint calculators.

So we in on every product can go in and calculate what is the impact if you change material to another material, if you have more recycled content in the product or if there is a possibility to reduce the energy use. And as I said before, looking on the hotspots in the product and by that starting to develop new products with lower carbon footprint.

Thank you, Anders. [Operator Instructions] I'll continue to the next one. Under what conditions would offset become part of your strategy, presumably here to reduce emissions. And Charles over to you for that one.

Yes, for sure. So I think in short, especially out to 2030, offsets will play no role in how we will realize our science-based targets. Over the last couple of years, there have been very public examples where different offset programs have actually been exposed to be bogus and whether they're double count or just outrightly falsified.

So unfortunately, as it stands, there's no global standardization. There's no EN program, ISO program that I'm aware of for offsetting. I think it will play an important role into the future. But for now, for us within ASSA ABLOY, we want to prioritize real reductions because we have significant opportunities. If we do that in the right way, we can reduce our cost and improve our profitability.

But we are committed to realizing net zero no later than 2050. And I'm convinced as we push to realize our net zero target, offsets will play an important role. But I think over the next decade, I strongly anticipate that there will be a global standardization, a framework that companies and institutions can reliably trust offset programs because I know that there are incredible projects, programs, technologies out there such as carbon capture and storage.

But we need to be able to trust and rely on those. And I think an international standardization is the level that's required. So again, we prioritize real reductions. We have great opportunity that will drive business benefits. But then when we push closer to our net zero goals, offsets will play an important role in the future.

Very good. Thank you, Charles. And I'll continue to the next one, which I'll pass -- hand over to Erik. At what point could sustainability-driven cost savings or pricing premiums become visible in margins?

I think that we don't talk so much about it, but of course, it has sort of impacts already today. I mean, if you look on what Anders talked about with the EPDs, which then goes into the green specifications, which we clearly see we have a double-digit increase in the green specifications year-on-year in Europe.

In reality, that sort of generates more business or if you look on our result when it comes to price versus cost, sort of when we can -- either it can sort of be that we get the premium out of it or so that it's related to, let's say, material reductions or, let's say, reductions when it comes to logistics. I mean it's there, but I believe that we have greater sort of -- I think greater sort of potential than if we look sort of in the years to come.

So I think that, as I said, it is there. But as I've also said, we take this as an integrated part of our business. So we don't sort of pinpoint it out in that way, like, for instance, when we have the quarterly reports, but perhaps that could be something when they are larger than there is today, that is something that we could see in the future to come.

Thank you, Erik. There are 2 questions left on my list. So I'll start with the first one. It is a complex world for a multinational company as ASSA ABLOY such as trade policy, conflict, geopolitical tensions, et cetera. What external factors or events post the largest challenges to the targets and the areas -- target areas in the 2030 sustainability program. I'll pass that one over to you, Charles.

For sure. So yes, incredibly relevant and pertinent question. I don't think there's any one thing really that we could point to that could be an external factor that creates a challenge, potentially an extraction. So a couple that come to mind is current conflict, potential future conflict as well. We continue to see significant energy cost increases.

Principally, that was from the conflict with Ukraine, now the challenge in the Middle East. And of course, that will have a knock-on effect from an overall increase -- cost increase, not least to potentially interest rates as well. And then we, of course, then always have the risk of a potential economic slowdown or even eventually a recession as well. But for us, within the group, we're very clear on what we do when it comes to sustainability.

We do not drive sustainability purely for the sake of sustainability. It needs to contribute to the group's overall strategy to our strategic objectives, to our growth enablers and our growth accelerators. And it boils down to 3 things that we need sustainability to do. One is the initiatives, do they reduce our cost? Do they reduce our risk exposure and do they generate growth opportunities.

I think if we continue to focus on that purpose with clarity, it doesn't really matter what the external challenges are because this should be a business enabler that supports us to become increasingly competitive whatever the challenge may be.

Thank you very much. Erik, did you want to add anything there?

I think that is also the part there is exactly what Charles says. I think for us, as we sort of -- it should -- for us, in general, of course, the sustainability should either reduce cost or create business opportunities. You can also say that some of these things that is happening is also, in a way, helping us to even use this more.

I would say that the geopolitical situation is, of course, one thing that could jeopardize. And of course, it's also so that we see certain, let's say, winds who are blowing in different directions across the globe. I would prefer that they would all -- when you look from a sustainability perspective, that they would all blow in the same direction.

But unfortunately, they are not. So I think that could also be something which is a bit slowing down in certain parts of the world where in some other parts of the world, we can see that it's increasing. But that's a bit also part of when you're managing sort of a worldwide organization that this is sort of normal, but that could be another one that could jeopardize. .

Thank you, Erik. Well, I just have one question left here. So let's take that one. Allan, how do you ensure improved safety in your highly acquisitive model? So that requires so many companies.

Yes, it's a really relevant question. We are very acquisitive. And acquisitions potentially pose one of our biggest safety challenges. But maybe just on a more general point, first of all, I mean, we continuously work to improve our work environment on enhancing our processes, removing hazardous risks.

We work with behaviors and attitudes that collectively form our safety culture, which is grounded our values and safety beliefs. And we're building a safety culture and engagement involvement through, for example, the rollout of several workshops with tens of thousands of participants focusing on risk and behavior.

So the new entrants into ASSA ABLOY come into that culture of that environment. So therefore, we systematically implement our health and safety programs, coming processes, governance, behaviors and culture transformation to get closer to 0 injury vision, and we bring our acquisitions on board with that.

Very good. Well, thank you very much for that, Allan. This means that I can't see any more questions. So we have come to the end of this year's sustainability seminar, which actually is the 15th since we started off with this sustainability roundtable discussions back in 2010.

All of us, we hope it has provided you with a greater understanding of our work with sustainability, and that it goes obviously hand-in-hand with commercial interests. And that you also feel confident about that we are on a journey of improvement.

As our Chairman actually said last year -- at the last year's seminar, we focus on sustainability because it makes commercial sense, but we also do this because it's simply the right thing to do. So thank you again for your interest, and thanks for your questions. And if you have any follow-up questions or feedback to us, please, as always, feel welcome to reach out to us at Investor Relations. So have a good upcoming weekend now, and goodbye.

Good morning, everyone, and welcome to the presentation of ASSA ABLOY's Q4 report for 2025. My name is Bjorn Tibell. I'm heading Investor Relations. And joining me here in the studio are ASSA ABLOY's CEO, Nico Delvaux; and our CFO, Erik Pieder. 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 ASSA ABLOY. We had a good organic sales development in Q4, an organic growth of 4%. We have strong growth in Global Tech and Americas, good sales growth in EMEIA and in Entrance Systems and a sales decline in APAC, mainly again related to depressing market situation in Greater China.

A 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 an operating leverage of 80 basis points. Good work done on the working capital side, also giving us a strong cash flow and a cash conversion of 137% in the quarter.

Also this quarter, again, the shift from mechanical to electromechanical continues, and we have seen an 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 complete.

If we look a little bit into the numbers, sales north of SEK 38 billion, 4% organic, like I mentioned, 3% net acquisition, and then unfortunately, hit in a strong way by FX, mainly weak dollar versus strong SEK. So 10% negative effect on top line. Therefore, sales top line minus 3%.

And EBITA margin also at record level of 17.9%, and we see the gap between EBIT and EBITA further growing as we continue to buy quality technology companies. It's important to look also at that 17.9% EBITA margin. And the EBIT margin, like I mentioned, 16.8%, 30 bps up, and EBIT at SEK 6.5 billion.

Look a little bit 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 nonresidential 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. And there is two markets we have seen a pickup 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 little 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 at 6%. And you know that 72% of the households in the U.S. that have a loan on their houses have an interest rate below 5%. So there is still that gap.

On a positive note, we see -- that's an interesting statistic that 55% of the houses in North America are older than 40 years. So that R&R really should start to kick in on the -- hopefully in the near future.

You see the numbers by region. Another important vertical for us is the logistics vertical, where we see a recovery in North America, not really a V recovery, more a 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. As a matter of fact, we believe that logistics market in Europe is even further down.

So our numbers, plus 4% in North America; plus 12%, very strong Latam; 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.

A 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 Entrance Systems division. And also good to see that in a, you could say, 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. Circle K in Germany, Entrance Systems won a service contract from around 2,000 industrial doors. Comcast U.S., our new recent acquisition, InVue 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 ice on our reader, and 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 4 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 5 years. And then our operating margin, well within the 16% to 17% bracket on a 12-month moving trend at 16.2%, and an EBITA margin even above that bandwidth at 17.2%. Therefore, also a good operating income, 107% up compared to 5 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 SEK 6 billion.

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 SEK 430 million last year.

And then International Door Products, IDP, U.S. manufacturer of standard and custom fire-rated steel door frames and doors. Also for the Americas division, complementing nicely our door offering. They had a sales of SEK 220 million last year.

If we then zoom into the different divisions, starting with EMEIA. EMEIA 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 declined in U.K./Ireland and South Europe. U.K./Ireland, mainly related to delay on the commercial project because some new government legislation. And then inside 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 basis points accretion. It's the only division that profits from the stronger SEK. And then M&A dilutive 50 basis points. That's mainly related to transactions of acquisitions we did in EMEIA, 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%, with an excellent operating leverage of 120 basis points. And then dilution, 50 basis points FX, dollar-SEK again, and M&A dilution also 50 basis points. Also here, mainly related to the acquisition-related costs that -- for the two acquisitions that I showed earlier, so some 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 basis points.

Then we go to Global Tech, I would say extremely good quarter for Global Tech, with 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 basis points, and a small accretion on M&A of 20 basis points, that's mainly linked to InVue.

And then 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 & 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 bps. FX hit us with 40 basis points and M&A has been neutral.

And with that, I give the word to Erik, 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 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%. EBITA margin for the full year, up with 10 basis 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 are minus 2% 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 basis points year-on-year. We have now added, as we have talked a lot like on the Capital Market Day about the Operational Value Added or OVA. 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 end of 2024 as we -- 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 3% on price, and consequentially then, you get a strong 1% that you have on volume. The flow-through, very good at almost 40% or an accretion of 80 basis points.

This comes from the, 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 SEK 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 SEK, also on the bottom line. This quarter, it was 30 basis points. 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 basis points better than a year ago. The mix impact of that is roughly 20 basis points.

So if I call it the true sort of -- the true impact is 50 basis points. It's positive to see that the conversion cost is, also this quarter, better than what it was a year ago with 30 basis points. You can see for the full year, we are actually 20 basis 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 basis 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 net working capital management.

If you look between the years, you would see that CapEx, that it looks at least slightly higher this year than what it was a year ago, but that is due to that last year we had some divestments or sell -- we sold some buildings in EMEIA as well as in APAC. But all in all, I mean, a 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 from -- on the net debt to equity from 65% to 63%. And on net debt versus EBITDA from 2.3 to 2.2 (sic) [ 2.1 ]. So we still have a very strong financial position and we can continue with our acquisition strategy going forward.

If we 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 SEK 6.4. And if you look on the dividend of percentage of EPS, it's over a period since 2020, it's at 43%, and the EPS growth -- yearly growth is 14%.

And with that, I hand it back to Nico for some concluding remarks.

Thanks, Erik. So like we said, a very strong end of a very good 2025. We have very strong execution in, you will agree with me, challenging market conditions. So a good organic sales growth of 4%, complemented with good growth through acquisitions of 3%.

A record EBITA and EBIT margin in the quarter, an EBIT margin of 16.8% with excellent operating leverage, and then also very good working capital management, giving us a strong operating cash flow and a very strong cash conversion.

Like Erik mentioned, the Board then proposes a dividend of SEK 6.4 per share that we propose to, again, pay out in two equal tranches like we have done in recent years.

And then last but not least, Bjorn has asked me to remind you that there is, at least for those that are interested, a sustainability seminar on March 20, where you can also find the registration link on this slide.

So as a conclusion, I think 2025 was a good year. And again, what we always say is that whatever the market conditions come to us, our decentralized model, our proven strategy, we are convinced that we will also continue to deliver good results going forward, whatever market conditions come to us.

And with that, I give the word back to Bjorn for Q&A.

Thank you, Nico. Well, yes, that means it's time to open up for your questions. And as usual, could we ask you to limit yourself to one question and one follow-up. And when we've been through the list, then we can start over again with you can register yourself to ask a question again.

So with that, operator, it means that we're ready to kick off the Q&A. Please go ahead.

[Operator Instructions] The first question comes from the line of Daniela Costa from Goldman Sachs.

I'll ask them one at a time. But mainly starting out in terms of sort of where we've seen some strong steel moves, especially in the U.S. We have also seen PPI of locks going up. There's FX. Can you talk a little bit about how you see the cadence of these potential headwinds or tailwinds from raw materials and FX panning out throughout the year? And also, you mentioned U.S. resi is stable, maybe also comment on that.

Perhaps if we start with market conditions, if I understood the question correctly, Daniela, so we -- like I mentioned earlier, we continue to see good momentum on the nonresidential side, especially on the institutional side.

But our spec business, for instance, was again double digit up in Q4 with most, if not all, verticals showing positive growth. And again, our more important verticals, education, K-12, universities and health care, driving that growth. So on the commercial side, we remain positive, and was also translated in a high single-digit growth in Q4.

The residential side, like I mentioned earlier, remains more challenging. We definitely believe that the residential market has bottomed out. And that from here on, hopefully, confidently, we will start to see some recovery. We don't believe that we will see the recovery on the short term on new builds because of the gap on the interest rate mainly.

But the fact that the housing installed base, so to speak, starts to age, should lead sooner than later to some recovery on the R&R side. And if you can believe the economists that forecast the future, they at least start to see some recovery in the R&R side already this year.

And then the other thing on the logistics vertical in the U.S., as we mentioned, we have seen a recovery, not a V recovery, but a slower U recovery. In a way, we are happy with the slower U recovery because that helps you also on the operational side to ramp up in a more easy way.

When it comes to some headwinds. Of course, yes, some natural things that we can't change. We had quite some bad weather, as you know, also in January that affected temporary, I think, to a certain extent, the business. That, of course, should just be a temporary thing and I'm quite confident that if you look over the quarter, longer period that, that will not be significant.

US dollar-SEK, we can only look back at the past and see where currencies stand today. We don't know how they will evolve in the future. But like Erik mentioned, they will continue to have a very important effect on the top line. He mentioned the number in the call.

It will also have a more important negative effect on the bottom line definitely now in Q1. You've seen it was 30 basis points in Q4. We believe it might, and it will be even a bit higher now in Q1. And going forward, we will see what happens with the currencies.

And then on the steel side?

Yes, right. If you look at material indexes in general, I think they are going up in a significant way, copper, zinc, nickel. Steel has been more stable, and you know that we are most exposed to steel. But we will do like we have done in the past. I mean if material indexes go up, we will try to compensate them through price increases.

We have already increased -- announced price increases end of last year and beginning of this year. And we will see. If the market follows, we obviously will continue to do price increases, and we are confident that we will be able, like we did in the past, compensate for material increases through price increases and defend the margin.

Perfect. My follow-up is just on your comment now. You're right on the 16% to 17% that you want to be on the long run margin at the top end of that. What would have to happen to see you above that? Is that something that you definitely don't want to go above because M&A will always dilute you back?

Or would you have to see it for a number of years above it, and then you would consider changing the target? Is there a possibility that at some point you would consider increasing the target? Or you rule that out given the structure of the business model?

I would say let's not answer hypothetical questions. I think let's work hard first to get more higher up into that bandwidth. That's also what we have said in the Capital Markets Day. We are today at 16.2%. We have the ambition to get more comfortable in that bandwidth, perhaps also more to the higher end.

And of course, there is a couple of main drivers there. Clearly, if you take the Americas, we have our residential business, where we have said that within the first 5 years after the acquisition of HHI, we will realize $100 million bottom line synergies.

If that happens, we can bring HHI to that 16% EBIT margin, including PPA and so on. So that is definitely is something that, over time, will move the needle for the Americas division. Of course, we will need some help of the recovery of the market for achieving that.

I think the second important driver is SKIDATA, where we know that we bought SKIDATA at very low single-digit margin and where we have the ambition to bring it to, let's say, around 14% over the first 5 years. If that also happens, then, of course, also because it's a EUR 300 million business that also has a more important effect on the margin.

And the third one, as we mentioned at several occasions, we still believe that we have upside on the EMEIA margin, where over time, that should come closer to that 16%. So I would say that are the three main drivers that should help us to further improve EBIT margin.

The next question comes from the line of Andre Kukhnin from UBS.

Can I just start with a follow-up on the -- so on the pricing intentions for 2026, can you tell us at this stage what we should be thinking about with current raw materials and FX for pricing for 2026?

So like you rightly said, it will depend a bit on where material indexes go going forward. And under the assumption that tariffs stay where they are today because also that seems to be moving target, I think you should calculate with a price somewhere, I would say, between 1.5% and 2%.

Of course, we live in a slightly higher inflationary world than, let's say, prior to COVID. Prior to COVID, our price component was perhaps a low 1%. This obviously should be a little bit higher with higher inflation. And then we have, of course, some price carryover from last year still on -- mainly on the tariff side.

And can I just ask about the demand trends as you started the year compared to kind of the exit run rate of Q4. I think you've covered the U.S. but if we could just go around maybe EMEIA and Asia on kind of which way we're trending as we go into the year. And I guess part of that, could you comment on the specified activity in EMEIA as well, please?

Yes. So I mentioned already for North America that we have seen double-digit growth of spec quotations. The same is true in EMEIA, and we have seen high single-digit spec growth for Oceania.

So on the spec side, we continue to see good momentum. I would say the answer is the same as we gave the last 3, 4 quarters. So a good healthy commercial activity level I think also translated in good organic growth in all three regions.

And a comment on the residential side would be also similar still, yes, definitely bottomed out, but no real recovery yet for the residential market. With the exception, like I mentioned earlier, for New Zealand, a smaller country, and then Sweden, where we have seen the recovery in the R&R side, but don't see the real recovery yet on the new build side.

The next question comes from the line of Gael de-Bray from Deutsche Bank.

The first one is on the M&A side. I mean, I think that based on the already announced acquisitions, the M&A contribution that's baked in for 2026 is just around 1%, which is lower than it was at this point in the previous 2 or 3 years, I think. So I'm wondering if you could provide any -- a bit more color on the M&A pipeline and perhaps a range of the potential M&A contribution for 2026?

So it's true that the carryover on the M&A side is 1% for the full year. It's around 3% for Q1. We have an active M&A pipeline. As you know, we have identified more than 900 potential targets. We are not talking to all of them, but we are talking to many of them.

We are confident we will continue to close some of the acquisitions we are talking to in the coming months and quarters so that growth through acquisition for the year will go up. And as you know, we have the ambition to grow through acquisitions 5% per year over a business cycle. We realized that 5% last year.

We will do our best to come as close as possible to the 5% or so this year. Like I mentioned, we have high activity then. To close the deals, you depend on two parties. Both parties have to agree. But we are happy, never satisfied, but happy with what we have in pipeline for the time being.

Okay. And the second question is on the organic growth dynamics or more specifically on the volume momentum. So I think it was around 1%-ish this quarter. So roughly the same as in the previous 3 quarters, really.

So I guess my question is whether you kind of see any signs of acceleration going into 2026 or whether that's too early. And if basically, you're comfortable with the consensus expectations for volume growth of 3% to 4% in 2026?

But it was not really the same over the last 3 quarters. If you look 3 quarters back, it was very low, 1%. In Q2, it was closer to 1%. And now in Q3, it was above 3%. So you see an acceleration of the volume growth. It's true that you don't see an acceleration to 2%, 3%, 4%, whatever. But at least you see an acceleration over the last 3 quarters.

Then of course, going forward, if you now look in Q1, the comparison is more difficult than in Q4, because I think last year, in Q1, we grew 2%, where in Q4, we had a slight negative growth. So that is one difference. And I think market conditions, like I mentioned earlier, are still very similar. So there's two things to take into consideration if you look now for organic growth in Q1.

The next question comes from the line of James Moore from Rothschild.

Nico, I don't know if you mentioned it earlier, my line was dead for the moment. And Elmech, is it possible to talk about the organic growth speed in the quarter for the global and the regional picture? And then I have a follow-up I'll come back to.

Yes, the organic growth for the geographical divisions in the quarter was at 8%, with good contribution from all three regions. And the growth for Global Tech was higher, around double digit.

And I wondered if you could talk about the opportunities and the threats of the Aliro smart lock digital key wireless ultra-wideband near-field standards that are coming. I mean, I see pluses and minuses, and I wondered if you could help us navigate it in the sense that it enables digital smartphone key wallets, and maybe that helps with Elmech adoption.

But is there a risk? And how should we think about the loss of proprietary ecosystem lock-ins with crossband interoperability? Does it commoditize the software layers? Do you worry about Apple and Google becoming gatekeepers? Just trying to think about what this means.

I think you should -- if you look at our Elmech business, which is around, what is it, 32% of sales. If you look at that part, more than 90% is on the nonresidential side, on the commercial side. And of course, all the things you talk about have an effect in the first place on the residential side.

And on the residential side, those standards, we see it as an opportunity because, like you said, it will accelerate adaptation. And I mean, really as one of the strong players in this field, if you see an acceleration of that market, we will obviously profit from it together with the other players in the market.

And then if we can do a good job and come with more innovative products and wider product ranges, then hopefully, confidently, we will also take a bigger part of that market.

Great. Lastly, I wondered if you could just talk a little bit about software recurring? It's obviously been a great growth engine. Does that continue in the quarter? And do you feel happy with the pace going forward?

You know that I can be happy but never satisfied, and that is the same, James, with recurring revenue. I think we see recurring Software-as-a-Service as the fastest growing, you could say, product or solution. That continues.

When I started back in 2018, recurring revenue was around 2% of top line. Today, it's close to 6% of top line. So very strong acceleration and relatively becoming more and more important, and you know that you also make very good margins on that type of business.

You see that as well in the geographical divisions and then also mainly in Global Tech as well on the HID side as on the Global Solutions side. And as we move more and more from mechanical to electromechanical, on, I would say, the nonresidential commercial side, we get more and more opportunities for that Software-as-a-Service. So we are confident that we will be able to continue that trend also for the foreseeable future.

The next question comes from the line of Lush Mahendrarajah from JPMorgan.

It's on Entrance Systems and just a commentary around perimeter security and sort of the stable development there. And I think maybe that's sort of a slight change of toe versus sort of Q3, and I guess, particularly given sort of data center growth, I thought that was an area that benefited. So just kind to understand, I guess, what you're seeing there in the quarter.

I didn't understand the question.

Data centers, how that's impacting Entrance, I think.

So as we also mentioned on the Capital Markets Day, data centers today represents around 1% of our top line sales. And if you consider that data centers are growing 50%, you pick the number, that means that data centers can give us an extra 0.5% organic growth. That 0.5% organic growth comes in the geographical divisions because they sell doors and door hardware to data centers.

But the one most exposed, which will profit the most, is indeed perimeter security because they do all the fencing around the data centers and they have done also a very good job in coming with vertical-specific solution around fencing for data centers.

The quarter had been a little bit weaker from an organic growth perspective. It's more a timing issue and a more difficult comparison with last year. If you look to perimeter security, they have been growing close to double digit for the last 2, 3 years.

And we are confident now, not only with the data centers, but also with need for fencing around high security applications and also with warehouses coming back that perimeter security growth will also continue now this year.

And just as a follow-up on the Entrance Systems margin as well, obviously, strong performance there. I mean, is there something going on there with the steel component and maybe some of your competitors importing more of their steel? Have you been able to sort of price a bit better and take some of that margin?

So yes, Entrance Systems is exposed in an important way to steel and I would say, aluminum. And there, the same answer as before. If material indexes go up for steel and aluminum, we will increase prices and try to compensate for those cost increases through price increases with the ambition to maintain margins.

The next question comes from the line of Vivek Midha from Citi.

My main question is on EMEIA. Nice to see that the growth recovery is continuing, led by the Nordics. You mentioned that Southern Europe remains relatively weak within EMEIA. Can you maybe talk about whether you see any visibility on a recovery there, the sort of expectations on the shape of any recovery?

So if you take EMEIA, I think we have two important growth drivers, that is North Europe with Finland and Sweden, in particular. And then we have the DACH region with German, in particular. I think both are also profiting from the NIS2 legislation, cybersecurity legislation, but you also have to improve your physical security.

And we see this is a European legislation that then has to be translated into a local law in the different countries. But you see that Germany and the Nordics are perhaps a little bit ahead of the other countries. And you see more activity there.

So that NIS2 is an important driver in those two markets. And then like I mentioned, in Sweden, of course, you have, to a certain extent, the recovery on the residential side.

What is also a good driver in EMEIA is emerging markets. So India and Middle East, Africa, and some markets in East Europe. Two challenging markets are the U.K., but we have said at a couple of occasions that we were confident that they had bottomed out and that we would see a recovery. We still believe that is the case.

On the commercial side, there is a challenge with some of the legislation -- government legislation that has changed, and therefore, some of the bigger projects are on hold. Once those are released, we are confident we will see that growth on the commercial side for U.K. and therefore, that recovery that we mentioned already a couple of quarters ago.

If you take South Europe, it's little bit a mixed picture, where Spain, Portugal and Italy, to a certain extent, show good results. It's mainly France that is down. France is also in Europe, one of the countries where we are most exposed to the residential business, and it's still the residential business that is challenging in France.

There again, we believe we are confident that we see light at the end of the tunnel and that in the foreseeable future, we should start to see recovery of that business in France.

And my follow-up is just a quick one on one of the small divisions. But in APAC, actually, quite a good margin print. I think it might be the best margin for the full year since 2019. Do you see a path to recovery to a 10% margin over the midterm here?

Yes. I think because if you look at APAC, again, you should make a difference between Greater China and the rest of APAC. I would say the rest of APAC has margins, let's say, similar to EMEIA, whereas in Greater China also last year, we had a small loss.

And as in the mix, Greater China becomes also less important and the rest becomes more important. And as in the rest, we also continue to see good operational efficiency gains. Yes, we aim to further increase that margin for APAC. Over time, I think it should be possible to go to double-digit also in APAC.

The next question comes from the line of Aron Ceccarelli from Bank of America.

My first one is on U.S. residential. You talked about the market bottoming out. I was wondering if you can provide a little bit of an idea of how pricing within different part of the market? If you can talk a little bit about perhaps the Kwikset brand versus Baldwin, it would be great. And also talk a little bit how the pipeline is shaping up as we enter the first part of the year.

Yes. So first on the market, to repeat what I said before, we don't believe that we will see, on the short term, a recovery on the new build because of the gap on the interest -- mortgage rates, where perhaps we are a bit more positive on the R&R side because of different facts.

And the main fact what I said earlier is that 55% of the houses in the U.S. are more than 40 years old, so sooner or later, that R&R has to come back. And there for us, as a strong market leader in that field, it's very difficult to do better than the market.

What we try to do is come with a lot of new product development. If you take, for instance, the Kwikset brand, on the digital side, I think we launched, over the last 6 months, more products than Kwikset had launched over the last 5 years. So really a very strong acceleration of new product development.

And I would say the most extreme example is the digital side for Kwikset, but we are doing the same thing for Baldwin and for all the other verticals on the residential side. And that's also an indirect way, obviously, to get price increases through into the market.

Because if you can come with a new product that you then also can develop at a lower cost, you can create a new price positioning for that in the market. That's not directly calculated in our price, but it's obviously an indirect way to increase prices.

And that is also translated in our bottom line where we continue our trajectory to the ambition that we have set over time of 16%. Again, there, it would -- that will not be possible if we don't see the recovery also of the market and get a little bit help of the market because only the synergies, the $100 million bottom line synergies that we have identified, will not do it.

Because if you look at the top line today, we are 60%, 70% below the peak from some years ago. That's also why we have taken extra measures in the residential segment in North America last year.

We took out and we had to take out, unfortunately, more than 1,500 people to adapt our cost to the local reality and defending and further improving our margin. And that's things that we will continue to do now. Also this year, we will adapt our cost structure to whatever top line we will see.

And my follow-up is on Global Tech. The organic growth was very strong in Q4 despite the 2-year stack was relatively easy. But can you unpack perhaps the main drivers behind the performance? I would like to understand if you're seeing a tangible market share gains or our performance is mainly coming from white space opportunities created by new technology adoption?

If you look at the two main business in Global Tech, on the HID side, we have PACS. PACS after all the turbulences with semiconductor shortages, recovery and so on, I would say is back on that, I call it, decent growth path. So mid-single-digit growth, steady growth with good profitability, and we believe that it's going to continue.

But what's good in HID is that we have seen very good growth for the other verticals, the smaller verticals where we invest a lot in feet on the street, a lot in R&D to make them significant bigger, then also helping them on the margin side. And so we have seen good development of those verticals in the quarter.

And the same is true for Global Solutions, where obviously, hospitality is the biggest vertical where we have also seen a good continued high single-digit growth momentum, but where also the other verticals delivered on a high level in the other business areas -- segments delivered on a high level in the quarter, contributing even more to the overall organic growth.

So you could say, in that sense, it was all stars aligned from an organic growth perspective for the different business areas as well in HID and in Global Solutions.

The next question comes from the line of Rizk Maidi from Jefferies.

Just going to start with a follow-up on the hospitality side. I think some of your peers have flagged that U.S. hotel occupancies have dropped, and this is affecting the appetite of hotels to invest into their own assets. So I'm just wondering whether it's something you're seeing or not?

We have seen good momentum of our hospitality business around the world and also in the U.S. So we have seen good growth of our business in U.S. in the quarter.

Perfect. And then second one is just if we could elaborate on the -- your pricing commentary. How much did you achieve in the U.S. out of, I think, the 3% to 4% sort of targeted? And if you could just give us a split of that 1.5% to 2% for full year '26%, how much of that is carryover versus incremental price increases?

So as Erik mentioned, our price component in Q4 was a low 3% for the group. And obviously, a good part of that has been related to tariff compensation, and tariff compensation is only in the U.S. So the two or the three divisions that had a higher price component than the group average are obviously Americas, Entrance Systems and HID because they have relatively important part of their business in the U.S.

So the price increase for Americas was a little bit higher than the average for the group. We've always said that on the tariff side, price in the U.S. should be around, let's say, 3%, prefers a little bit higher than 3%. We now have seen that it's a little bit lower than 3% because we were able to further move parts, subassemblies and products to more tariff favorable destinations.

So if you calculate with, let's say, 1.5% tariff impact for the full year 2025 on group level, and if you take into account that most of that has come in Q2, Q3, then you can also see what that gives us now in 2026.

And then the rest of the 1.5% to 2% I mentioned for the full year is then the normal price increases that we do at the beginning of the year to compensate for general inflation, material inflation, labor inflation, you name it. And then depending on where material indexes go, we will continue to try to increase prices as we go.

[Operator Instructions] The next question comes from the line of Andreas Koski from BNP Paribas.

I just want to follow up on the price discussion here because when I look at your price development through 2025 and now your comment about new price increases at the end of last year and the beginning of this year, I get to a price component in the beginning of 2026 of around or even above 3%, again, which means the price component at the end of the year must be around 1% to get to 1.5% to 2% for the full year. Is that the right thinking? Or what am I missing?

I think in global terms, I think it's a good thinking. It's more or less in line with how we see things then. Again, everything will depend how costs evolve going forward and how successful we are or not in realizing the price increases that we have announced and are announcing and that should kick in later in the quarter.

Understood. And if -- I mean, in 2025, you've had a very strong drop-through -- organic drop-through of around 50% for the full year and it was close to 40% now in the fourth quarter, which was also a very good number. But if volumes will account for a larger share of organic growth in 2026, what do you think is a reasonable drop-through for you? Do you think that should come down towards 30%? Or what is a good guess?

I think everything depends on organic volume growth, and there is most probably somewhere an ideal organic volume growth where you get the best volume leverage. And that's most probably somewhere around perhaps 2%, 3% because if it's lower, it's more difficult to compensate for inflation.

If it's much higher, you put too much pressure on your supply chain, on your factory, you have to work with over time, you have to expedite deliveries and so on. So most probably that 2%, 3% organic volume growth is an ideal place to be. And if you are there in normal conditions, drop-through around that 30% should be realistic, yes.

And if -- okay, Bjorn, to squeeze in one just follow-up because you mentioned that comps will now become more difficult in Q1 and that market conditions are still very similar. Normally, you get the question how the current quarter has started. But does your comments around the tougher comps mean that you are now seeing slower organic growth in Q1 '26 compared to Q4 '25? What are you seeing?

Yes, perhaps on how that the quarter started, how January started, it's a bit difficult to compare. Of course, January had one working day less. If you compensate for that, January was a little bit lower than Q4. And that was mainly, we believe, linked to two things.

The weather conditions in general and the weather conditions in the U.S., in particular. We believe this is a temporary thing. And over the quarter, we don't think that is going to be a significant reason.

And the second reason was that we have a more important factory in Berlin. And you know that there was a sabotage -- electrical sabotage in Berlin that they were without current. Our factory was without current for 5 days. We could not produce an invoice for 5 days, had a negative effect in January.

But again, there, this will pick up, and we don't think that it's going to be a notable negative thing in the quarter. So that is on how the year started.

On -- the comment on the comparisons is as well top line as bottom line. Like we mentioned, we had a strong organic growth in Q1 last year than in Q4 the year before. Therefore, the comparison is more difficult. But also bottom line, the comment was always there because we have the normal seasonality, but we also want to highlight that now with SKIDATA coming in, we have a much higher seasonality.

SKIDATA will give an extra around 50 basis points seasonality in Q1, negative seasonality in Q1. And then like we mentioned on the currency side, which will have an important negative effect in Q1 top line but also bottom line. And that's perhaps the two deviations if you look at historical numbers.

So I think we have time for one more question.

The next question is from the line of Andre Kukhnin from UBS.

Well, just on SKIDATA, when you said 50 bps, is that at the group level? Is that EMEIA?

That's on group level.

Okay. And I just also wanted to ask about the Americas dilution to margin from M&A through the year looks like 90 basis points. And I think from discussions before, I understand this is mainly investments in the Level Lock acquisition where you're rolling out that technology across bigger brands.

Could you just comment on how that's going and what the outlook is for 2026? I noticed that dilution has kind of come down a bit or quite a bit in Q4 versus the prior quarter's run rate. Does that mean you're kind of now at the run rate of investment? And what kind of payback do you expect in 2026?

Yes. So if you take Q4, the acquisition -- the dilution of acquisitions in Q4 in the Americas has nothing to do with Level Lock because we own it now more than a year. And so therefore, Level Lock is in the organic part.

The dilution in Q4 is mainly transactional related costs for the two acquisitions that we also mentioned in the presentation. So you could say it's more one-off type of thing, whereas it's true that Level Lock has around 100 bps dilution for the Americas.

Level Lock -- it's fair to say that we are not entirely happy with the performance of Level Lock after the acquisition. We are struggling a little bit on getting the sales up in line with our expectations.

We have been taking measures to do that because we should see more sales as well on the residential side as on the light commercial side, and we have put now the right resources in place and the right focus in place to do that, but that was a bit later than anticipated.

And I think we have also been perhaps a bit too slow in adapting the cost to a lower top line because we, on one side, wanted to continue and finalize some of the R&D projects that they are working on because we have bought them in the first place as a, let's say, R&D machine coming with very exciting new products.

And on the other hand, we wanted to understand first a little bit better the commercial momentum. So we have now taken actions also on the cost side. So that dilution should gradually reduce now over the coming quarters. But it will remain dilutive for the quarters to come.

It's time for us to round up. Thank you, Andre, and thanks, everyone, for your participation. We -- if there are any follow-up questions, please feel welcome to reach out to us at Investor Relations. And we look also forward to meeting and seeing many of you in the coming weeks. Thank you again, and have a good day.

Thank you.

Thank you.

Good morning, everyone, and welcome to the presentation of ASSA ABLOY's Q3 report in 2025. My name is Björn Tibell, I'm heading Investor Relations. And joining me here in the studio are ASSA ABLOY's CEO, Nico Delvaux and our CFO, Erik Pieder. As usual, we will now kick off this conference with a summary of the report and then we will open up for your questions.

So Nico, that means it's over to you.

Thanks, Björn, also good morning from my side. Q3 results, we can show strong numbers for Q3 with good growth and strong margins. We had a good organic sales development with a strong 3% organic growth with good sales growth in EMEIA Entrance Systems, Global Tech in Americas, and the sales decline in Asia Pacific, mainly because of the continued challenging situation in Greater China.

Good operational execution with record operating margin, highest operating margin since Q3 2015, 16.8% EBIT with excellent operating leverage offsetting our M&A and currency dilution. Also very strong cash flow, 10% up and a cash conversion of 125% and then we completed 5 acquisitions in the quarter.

If you look at the numbers, sales of SEK 38 billion. Like I mentioned, 3% organic sales, a strong 2% price and 1% volume and 5% net acquired growth and then minus 6% from currency, mainly SEK dollar related. So top line, up 2%. Very strong EBITA, record margin of 17.9% and also a record margin of EBIT of 16.8% and then EBIT and EPS up 3%, EBIT in absolute value SEK 6.4 billion.

If you look a little bit on the world, I can perhaps summarize because the picture is very similar as in Q1 and in Q2, wherein our 3 main regions as well in North America, as in Europe, as in Oceania, we see -- we continue to see very good momentum on the nonresidential side, but also in all 3 regions, we continue to see more challenging market conditions on the residential side.

We have seen also a slight recovery, I would say, on the logistics vertical, which is important for Entrance Systems, not a V recovery, but a smaller but a positive recovery. We have seen a plus 5% organic growth in North America, a very mixed picture for our Americas division, where we have seen high single-digit organic growth for the nonresidential part and low single-digit negative growth for the residential part. And then strong performance also for the other divisions with good momentum in all the different verticals. Also our spec business up double digit in the quarter.

South America or Latin America, plus 1%, where for the Americas division, we have seen a small single-digit negative decline, but then good performance for the other divisions. In Europe, plus 2%, same picture, like I mentioned earlier, on residential, commercial, where we see in Sweden, at least some recovery on the residential side on the R&R side, but no real recovery yet on the new build. And then obviously, the rest of Europe, which is more ECB-related, is later in the cycle on the residential side. But continued good momentum on the commercial side, also in Europe, double-digit growth of our spec business.

Africa minus 8%, it's a small continent -- small part of our business is mainly related to higher project business for HID last year, so more difficult comparison. Oceania plus 3% with good performance as well in Australia as in New Zealand. And New Zealand is a bit in the same picture as Sweden. They also started to cut interest rates much earlier. And there, we see good recovery as well on the new build as on the R&R side.

And the last but not least, APAC, minus 4%, a very mixed picture between on one side, Greater China, where we continue to see double-digit negative growth where market conditions remain very challenging on the residential side where all indicators are down double digits. And then the rest of Asia where we have seen good momentum, good positive growth as well in Southeast Asia as in markets like India.

If we then look at some of the products we launched in the quarter, some digital products. We extended our Centrios product portfolio offering with a new mortise lock range. Centrios is our access solution for small and medium enterprises. We also launched in LatAm, a new range of digital door lock residential applications with facial recognition. And InVue launched a new high security retail display system for phones, tablets and wearables giving much more hands-free, smooth testing environment for new tablet, phones in those high-end stores.

Also interesting to see that our electromechanical products grew 13% in the quarter. So we continue to see that shift from mechanical to electromechanical and digital, and that obviously also gives us an opportunity to get more recurring revenue. Our recurring remains our strongest growth product or service offering and today is close to 6% of top line so continue also growing in relative weight.

So now 3 consecutive quarters with good organic growth and that organic growth continues to be complemented with very good growth through acquisitions. Our sales, 62% up versus 2020. And then our margins well within the 16% to 17% bandwidth we aim for, a run rate of EBIT margin of 16.1% and our EBITA margin even above the 16% to 17% bandwidth at 17.1%. So good margins, increased top line, they are also good -- therefore, also good bottom line, a record operating profit for Q3 and our run rate EBIT up 108% versus 2020.

Acquisitions, we continue to be very active on the acquisition side, 5 acquisitions completed in the quarter, 16 acquisitions completed year-to-date as of end of September and those acquisitions represent an annualized sales of close to SEK 5 billion. Just highlighting one of the acquisitions in the quarter, Calmell, a Spanish manufacturer of smart cards, smart paper tickets and magnetic tickets, acquisition in HID. They are based in Barcelona, they will reinforce our offering within smart cards, and we had a sales of around SEK 330 million in 2024.

If we then zoom into the different divisions, starting with EMEIA, very good quarter for EMEIA. We have a strong organic sales growth of 4%. It has been many quarters for EMEIA since we have seen such a high organic growth rate. So very happy with that. Strong sales growth in Central Europe and the Nordics, smaller sales growth in Middle East, India and Africa. And then sales decline in U.K., Ireland, that was mainly because some commercial projects are on hold because of some new government regulation, but we are confident that those projects will be released now in the coming quarters.

And then also sales decline in South Europe, that's mainly linked to a more challenging residential market in France. Strong operating margin of 15%. You really see now through that organic sales through that volume growth that we also get very good volume leverage and therefore also better margins for EMEIA. Operating leverage, 40 basis points, driven by volume growth, positive mix and operational efficiencies. FX also helped us with 40 basis points because of the stronger SEK. And then M&A was dilutive 30 basis points.

Americas, an organic sales of 3%. We have a strong high single-digit sales growth in the North America nonresidential segment, but small single-digit negative growth in the North America Residential segment and in Latin America, where the residential segment continues to be a little bit up and down, continues to be around that flat line and depending a little bit on quarter per quarter and the comparison with the quarter of the same year before we see a small growth or in this case, a small negative growth.

An operating margin of 18.5%, excellent operating leverage, 70 basis points. FX dilutive 20 basis points and then M&A continue to be strongly dilutive 120 basis points. That's still linked to the Level Lock acquisition. We then go to Opening Solutions Asia Pacific, an organic sales decline of 4%. We have good sales growth in Pacific North Asia -- Northeast Asia subdivision and a significant sales decline in the Greater China, Southeast Asia subdivision, where we have, like I mentioned before, that's a very mixed picture where Greater China is down double digit -- strong double digit and where we have seen good double-digit growth in Southeast Asia. So in the whole picture, it's really Greater China that brings that division down.

Nevertheless, a strong operating margin of 10.2%, a long time ago that we had a double-digit margin in this division, excellent operating leverage of 260 basis points, FX dilutive 30 basis points and no M&A activity in this division. Global Technologies, also a strong quarter with an organic sales of 3% with good growth in both HID and Global Solutions and a very strong operating margin, I would say, where all the stars are really aligned of 19.8%. Good operating leverage, 20 basis points, dilutive FX, 70 basis points, strongly dilutive, I would say, because of the weaker U.S. dollar. But then strong accretive on the M&A side, 140 basis points, a little bit because of the divestment of Citizen ID, but mainly also because of the acquisition of InVue, which has been a very successful acquisition with very good accretion also bottom line-wise.

And then last but not least, Entrance Systems, also a very strong quarter again for Entrance Systems with an organic sales of 4%. Strong sales growth in Perimeter Security and Pedestrian, good sales growth in Doors & Automation and Industrial. So in all 4 segments, good growth. And also good to see that our growth in service has come back to a strong higher single-digit level. Also strong operating margin of 17.4% with excellent operating leverage, 130 basis points. Dilutive FX, 20 basis points and then still an important dilution from SKIDATA on the M&A side with 80 basis points. As you know, SKIDATA is still very seasonal with very low sales in Q1 and Q2, a bit better sales in Q3 and then much better sales in Q4.

And with that, I give the word to Erik for some more details on the financial numbers.

Thank you, Nico, and good morning also from my side. I will just repeat a couple of numbers when it comes to the sales. We were up 2%. Organic growth was up with 3%. Acquisition acquired growth was plus 5%. And then you see a strong dilutive effect of the currency or the FX of minus 6%. If we look on what it looks like today on the period end versus last year, then if you look for Q4, we expect an even higher negative impact of minus 9%. And since it's mainly related to the SEK versus dollar, we will also have a clear dilutive impact on our margin.

Operating income as well as income before tax, net income and EPS, they were all up with 3% versus the same period last year. As mentioned by Nico before, we had a strong cash flow. We were up in the quarter, 10% versus the same period last year. And if you look on year-to-date, we're almost at the same level as we were a year ago. Return on capital employed remained on the same level at 14.2%. If we look into the bridge and dissect it a bit, the organic sales, it was a strong 2% when it comes to price, which leaves, I would say, plus/minus a bit, 1% in organic volume growth.

The flow-through, as seen was at 41%. So it continued to be strong. Of course, it's related to the price versus cost, but we also have strong operational efficiencies. We have -- like this quarter, we have savings from the MFP projects of roughly SEK 240 million, but we also have done other operational efficiencies in order then to be able to perform such a good flow-through that we have. Currency was negative with 20 basis points. And then you see the dilutive impact on the M&A. That comes predominantly then from SKIDATA and Level Lock. However, remember that we bought those 2 companies last year in September. So they are in for 2 months in the acquisition column and then they're in for 1 month in the organic column.

And then as mentioned before by Nico, we had a strong performance of InVue in the quarter. If we look on the cost breakdown, direct material was 80 basis points better than the same period last year. Of that, roughly 1/3 comes from positive interdivisional mix, which leaves, let's say, if I call it the true price versus cost is about 2/3 so let's say, almost at 60 basis points. It is starting to go down, and we expect it to continue to be slightly lower in the quarters to come. Conversion cost was also positive versus the same period last year. You have the higher volumes and then the operational efficiencies, as I talked about on the last slide.

And then SG&A, slightly worse than a year ago, minus 40 basis points. There, we have sort of -- you have the inflation is impacting as well as we continue to invest in R&D as well as in sales. So that's the reason why it's slightly negative. Operating cash flow, as mentioned before, it's up 10% versus the same period last year. As mentioned before by Nico, the cash conversion was a strong 125% for the quarter. It's driven by the strong earnings as well as reduction in our working capital, predominantly within receivables as well as within inventory.

That sort of leaves, if you flip the slide that you can see that the net debt to EBITDA went from 2.3 in the same period last year down to 2.2. If you look sequentially on the gearing, we went from 70% in Q2 down to 65% in this quarter. So we have actually reduced the actual debt with about SEK 4 billion in the quarter. That comes from, I would say, the strong cash flow, as mentioned before. So all in all, we have a very strong financial position, and we can continue with our acquisition strategy.

Last but not least, from my side, the earnings per share, as mentioned before, they were up with 3% versus the same period last year. And with that, I hand it back to Nico for some concluding remarks.

Thanks, Erik. So concluding, it was a good Q3 for ASSA ABLOY. Good organic sales growth of strong 3%, a strong record operating margin of 16.8% with excellent operating leverage of 41%, the best operating margins over the last 10 years. A very strong cash flow, 10% up and a cash conversion of 125%. And then it's clear that we continue to live in uncertain market conditions where things change very fast day after day, night after night, tweet after tweet. But it's clear that our decentralized organization really helps us to make local decisions in a fast and agile way.

And we will continue to invest there where we see opportunities to grow fast, and we will continue to adapt our cost in those markets or in those verticals where we see that the market is challenging. And then Björn asked me to remind you that we have our Capital Markets Day on November 19 in the U.S., and you see also the link where you can register yourself, if you didn't do so yet. And with that, I give back the word to Björn for Q&A.

Thank you, Nico. Well, excellent. That means it's time to open up for the Q&A session. And as usual, can I ask that you limit yourself to one question and then a follow-up. And if we get around the whole queue of questions, then you can obviously line up again. The operator will tell you how to do that. So that means, operator, we are ready to kick off the Q&A session. Please go ahead.

[Operator Instructions] The first question comes from the line of Andre Kukhnin from UBS.

I wanted to ask really about the Global Tech margins now that we had a couple of quarters of strong delivery. Do you think it's time that they challenge your view, Nico, that this is a 17% to 18% margin business? And as we kind of look forward and see continuation of gradual recovery and operational gearing that this business can generate with this kind of cleaner form with a couple of disposals. Do you think we should be thinking about maybe at least the high end of that or maybe even going through it?

You continue to challenge me, Andre, like a lot of other people continue to challenge me on the margin for Global Tech. And my answer remains the same. We still believe this is a business that should perform somewhere between 17% and 18%. Then you can debate if it has to be on the higher end of that bandwidth or not. I can only say that in the quarter, all stars were aligned in the sense that we had good growth, good cost savings, good price realization, and we also had a strong PACS and a strong hospitality, and that's the 2 best margin contributors in the mix of Global Tech.

You should not forget that all the other verticals in Global Solutions next to hospitality and all the other business units next to PACS in HID still have lower margins are also smaller, and we continue to invest heavily in those verticals to get them on a higher volume level and therefore, ultimately, over time also will give better margins, but we are not there yet. Therefore, we remain with that ambition between 17% and 18%.

Very clear. And if I may just ask a quick follow-up to Erik on the price cost, just to make sure I got that right. Did you say the pure price cost was 60 bps in Q3 and you expect that to get smaller from here? Could you just confirm that? And then also kind of what would drive that becoming smaller in coming quarters?

No. What I said was that -- and you're right about the number because I said 1/3 was related -- out of the 80 bps, 1/3 is related to mix and 2/3 is related to the true price versus cost. And then you come to around the 60 bps when you look at that. I think that, of course, what you see is that for us, the comps there is getting tougher and tougher. So -- and I think that is sort of why it's more from a comps perspective that I'm saying it. And then -- yes, so I would say that will be the main reason.

The next question comes from the line of George Featherstone from Barclays.

I just wanted to touch a little bit on Entrance Systems because it seems as though in the Industrial segment, you've been pretty constructive on the momentum in that business throughout the year. And you talked a little bit about orders before. I don't know whether you could give us a little bit more color on how orders have evolved so far in the second half of the year to sort of paint a picture for how things might evolve into the first half of next year.

Yes. So we -- what we said is that we had seen a good recovery on the loading dock side on logistics vertical end of last year -- November, December last year, where we got good order intake. And we have also said that typical delivery times are 6 to 9 months. So the Q3 and the good organic growth for Industrial segment that you see in Entrance Systems in Q3 is thanks to those orders that we got later last year. I would say it has been a little bit up and down. We were then very excited November, December, then we saw things a little bit calmer again at the beginning of the year, then we got another uptick and then we saw it's calmer again.

So we definitely don't see that V-shape recovery on the logistics vertical side. It's more a steady, slower recovery. But nevertheless, it's a good recovery from a lower level. And therefore, we should continue to see improvement on our Industrial segment for the coming quarters.

We now have a question from the line of James Moore from Rothschild & Co.

I've got a couple of questions, if I could. One on the U.S. residential environment where it's obviously stayed soft. But when you look forward in terms of pipeline or specification, do you see any signs of improvement? I noticed that some mortgage application data is starting to tick up. I don't know if you're seeing that yourselves. That's the first question.

And then the second question, great to see electromechanical growing 13%. I noticed it's been a similar share of group sales for the last 4, 5 years. Do you have a sense or could you give us a sense for the shape of organic sales growth in the last 2 or 3 years? Has that maintained itself or slowed down? Is there something behind that other than acquisition effects? Any color on that would be great, Nico, and how you see it really going forward?

I think first on the residential side in the U.S., yes, I agree with you that there is some positive indicators -- market indicators on the residential side, but there is also -- if you want to see the glass half empty, there's also negative indicators on the residential side. I think that's a little bit what we see also in our results on the residential side over the last quarters. It has been a little bit up and down around that 0 level. And depending also where we were same quarter a year ago, you have this small single digit up or small single digit down in -- which is the case now in Q3. We don't see really a strong pickup on the residential side yet.

And internally, as a matter of fact, we don't have too much long-term indicators because when you refer to spec business, we don't spec on the residential side. So our spec activities on the nonresidential side. So that is not an indicator for residential business. So we look at similar indicators as you do, James. I can only say that we don't see that strong uptick yet. We know that there is a significant deficit in housing in the U.S. So sooner or later, that has to come and hopefully, confidently, it will come sooner than later.

When it comes to the electromechanical part of our total sales, it's around 31%. True that percent-wise, it's not so much up, but it has all to do like, you also alluded, to the acquisitions we do as we do a lot of acquisitions recently also on the non-electromechanical side that brings that percentage down. I think it's more important to look at the pure organic growth and the growth of the electromechanical side. And there, we have definitely seen an acceleration, I would say, after COVID, and you see that acceleration to continue.

After COVID, there's much more people that are looking for electromechanical solution for a simple reason, you can do so much more operational efficiency-wise, management-wise, you can do it also touch-free as compared to a mechanical solution where prior to COVID, we still often had specifications written pure in a mechanical way. Today, there's much more electromechanical. And if you already asked for a mechanical spec, then often there also as an option, an electromechanical alternative. I don't know the exact number for the last 3 years, but it's around double-digit organic growth that we had on the electromechanical side, if you take the last 3 years.

The next question comes from the line of Gael de-Bray from Deutsche Bank.

Yes. I have 2 questions, please. The first one is on the pricing side. I mean, looking at the U.S. PPI for locks and door hardware products, I mean, it's been up double digit in the past couple of months roughly. So I was wondering, I mean, the pricing contribution to the group's top line is still more or less unchanged at about 2% plus this quarter, which looks a bit surprising in light of the PPI dynamics. So specifically, I mean, could you talk a bit about your pricing development there in the U.S.? That's question number one.

Yes. So I think price is up as you compare to Q2 because we have said that price was a strong 2% whereas compared to Q2, it was a low 2% and in Q1, it was 1%. So it's incredibly definitely up. We had said earlier that also in order to compensate for the tariffs in the U.S., we needed a price increase somewhere between 4% and 5%. That has come down. It's today more between 3% and 4%. And that has to do with -- 3% to 4% on the U.S. business. That has all to do with the fact that we also found other ways to compensate for the tariffs. Obviously, we have been negotiating with our suppliers and got very good results there.

We have also been able to relocate some components, some subassemblies and assemblies to countries that are less tariff impacted. And therefore, the price component that we need came a little bit down. So if you take between 3% and 4%, if you say whatever, 3.5% that means -- 3.5% on the U.S. means between 1.5% and 2% on a group level. If you take on top of that the normal 1% inflationary price, you look somewhere at 3%. And at least we are going in that direction with a high 2% in Q3.

Another reason why it's still lower in Q3 is the fact that we still, at the beginning of the quarter, had some inventory at lower cost prior to the tariffs, which we were able then to continue to invoice at the beginning of Q3. Obviously, that is now done in the end of Q3 and going into Q4. So you should see a further higher price component now going into Q4.

Super helpful. And the second question is I mean a few days ago, you announced the acquisition of Kentix, which is obviously a very small transaction, but in a key market, data centers, which have obviously become an increasingly important vertical for many other industrial companies. So maybe could you elaborate a bit on the addressable market size on the growth potential in the field of monitoring and access control products for data centers?

I would say very excited about that Kentix acquisition because it was really the missing link for us to really offer a complete access solution for data centers. They have particularly a very good solution for those shared data centers where you have to control indirects different customers on the same rec, and they combine that access control with a lot of other information on the performance of the service. They measure temperature, they measure current consumption and so on. So you get also a very good diagnostic data on how that part of the data center is working. So very excited about that.

I can only say that data centers, if you look a year, 1.5 years back, it didn't even make it to our dashboard when we are looking at specification. Today, it's by far the fastest-growing vertical when we do specifications. And we don't specify all data centers. There's still a lot of data centers that are not specified and go straight into the sales funnel. But today, it's not in the top 3 of our verticals yet, but it's growing very fast and making its way up. So it's definitely something that will move the needle for us even on group level going forward.

I think we have a really complete solution from our fencing around the data center with Perimeter Security to the entrance in the data center with our security doors in the geographical divisions and our Industrial and Pedestrian doors in Entrance Systems and then a full suite of access solution with our mechanical -- electromechanical offering in the geographical divisions and now nicely complemented also with that additional acquisition we did last week. So very excited about that, yes.

We now have a question from the line of Max Yates from Morgan Stanley.

I just wanted to ask on the government shutdown that we currently have in the U.S. And I mean, in your Institutional business, obviously, some of these verticals, sort of government buildings, some of the education are probably quite important. Do you think this will have any effects on demand in your business? And are you seeing anything already in terms of some of those projects kind of being delayed or pushed out?

So the pure central government business of the U.S. is a smaller part of our business. Then some of the businesses are also continue to run. I think everything depends on how long that shutdown would last. If it's, let's call it, a normal shutdown, it should not have any negative effect on our business. It's just a small stop and go on a very small part of our business. And as there is a big pipeline, I think, there is no effect on our business. Of course, if it would hang on and be much, much, much longer, then ultimately, it could have some consequences. But let's take that challenge if that would be the case.

The next question comes from the line of Rizk Maidi from Jefferies.

So the first one is really whether you've seen any changes when it comes to the demand environment between the months of the summer and then September? And whether you could just give us an indication of how Q4 started for you so far?

Yes. Of course, Q3 is very, very difficult to answer that question because July and August, as you know, are holiday months and it can fluctuate very much on smaller months. Obviously, September was much better than July and August because we had also one working day more and it was not a holiday month. But if you try to compare and compare like-for-like, so correcting for the working days, September was slightly better than July and August. And then we have seen the same momentum now in October as -- or the beginning of October as we have seen in September.

Perfect. And then finally, just on the M&A impact on margins guidance for Q4. I think you're guiding for it to be accretive. Can you just walk us through sort of the divisional impact here and what we should be aware of?

The main reason is that SKIDATA and Level Lock will not be longer in the acquisition column because we are now partly owner of both companies for more than 12 months. So they will move into the organic column. And as you could see in Q3 and also in previous quarters, they have been the main reason for the dilution. Then I think one bigger acquisition on the acquisition column, which is still there in Q4 is the InVue acquisition, which has been accretive, and we will probably -- confidently will continue to be accretive also in Q4.

We now have a question from the line of Mattias Holmberg from DNB.

Nico, I think in the past, you've talked a little bit about your window hardware business in the U.S. as sort of potentially a leading indicator for the U.S. residential side as I guess it's one of the few exposures you have to directly towards the homebuilders. Could you say anything about what you've seen and heard from this vertical, given that it seems like the sort of overall residential market is hovering around this no growth environment and has been doing so for quite some time?

I think we -- our business might not be directly representative for the market because I think we have done 2 good things in our window hardware business in the U.S. One, we were able to compensate in a good way also through pricing for the tariffs, which then helps obviously on the organic growth side. But I think we have also been able to improve our relative position in the market through to some new wins. I think if you look at the underlying market, it's very similar as what I said before. I think on the R&R side, it's a little bit more positive than on the new build side. On the new build side, we don't see any real recovery yet, and we also don't see any signs of a real recovery yet.

The next question comes from the line of Vivek Midha from Citi.

My question is also on the Global Tech M&A performance. It looks relative to Q2 that both in InVue on the absolute revenues and on the margin contribution, that looks to have improved. I was just wondering if you could give us color on what growth -- organic growth InVue delivered in the quarter within that M&A line? And more broadly, what's been doing to drive performance within that business?

So InVue does asset management protection of assets in retail stores. So if you have a high-end store of iPhones or tablets, they protect those -- that equipment that people cannot steal it. In the past, you remember there was always with a cable, and it was not very user-friendly. They came with different new innovative solutions. One of the latest solutions is that you don't have this wire anymore. You just have something on the phone that permits you to really feel how the new phone feels in your hand.

And if you walk too far away from the station, then the alarm will go after making it much more user-friendly. And we have had several bigger global companies in the phone and tablet space that have adapted that technology from us. So therefore, we have seen very good higher double-digit growth of that InVue business as compared to a year ago, and that with also good margins, and that's the reason why you see the good acquisition column for Global Tech. Next to that, of course, we have the divestment of the Citizen ID business.

Understood. And a very quick follow-up. Just to understand on the price cost, even if we're looking at the true price cost, that looks to have been broadly stable. In the past, you were guiding for this to gradually fade from the 60 basis points you saw in Q2. So just to understand what, if anything, has surprised you to the upside in the third quarter on that price cost?

I think we should run our business that we don't have surprises. So I would say that we had not a surprise on the price cost. So if you look at the direct material percentage, what Erik explained in the presentation, you can clearly see that we were able to fully compensate for tariffs and other inflationary pressure, yes, partly through price and partly through other actions that I mentioned before, and we're able to maintain the margin, and that has been our ambition from the beginning. That is what we said that we would do from the beginning.

So in that aspect, that should not be a surprise, and we will continue to do so also in the coming quarters. But I think you can also see it in a positive way, despite all the inflationary pressure, despite all the tariffs and so on, we still had, let's say, 60 basis points pure price cost accretion in the quarter, 60 basis points of the 80 basis points in total that you see on the direct material line.

We now have a question from the line of Magnus Kruber from Nordea.

It's Magnus, a couple of questions from me. Good to see acceleration in growth in EMEIA in the quarter. Could you help us a little bit to what degree that helped us on the mix, on the margins, how many bps that helps us?

On which division?

On EMEIA.

Yes. So I think on EMEIA, the main reasons for the improved margin is the volume. I mean, you have seen the 4% growth, the other price in line with group. So they had good pure organic volume growth. And we have always said that EMEIA today was on a cost structure that once you would start to see volume growth, you would also see very good margin improvement. And that is what we have seen in the quarter. So if we are able to continue to see that volume growth in the coming quarters, we should continue to see also margin improvement for EMEIA. And that is thanks to a lot of operation efficiency measures they have done. They also contributed to MFP. They did a lot of VA/VE actions. And then, of course, you have the price effect.

That is true that there is also a positive mix effect in the sense that we are growing better in the Nordics than in the South of Europe. And you know that in EMEIA, if you look, the higher you go geographically, the better the margin; the lower you go, the lower the margins. So that was a positive mix effect.

Then on the other side, we have also a negative mix effect in the sense that we were growing nicely also in Africa, Middle East, India and that has also lower margin. So yes, there is a small positive mix effect, but the main reason is the organic volume growth that we experienced in the quarter.

Got it. And my second question, could you elaborate a little bit on what we see in terms of margins across China and the other parts of APAC have helped us a bit with the margin levels there in the past?

There I would say also nothing has changed. We have always said that Southeast Asia, Pacific is in normal conditions, margins more or less in line with EMEIA. Whereas Greater China, we still have an ambition that one day over time, we want to have that high single-digit EBIT. Today, we are far from that. Today, in Greater China, we are very slightly negative. So you could say close to 0 EBIT. So I think Greater China has done an excellent job in further cutting the cost to keep at least the margin close to 0 in a much lower top line today than, let's say, a year or 2 years ago.

[Operator Instructions] The next question comes from the line of Daniela Costa from Goldman Sachs.

I just have 2 follow-ups. On the pricing point, I think as of the 2Q call and what we had of tariffs at that point, you had said that you needed to put prices up in the U.S., 4% to 5%. Since then, we had the extra or the up on the Section 232 of steel and derivatives in August. Can you comment to sort of what would be the equivalent figure now? And I guess sort of what's inside your going forward pricing commentary? That's question number one. I'll ask the second one afterwards.

Yes. So like I mentioned earlier, the 4%, 5% we mentioned earlier is more today between 3% and 4% because we were able to negotiate with suppliers better price, and we were able to move some of our components, some of our subassemblies and some of our final products to countries with less tariff impact. When it comes then to the new tariffs on the direct material percentages in the different products, you will appreciate it's a very difficult calculation to be made because you really have to look product by product and then you have to see how much steel content there is in every individual product. So we are still fully -- you could say, very much into the calculation, but we believe it has no significant effect on the tariffs because you win and gain a little bit.

So -- and if there would be an increase of the tariff cost, again, we will just compensate that through price increases and other operational measures like we have done for all the other tariffs. So we remain very confident that we -- also going forward, we will be able to compensate tariff costs and keep margins.

Okay. So 3% to 4% regardless of the post development? Okay. And then just in terms of the strength you've mentioned and been talking through in Europe, driven by Central Europe. Can you give us a little bit more granular by vertical view? Is it resi? Is it non-resi? Is there any restocking at distributors? Sort of what are the main contributors there?

Well, definitely not restocking. That's not a significant argument. I think we should also here make distinction between residential and nonresidential. So residential is around 45% of EMEIA. And I would say on the residential side, it remains challenging. It's most probably bottomed out on a lower level if you take the bigger picture for EMEIA. But for EMEIA, bigger picture, definitely not a recovery yet. The only recovery we really see is in Sweden, where Sweden continued -- started to cut interest rates already almost 2 years ago. There have been 5 or 6 interest rate cuts in the meantime.

And there, we have seen R&R coming back from a lower level. But in a way, we are even a little bit disappointed to see that it takes longer for the new build to come back. We haven't seen that recovery on the new build yet. We are confident it will come, and hopefully, it will come sooner than later. I think the rest of Europe, where it is more ECB related, is still later in the cycle. And there the more challenging country is definitely France, where we have seen more pressure on our residential business. If you take the nonresidential, it's still on a very good strong level, very similar to what I mentioned earlier for the U.S. Our spec business is up double digit, and we see a good higher single-digit growth overall for that business in EMEIA. And then, of course, we have good emerging market part also in EMEIA with Africa, Middle East and definitely also India. That's still a smaller part of our business, but a fast-growing part.

The next question comes from the line of Andreas Koski from BNP Paribas Exane.

I want to ask about Global Technologies and the organic growth of 3%, which you would say is a good organic growth in the quarter. But I think in the past, you've been talking about an organic growth rate of around 5% as a level that we should expect going forward. I just want to get your thoughts on how to think about the organic growth in Global Tech going forward?

I think when we look at those numbers, obviously, we should not just look at one quarter because for the quarter, also the comparison with a year ago is important and also the way we came out of, you could say, more turbulent cycle on -- especially on the HID side with all the electronic component shortages we had 2 years ago, and therefore, disturbs a little bit the curve.

And also on the Global Solutions side, the very high comparison we had with last year because you remember that we said at several occasions that Global Solutions for more than 2 years, for more than 8 quarters was growing double digits. So it's difficult to continue to do that. But I think overall, we remain with our statement that Global Tech is a division that should grow higher than our 5% ambition that we have as a group. Global Tech over business cycle should grow closer to that high single digit rather than the 5% we have as an ambition for the group. And we are confident that if you look over a longer period that you will see that acceleration again now after, you could say, the turbulences around electronic component shortages.

And looking into the quarters ahead, how do the comparables look like? Will the comparables still be tough and we should expect a more muted picture in the very near term?

I think Q4 will be still a bit more challenging. But then as of next year, we should see that acceleration.

That's great. And then on the -- on the EBIT side, if I look at the other line or overhead cost line, which was negative SEK 272 million, it's a very high cost number compared to previous quarters. Is that step-up because of the acquisitions you have made or -- and that higher level will now be sustainable? Or did you have some, call it, extraordinary or something in there and that we should expect that to come down to the low 200s that we have seen in recent quarters?

I think there, Andreas, it sort of fluctuates between the quarters so you shouldn't read too much into now -- I mean now it's up above SEK 270 million. Last year, we had SEK 192 million, but it's more sort of fluctuates. It has nothing to do with acquisitions at all. It's just sort of -- yes, that it fluctuates. .

We have a follow-up question from the line of Rizk Maidi from Jefferies.

Just a very quick one. You talked about the U.K. being weak, and I think that was also the case in Q2 where you had some missing projects that we thought would come back in Q3, but they didn't. Can you maybe just elaborate on that and just quantify the impact? I think in Q2, you said it cost the division 1 percentage point of the organic growth?

So I think what we said at previous occasions is that if you look at the residential market, which is challenging, there's perhaps 2 places where we are a bit more optimistic that is Sweden. I commented on that. And the other one, U.K. also because U.K. has been on the lower side, residential since quite some time. And we continue to see that slight optimism on the residential side for the U.K.

The reason why it's lower in Q3 is more on the commercial side, where some of the commercial projects through new government legislation has been on hold. Those projects have not been released, and the government is working on adapting those standards and regulations. And we are confident that now Q4 and definitely in the coming quarters, those projects will be released and then we will see that growth coming in also on the commercial side, and that will help then the U.K. picture.

[Operator Instructions] We have a follow-up question from the line of James Moore from Rothschild & Co.

Just a quick one, Nico. I see that the PPI in the U.S., the purchase price index is up 10%. It's quite a big number. I just wondered if that is a good guide for what you're seeing in the market with the current tariff environment. I understand about the inventory cycling, but maybe in the more recent months where we're now seeing a full flat tariff impact. Do you think that's a good guide for the U.S.?

We would like to have 10% price increase. I can tell you that is not the case for us. think the Americas price component has been a little bit higher than the group average. And I want to come back to what I said before, we need that 3% to 4% for the tariffs. And if you then take another, let's say, 1% or whatever normal inflation, that is more the number that I think is realistic for our business. Then, of course, if we can further increase prices, we'll always try to do so and perhaps the PPI is a good argument to see if we can further increase prices, but it looks a little bit too high for us at least.

Sorry, so my mistake. So the 3% to 5% comment is specifically for the U.S.A. It's not the global impact. That's just the U.S. business.

Exactly. Yes. So 3% to 4%, the U.S. business, which means 1.5% to low 2% for the group, you could say.

We have a follow-up question from the line of Andre Kukhnin from UBS.

I just wanted to come back to the specified activity at growing double digits in U.S. and Europe. I think in U.S., we've been there, I think, for a quarter or 2 already. And in EMEIA, I think, too. I'm just trying to understand when do we get the kind of growth acceleration in revenues from this step-up in specified activity. Could you just talk us through the cadence there?

Well, it's very difficult to say because we make specifications today and some of the projects are realized 6 to 9 months later. Some of the projects are realized 2 years later. So when you look at spec, you should look more on a trend over a longer period, but I would argue that you see that acceleration already in EMEIA. I mean if you see the 4% organic growth in the quarter, that is clearly also linked to, like I mentioned earlier, the commercial side because it's not so much coming from the residential side. And it's on the commercial side where we spec all these projects, and it's linked also to the shift from mechanical to electromechanical. It's also linked to more green specifications, something perhaps more specific for EMEIA. And we are -- we continue to see that trend on the specification side.

But is it right that the actual revenues of your commercial businesses in U.S. and Europe are not growing double digit at this stage, they're in high single digit?

Yes. I've said during the presentation that our North America commercial business was growing high single digits in the quarter. And it's a similar -- it's a little bit more difficult to calculate in EMEIA because, as you know, whether you put multifamily and some of the semi commercial projects, but it's a similar number in EMEIA.

Thank you. That means it's time for us to round up this conference. If there are any follow-up questions, feel welcome to reach out to Isabelle or myself at Investor Relations. And that means we look forward to seeing you in the next coming weeks and many of you also at our CMD in Milwaukee. Have a good day now, and stay safe.

Good morning, everyone, and welcome to the presentation of ASSA ABLOY's Q2 report in 2025. My name is Björn Tibell. I'm heading Investor Relations. And joining me here in the studio are ASSA ABLOY's CEO, Nico Delvaux; and our CFO, Erik Pieder. We'll start now, as usual, with a summary of the report before we open up for your questions, and then we will round up in about 1 hour's time.

So with that, the floor is yours, Nico.

Thank you, Björn, and also good morning from my side. We can report good numbers for Q2. We had a strong overall performance with a good organic growth of 3%, a low 2% price, a high 1% volume. So it's also good to see now that we have for the second quarter in a row, again, positive organic volume growth. We have seen good organic sales development of strong sales growth in Global Tech, good sales growth in Americas and small sales growth in Entrance Systems, but then a sales decline in EMEIA and in Asia Pacific.

Also good to see that organic growth continues to be supported by a strong growth through acquisitions, 5% net in the quarter. And then a very strong operational execution with a volume leverage of 53% on the 3% organic growth, giving us an EBITA margin of 17.2% and an EBIT margin of 16.2%. Also good work on the balance sheet side with a strong cash flow of SEK 5.5 billion and a cash conversion of 103%. And we continue to be active on the acquisition front with 5 acquisitions completed in the quarter.

If you look at the numbers, sales of SEK 38 billion, so the 3% organic, the 5% net acquisition and, unfortunately, a strong currency headwind of minus 8%. The EBITA margin of 17.2%, even above the 16% to 17% bandwidth, which we aim for, EBIT up 1%. If we then look a little bit into the different regions, I can repeat what I said in previous quarters. We continue to see strong momentum on the nonresidential side, so the commercial side. We see that as well in North America, as in Europe, as in Oceania. And we continue to see more challenging market conditions on the residential side where in North America, interest rates remain too high and where the effect of ECB lowering the interest rates in Europe has not translated yet in a recovery of that residential market.

Where we see some uptick on the residential side is in Sweden. You know that their interest rates were already cut more than a year ago in May last year to be exact. For the first time, we had 5 rate cuts in Sweden. And we see in Sweden R&R slowly coming back, but no recovery yet on the new build. Very similar situation in New Zealand that is very comparable to Sweden. What's also good to see is that we continue to see more activity on the logistics vertical in Europe and definitely in North America.

So North America, plus 4%, where on the commercial side, we had a very high single-digit organic growth and where we had a flat development on the residential side. South America, plus 4%. The Americas division was flat in South America, but we had a strong Global Tech, so continue to be a good momentum in South America, although we are a little bit concerned, obviously, with what's going to happen with mainly Brazil and Mexico now with the import tariffs towards the U.S. Europe, plus 1 where, again, on the residential side, France, especially is more challenging because France is also very exposed to the residential side, but very strong DACH and then Scandinavia or Nordics recovering.

Africa, plus 4%; Oceania, plus 1%; and Asia, minus 2%, where we should make a big distinction between Greater China, where all market indicators continue to be double digit down. You can look at new housing build on the residential side, new permits, finished houses, everything is down double digit. And we also have seen a double-digit negative growth in our Greater China business, where the rest of Asia is really strongly positive. Some market highlights. You might have seen this also on social media, SKIDATA entered a strategic partnership with Samsung so that our SKIDATA access management solutions for stadiums, now people going to the stadiums can also experience the Samsung Wallet experience, a smoothless experience when they use the SKIDATA access management solutions in those stadiums.

Some bigger project wins in South Korea, one of the largest apartment complexes with more than 2,500 apartment units using our door hardware. The Freedom of the Seas, one of the biggest cruise ships in the world in our Marine segment in Global Solutions using our solutions and updating more than 2,700 locks to RFID. And then a stadium in Illinois, focusing also on sustainability, improving energy efficiency using the Americas hardware.

So now like I mentioned, the second quarter in a row with good strong organic volume growth continued to be complemented with strong growth through acquisitions. Our sales up 59% if we compare with 2020 on a 12-month moving trend. Operating margin within the 16% to 17% bandwidth, a run rate of 16.1% on EBIT and 17.1% on EBITA. And then a good operating profit for Q2 and EBIT up with -- on a run rate with 108% (sic) [ 106% ] if we compare with 2020. Acquisitions, as mentioned earlier, 5 acquisitions completed in the quarter, 11 year-to-date.

They represent an annualized sales of SEK 4.4 billion. And then we also concluded the divestment of the Citizen ID business, where we agreed with all parties to keep the U.S. part of that Citizen ID business. It's a smaller part. It's around $25 million depending on year-to-year, it fluctuates a little bit. It's mainly the Green Card business that is a project that normally will end somewhere beginning of '27. And as it's close to the end of that project, all parties agreed that, that was the best solution.

Some highlights, TeleAlarm, a European -- German provider of remote care technology, reinforcing our product and solution offering within senior care, and they had a sales of SEK 330 million last year. And then Kingspan, an acquisition in my Country, Belgian manufacturer of high-quality door panels for sectional doors, residential and commercial doors. They had a sales of SEK 290 million last year.

If we then go a bit into the different divisions, EMEIA, an organic sales decline of minus 1% with good sales growth in Central Europe, a small sales growth in the Nordics, where we commented on the recovery of the residential side in Sweden. A sales decline in U.K., Ireland, mainly related to some timing issues on some bigger projects. We are and we remain more positive on U.K., but then sales decline in South Europe, mainly because of France residential and also sales decline in Middle East, India and Africa, mainly because of the Middle East. An operating margin of 13.9%, where we had a negative operating leverage of 30 basis points on the minus 1% organic sales, but were helped by currency, 50 basis points and M&A 10 basis points.

A very strong Americas, an organic sales of 4% with a high single -- a very high single-digit sales growth for the North America Non-Residential Segment, flat sales in North America Residential segment, which I think is a very good achievement given the market conditions and also flat sales in Latin America against a difficult comparison last year. An operating margin of 18.6% with strong operating leverage, 60 basis points on the 4% organic growth, helped by currency 20 basis points, but then a stronger dilution on the acquisition side, 120 basis points linked to Level Lock, as we mentioned in Q1, this dilution would continue in Q2, and we foresee now that in the second half of the year, that dilution will normalize to more normal M&A dilution levels.

Asia Pacific, an organic sales decline of minus 1% with a strong sales growth in Pacific Northeast Asia and a significant sales decline in Greater China and Southeast Asia, where we should make a big distinction between Greater China, where we had high double-digit negative growth and Southeast Asia, where we had double-digit positive growth. But despite the negative organic growth, very good operational execution with excellent operating leverage of 130 basis points, giving us an operating margin of 9.6% with FX dilutive 10 basis points.

Global Technologies, another division with very strong performance in the quarter, and organic sales growth of 8%, very strong sales growth in HID, strong sales growth in Global Solutions, where I would say all business areas or business units contributed to that strong growth. Also very good operating margin of 18.5% with an excellent operating leverage, 280 basis points accretion. And then FX dilutive, a significant way, 100 basis points because of the weaker U.S. dollar. and M&A accretive 90 basis points, mainly because we don't have the Citizen ID business outside of the U.S. in our books anymore.

And then last but not least, Entrance Systems, an organic sales of plus 1% with very strong sales growth in Perimeter Security, good sales growth in Doors and Automation and in Pedestrian, but the sales decline still in Industrial. Only a small sales growth in service where we find it challenging to find enough service technicians to execute on all the work that we have in the pipeline. A good operating margin of 16.5% if we take the dilution of SKIDATA into account, a very strong operating leverage, plus 100 basis points. FX dilutive 10 basis points. And like we also mentioned, in Q1, SKIDATA is very seasonal. So Q1 and Q2 are lower quarters from a top line perspective for SKIDATA. Q3 is better and then Q4 is much better. So that dilution will go significantly down in Q3 and definitely in Q4.

And with that, I give the word to Erik for some more details on the financial numbers.

Thank you, Nico, and a very good morning from my side as well. As mentioned before, if we look on the sales, it ended up flat due to the sort of the headwind that we have from the currency with minus 8%. Organic growth was strong at 3%. Our EBIT operating income in value is up with 1% despite also there, we would have a headwind from the currency. The EBITA margin and the EBIT margin, 17.2% EBITA margin, 16.2% on EBIT, stronger than what it was a year ago. Income before tax is up with 2%. Net income and EPS is up with 1%. Cash flow, as mentioned before by Nico, was strong at almost SEK 5.5 billion. It's slightly lower than what it was a year ago, but still we had a very good cash conversion of 103%. And finally, then we continue to improve our return on capital employed. It went up with 20 basis points and ended at 14.2%.

If we dissect a bit and look into the bridge, the sales price is, let's say, a low 2% and volume is a strong 1%, and that combined gives us about 3%. We had a very good operating leverage of almost 53%. This is driven by the tailwind from price cost. It's driven by operational efficiencies. We had savings from the MFP program of about SEK 200 million, but we also had other operational savings in there. Currency had a slight negative impact of 10 basis points. And then you heard Nico talk before about the dilution on the M&A of the 60 basis points that comes from the SKIDATA as well as the Level Lock acquisition.

Cost breakdown, direct material, 60 basis points better than a year ago. In this 60 basis points, there is no mix. So this is pure, let's say, the price versus cost. And as you -- as those ones have seen, it starts to go down every quarter, and we expect that to continue -- that would have a less positive impact in the quarters to come. It's positive to see that the conversion cost is favorable versus the same period last year. It's 50 basis points better. I mentioned before the MFP savings, but we also have MFP savings, pricing efforts and also other operational efficiencies that we have done. We also see less of a dilution on the SG&A. It was minus 30 basis points. There, sort of our efficiency measures couldn't cover for the inflation as well as continued investment that we have within our sales organization.

Operating cash flow, as mentioned before, it was strong. We still continue to do very well, I would say, on the working capital management. We had a slight uptick in receivables, but it's not, let's say, it's still sort of very much under control. And as mentioned before, the cash conversion was 103%. And if you look on the 12-month rolling versus EBT, it's 105%.

The gearing, net debt to EBITDA went down slightly to 2.3. Net debt to equity is 71%. In value, our debt versus the last quarter went down with roughly SEK 0.5 billion. And that is, of course, on the negative side, we have continued acquisitions. We have paid half of the dividend. On the positive side, we had a good cash flow as well as we are helped of the stronger Swedish krona. But -- and all in all, I think that we can continue to do our acquisition strategy because our balance sheet still remains strong. And last but not least, you were sort of trying to speed me up there, Nico. Earnings per share, as I said before, is up with 1%.

And with that, now you can sort of take your concluding remarks.

Sorry for that, Erik. Of course, up to you to judge, but we are convinced it was a strong Q2, strong overall performance with a good organic sales growth of 3%, complemented with strong growth of acquisitions of 5%, then a very strong operational execution with an excellent operating leverage of 53%, giving us an EBITA margin of 17.2% and an EBIT margin of 16.2%. Strong cash flow, SEK 5.5 billion, strong cash conversion of 103%. And okay, it's not a surprise if I tell you that we live in an uncertain market condition.

But there, again, like we say every quarter, we are convinced that our decentralized organization, being able to make decisions very close to the local customer in the local market gives us a competitive advantage in those uncertain market conditions. And last but not least, Björn asked me to remind you of our Capital Markets Day that will take place on November 19 in the U.S. and the registrations are open on the link that you can see on this slide.

With that, I give back the word to Björn for Q&A.

Excellent. Thank you, Nico. Well, it means it's time to open up for questions now. [Operator Instructions] We don't have as many people indicating that they would like to ask questions at the moment. [Operator Instructions]

So with that, operator, it means that we are ready to kick off the Q&A session. Please go ahead.

[Operator Instructions] The first question comes from the line of Midha, Vivek from Citi.

My main question is on the Americas growth, slightly better sequentially than Q1. You highlighted high rates pressuring the residential segment, but then compared to Q1, resi appears to have improved from the mid-single-digit negative growth you highlighted then. So could you please comment on how you expect Americas organic growth to develop over the coming quarters? And also specifically, how much of the improvement in Americas was driven specifically by price?

Yes, I would say that we don't see too much of market changes in the Americas division. We continue to see good momentum in LatAm. With that side remark, like I mentioned earlier, that we are a little bit concerned going forward with Brazil and Mexico, in particular, with -- linked to the tariffs in the U.S. But for the time being, we see still good momentum in LatAm. If you take North America commercial side continues to be, yes, good momentum, perhaps not as hot as 3 years ago, but very good momentum.

Our specification business in the quarter was again up double digit in all verticals and definitely in the 2 verticals that matter for us the most, health care and education. We only -- again, all verticals were positive with the exception of offices, which should not be a surprise and hospitality, which we believe is might be just a timing issue. But so double-digit up on the specification side, which is for us the only real leading indicator on commercial new build.

And then residential, like I mentioned earlier, we don't really see an improvement. If you look at interest rates, the gap between where the house owners have their interest rates sitting for their existing loans and at what interest rate they can get a new loan is still too big for things really to start moving. Then of course, you most probably will see a little bit of recovery on the R&R side because at a certain moment, people just decide to refurbish their house because they don't want to wait any longer.

And if they refurbish their house, it will be good anyhow if one day they want to sell the house because it will increase their price. So that might be something we see in the numbers. But I would not be too enthusiastic that residential is recovering in the U.S. We don't see that yet. When it comes to price, the Americas had a price component similar to the group. Of course, they had already some help on price from the tariffs. But that only start to kick in, in the latter part of Q2 because, obviously, we build up a lot of stock locally in the U.S. before all the tariffs came in.

And I might be surprised that the price component is not higher. A big explanation there is that the Americas also has an important steel door business. And as we mentioned in previous quarters, on the steel side, we were done with price increases because steel was going down over the last several quarters. And that is still the case. We are confident now that going forward, also there with all the tariff situation, steel will go up again and that, that will also give us then the possibility to again increase prices on everything that is steel.

Very helpful. One quick follow-up. You mentioned spec growth in the U.S. there. Could you give us an indication of how it trended in EMEIA and Oceania?

Yes. So overall, for the world, we had a double -- low double-digit growth of the spec business. And in EMEIA, it was high or very high single-digit growth.

The next question comes from the line of Andre Kukhnin from UBS.

I just wanted to dig into the Global Tech actually margin performance, please. I wonder if you could comment a bit more on sustainability of that? Or should we think about kind of moderating back to the trend levels that we thought about before for this business?

Yes. So if you look on the margin, of course, the fact that we had high top line growth as well in Global Solutions as in HID helps in an important way to get the volume leverage. And we have seen good growth, like I mentioned, on all business units or business areas as well in Global Solutions as in HID. But we had a positive mix in the sense that we had stronger growth in PACS in HID, which is the more profitable subsegment in HID. And we had also very good growth on the hospitality side in Global Solutions, which also has better margins than the other verticals in Global Solutions. So there was the mix.

There was definitely very strong operational execution and good pricing leading to that very good margin for Global Tech. You know that we had all those disturbances in the numbers because of the electronic shortages, I would say, almost 3 years ago related to the PACS business. That has -- is completely behind us. And as of now, we foresee PACS to grow again like they were growing before COVID on that somewhere mid-single-digit growth level. And that's, of course, important from a margin stability perspective for Global Tech.

Great. And just a quick follow-up on something you mentioned on the cost side when we talked about MFP, but also other operational savings, Erik. Could you just comment on what those kind of other operational savings are? And how should we think about them? Is that kind of a specific push in the quarter to maybe mitigate M&A dilution? Or is this something kind of more sustainable?

So we continue to do VA/VE activities in our factories. We do lean activities. That's an ongoing progress, a process that gives us cost savings every quarter with the automation, robotization. And then in the quarter, in particular, we also did some extra cost measures in several divisions, but mainly in the Americas, where in the residential segment, we adapted our personnel number, you could say, to the new lower reality. We unfortunately had to cut, I think, around 400 people on the residential side. We did something similar on the commercial side and also in LatAm. And that obviously then also helped on the leverage. And we did smaller -- similar activities in some other divisions.

We now have a question from the line of George Featherstone from Barclays.

I just want to start on Entrance Systems. You've talked before about some maybe positive orders momentum building now, I think, probably related to the Industrial segment. Can you just talk a little bit about what you're seeing in underlying activity now from an orders perspective? I appreciate things haven't sort of translated yet from a revenues standpoint.

And then just a follow-up on the Americas conversation. That Non-Resi business is going quite strongly against the underlying market data, so I just wondered what you think might be driving your performance relative to the broader market backdrop?

So we start with Entrance Systems. As we mentioned at previous quarters, we had seen activity on the loading dock side, on the logistics vertical side coming back somewhere end of last year. We start seeing orders coming in again. And we said that loading docks have a longer lead time, 6 to 9 months. So that effect of these loading docks being translated in sales, we did not see yet now in Q2. That's something that will come in Q3 and definitely in Q4. So we should see an uptick from this in the second half of the year. And we can say that we continue to see good activity on the loading dock side. So there's more orders coming in, and we see a good recovery from, yes, obviously, a very low level, but definitely positive on the logistics vertical side for the Industrial segment in Entrance Systems.

When we go to Americas, the question on commercial side. Of course, one quarter doesn't -- you should not conclude too much on one quarter. Yes, we had a very good quarter with high or very high single-digit growth for the commercial side. I think if you look at relative performance in the market, I think you should look over a much longer period. And if you look over a longer period, what we definitely have done in the U.S. or in North America is invested heavily in new product development coming with a lot of new products, extending our product range and also further verticalizing our sales organization with dedicated sales teams for the different verticals. And we are convinced that those 2 actions definitely have helped us in our relative position in the market.

Okay. So just to follow up on the last point. Do you think that this is just the cumulative effect of the positioning in the business in the U.S. rather than anything specific to the quarter related to early buyout tariffs?

No, I don't think that early buyout tariffs has something to do with it. That's not something that would move the needle significantly. I think it's just a very good strong execution by our very strong Americas team.

The next question comes from the line of Gael de-Bray from Deutsche Bank.

Could you elaborate on the pricing dynamics, please? I mean it was only 1% this quarter despite the impact of the tariff. So can you perhaps help us frame the magnitude of the pricing effects that we could expect to see maybe in the third quarter? That's question number one.

Gael, I don't know how you commented and say that it was only 1%. We said in the call, Erik and myself, that it was a low 2% price component in the quarter compared to a high 1% in Q1. So we have started to see pricing to compensate for tariffs kicking in, I would say, mainly towards the end of Q2 because like I mentioned earlier, we still had and have stock in the U.S. from prior of the tariffs.

So there was not a very urgent need to increase prices for the tariffs, but we were able to fully compensate, as you have seen on the volume leverage, as you have seen on the EBIT margins, we were able to fully compensate for the tariff cost and keep the margins through the price increases. And therefore, you see that uptick from a low 1% to -- from a high 1%, sorry, to a low 2% in Q2. We should not forget that the tariff is only on the U.S., so it's only on less than 50% of our top line.

Okay. Understood. But then the pricing contribution is expected to move up, I guess, sequentially in the third quarter, but the tariff headwinds will probably also accelerate in that same quarter. So all in all, I mean, how do you feel about the price versus cost looking at the third quarter in the U.S. on a sequential basis?

We made a calculation and things, of course, change every day, but we made the calculation 2 days ago with the tariffs as they stood 2 days ago. If we want to fully compensate for the tariffs and protect the margins and do that only with price increases, we would need a price increase between 4% and 5% in the U.S. Obviously, that 4%, 5% is on half year, and it's on half of our top line. So you could say that the tariff price component for the second half of the year should be around somewhere around 1%. Then obviously, we will not only do and compensate for price increases, we're also working hard on renegotiating with our suppliers to get better deals.

We see that suppliers are receptive to the idea of keeping business for trading in some of their margin. And we also continue to relocate some of our products from, let's say, higher tariff countries to lower tariff countries. So all that together, and it's clear that pricing is the main component. We are confident that we will be able to compensate for the tariffs and keep the margins from a tariff cost perspective. And like Erik mentioned, you have seen over the last quarters, the accretion price versus cost going down. It was 60 basis points this quarter. We expect that to be still positive, but lower now in Q3 and further fading out as the big effect of hyperinflation and, therefore, strong price increase in previous quarters or previous years starts to fade out.

We now have a question from the line of Marianne Bulot from Bank of America.

I wanted to focus a little bit more on the residential segments, especially in EMEIA and APAC. Just wondering in Europe, do we need to wait a full year to see the recovery as we have seen for Sweden? Just wondering if you've seen any kind of signs of bottoming or if you see continued softness for H2?

Of course, we also don't have the glass ball to look into the future. Let's say that we are a bit more confident on Europe than on the U.S. because in U.S., you have that gap, like I mentioned earlier, between where people have their loan and interest rate at which they have the loan today versus where the interest rates stand. It's true that in Europe, if you take EU, the ECB has lowered interest rates now 4, 5x. But it's too early to see that already being translated in more activity for us because we are also more towards the end of the construction cycle.

So we believe that, that recovery on the residential side is much -- is more something for next year, not for the second half of the year. Then it's true that in Europe, the comparison obviously becomes easier because it's now already 2 years that Residential went down. The positive side, like I mentioned earlier, is Sweden. They were the first in lowering interest rates. And it's also a country with 100% variable interest rates, so things -- reaction time is much faster. And in Sweden, we see that recovery from a low level on the R&R side. We don't see that recovery yet on new build, but we are confident that, that will be the next stage for Sweden.

Obviously, Sweden is a very important market for us. It's a bigger part of our EMEIA sales, and it's also quite importantly exposed to residential. If you take APAC, China, no recovery at all. Again, market down double digits on the residential side this year. So definitely no recovery this year. The other markets Australia or South Korea, I would say, are very similar to EU. And New Zealand is very similar to Sweden. Also in New Zealand, we had several interest rate cuts earlier a year ago. And there, we also see the recovery on the R&R side and where the new build also will start to recover as of -- from now.

The next question comes from the line of James Moore from Rothschild & Co.

A couple, if I could. On the Americas, the good commercial result, is that more on the private side or on the institutional side? And with the One Big Beautiful Bill, do you have any clarity on what that means for the next few years of institutional spend? I just get the sense that education and health care has been pretty good for a while now. And I wonder whether that's ever going to peter out or whether it's going to keep on being very strong because of U.S. fiscal actions. That's really the first question. And the second one would be on HHI. I understand that the market is dead. But in terms of your endogenous internal developments, could you just expand a bit about what's going on and what's keeping you busy?

Yes. So on the Americas commercial or nonresidential growth, obviously, it's -- if you have high single digit, it has to come from both. It has to come from institutional and noninstitutional. But it's clear that institutional is a bigger driver than noninstitutional. And you're right, 2 important verticals for us, education and health care are performing strongly. Now looking to the future, it's very difficult to predict. The only internal indicator we have is our spec business. And like I mentioned, our spec business was up double digits in the quarter and was, again, strong contribution from health care and from education. So we don't see any slowdown in those 2 important verticals for us. So we are still very confident that the nonresidential side will continue on a good level going forward.

When it comes to HHI, so like I said, a flat top line development and I think very good operational execution in the Residential North America segment, as we call HHI today. To that aspect, remember that we said we have the ambition to grow -- to improve our bottom line quarter after quarter compared to the previous quarter and compared to the quarter a year ago. Q1 was the first quarter where we did not deliver on that ambition. I can say that now in Q2, we strongly delivered on that ambition. We have seen a strong improvement of our bottom line to that extent that we definitely overcompensated for the negative development in Q1, and we are back on track towards that ultimate goal of 16% EBIT for HHI once the $100 million bottom line synergies kick in.

We have put a new organization structure in place for North America Residential segment in July -- or June, July last year, where we created, you could say, subsegments. We have QuickSet Mechanical, QuickSet Electromechanical Digital. We have a hardware subsegment. We have a Private Label subsegment. We have the Faucet segment and then we have the Luxury Hardware segment. And we run those now as separate P&Ls to, I would say, to implement proven ASSA ABLOY concept, giving responsibilities lower down in the organization and fine-tuning actions more on a lower micro level. And those actions also start to bearing fruit, I would say, as well on the top line, where the new products that we launched on the digital side definitely helped in an important way to keep top line flat, and they also help on the bottom line on our ambition to increase the bottom line quarter after quarter.

Just how sustainable that is?

We now have a question from the line of Anders Idborg from ABG Sundal Collier.

I just wonder if you could say a bit more about the drivers in Entrance Systems, you say strong sales growth in Perimeter. I know it's not the biggest area, but it's a highly profitable one. So is it data centers mostly? Or is it broader based across logistics? And the other part is just did anything turn for the better there in residential, which has been pretty slow before?

Well, on the Perimeter Security side, I would say it's a result of a lot of very good actions that we have done over many years. Also on the Perimeter Security side, we have segmented the market and have now tailored solutions for the different verticals, be it the data centers, be it logistics warehouses, be it embassies. And that focused approach, we've also dedicated solutions and sales teams definitely has boost our sales. We believe that definitely, we are doing better than the market in Perimeter Security. And like you mentioned, it's indeed the best margin we have in Entrance Systems. So from a mix perspective, that also helps bottom line-wise.

We don't see any slowdown. We are confident that we can continue and keep that good work also going forward. Obviously, the boom in data centers helps because they also do fencing for data centers. I would say that the fact that in general, we don't live in a more secure world and people want to secure their places better also helps. And then perhaps the tariffs also on steel, in particular, help us is that it also gives us a competitive advantage over some of our colleagues, competitors in the market that import products from overseas as producing everything locally in the U.S. made in the U.S. for the U.S. gives us that competitive advantage.

On the Residential side, we had indeed positive growth. It was mainly because of an easier comparison because, again, we don't see the residential market recovering yet at a significant way in the U.S. And then I mean, it's difficult again to say that you do better than the market in one quarter. I think you should look over a longer period to judge if you gain market share or not.

Okay. And could I ask if you could be a bit more specific, what kind of growth rates ballpark are we talking about over the past few quarters in Perimeter, just to have a sense?

Yes. I think if you take the last 3 years, you talk about, on average, high single-digit organic growth per quarter. Then obviously, it fluctuates very much by quarter because it depends if you get a big project or you don't get a big project and the comparison with last year. But if you take the last 3 years, it's high single-digit CAGR.

The next question comes from the line of Rizk Maidi from Jefferies.

I just have a couple, and maybe I'll take them one at a time. Nico, maybe just on the demand throughout the quarter, have you seen any major differences between sort of April versus May and June? And if you could just comment on how Q3 started so far, please? I'll start there.

Yes. So April and May was, I would say, very much in line with Q1, if you correct for the working days. And of course, you have also the holiday periods in April and May. But then June was better than April and May, again, if you correct for the working days. And June, obviously, is the biggest month in Q2 because there's less holidays in June than in April and May. And we have seen that higher growth rate of June continuing now in the first week or the first weeks of July.

Yes. Perfect. And then maybe can you comment on your pricing outlook? I think you mentioned on the call that you need 4% to 5% price increases in the U.S. to offset the current environment of tariffs. And obviously, you're going to do some efficiencies, et cetera. Just maybe how do you see the pricing component now for the full year if current tariff environment don't change?

I think your last comment is very important if tariffs stay, it looks like tariffs change every day. But like I mentioned, if we -- and we have that ambition, and we are confident we will be able to do so to compensate fully for tariffs and keep the bottom line, that should give us an extra 1% price component on group level for the second half of the year. So before we said that a good price number was 1.5%. So you should add another percent to that. So it should be somewhere around 2.5%. Then we will see how things play out with the tariffs. But the 2.5% should be a good indicative number to go forward.

Perfect. And then just to understand the margin development now in Q2, just to be clear, so mix was neutral and then price cost contributed 60 basis points, basically, right?

Correct.

If you talk on direct material, yes, of course, it depends on where you look on mix. If you look mix on bottom line, obviously, the fact that we grew very good in Global Tech and in Americas helps because it's the 2 divisions with the better margins.

Yes. Because for example, if I take Entrance Systems, I mean, the drop-through was quite massive with just a weak -- I mean, low volumes, right? Just how sustainable that is?

Well, I think if you look at the margins for Entrance Systems and you exclude SKIDATA, you will see that margins have been very stable for the last 2 years on a high level. And like we mentioned or like Erik mentioned, we should expect price versus material to be less accretive going forward. On the other hand, we should have less dilution from SKIDATA going forward. Then everything will depend on the mix, how much can we grow service versus equipment, how much can we grow Perimeter Security versus the others.

Perfect. And the last one, and I promise. You've talked about project delays in the U.K. Maybe if you could just quantify those? And I guess these should come back now in H2?

Yes. I think we had expected a small positive organic growth in the U.K. In reality, we had a small negative organic growth in the U.K. and the difference between the 2 was some project delays on the commercial side and also an unfavorable comparison with last year where we got a big project on the commercial side. So we are confident that we should see growth in the U.K. now going forward.

We now have a question from the line of Nick Green from Bernstein.

The question is on HHI. Can you just give us an update on your planned disposal processes? You mentioned that the faucets business has been put into a separate subdivision. But just remind us again, please, on what your intentions are for some of the businesses that you hadn't originally intended to keep and if there's any status update there?

Yes. It's interesting that you say that can you talk about the divestment of the faucet business because I think we never have said that we will divest the faucet business. We have said always that we will, at the right moment in time, look at the faucet business and to see if that is something that fits in our portfolio or not. Up till, I would say, yesterday, this was not really something we were looking into it for the simple reason that we had our TSAs, our service agreement still with Spectrum brands, and they were for the complete HHI organization. And if we would already decide to divest the faucet business, that would have been very complicated with the TSAs. We are now since mid of May out of the TSA.

So that is not an argument anymore, but we have decided and we had to decide also to focus our activity on other things. One is on realizing the synergies because we see still a lot of synergies that we can grasp and we prioritize that. And then you will appreciate that we have been very busy with all the tariffs and the tariff movements over recent months. But it's definitely a strategic question that we will take up now and see what we will do with the faucet business going forward. I would say that's the only strategic question that we have on HHI. All the rest is very obvious that it is core to what we do, and there's no discussion of eventual divestment of anything else in HHI.

Okay. Then maybe just a quick follow-up on the same topic. Should we understand the faucet business to be margin dilutive to HHI? In other words, to get HHI up to your target of 16%, can you do that whilst keeping the perimeters you currently have it? Or would you need to make a decision on the faucets to do so?

I can say that the faucet business today is a profitable business. It's definitely not a burning platform. That's also why we did not prioritize a possible decision on faucet business earlier in the stage. We didn't know faucet business before we bought HHI. I think it's an interesting business, very similar to what we do in our core. Obviously, it's not -- it has nothing to do with access solutions. Then going forward, that will, of course, be part of the analysis that will lead to a possible decision is how much can we improve margin on faucet business and how can we eventually have a sustainable position there or not. So we'll take that with us in the strategic review and that then will lead up to a decision, yes or no.

We have a follow-up question from the line of Midha, Vivek from Citi.

My follow-up is on the EMEIA margin, 13.9%, even though you benefited 50 basis points from the stronger SEK. And we are now gradually seeing a recovery in the Nordics, which is margin-accretive. So could you maybe talk about your expectations for the path towards the historical margin level of around 16%? Are there any other actions that you're taking in order to drive that improvement?

Well, it's clear that we are not happy with the margin of EMEIA where it stands today. The lower margin in Q2 has, of course, everything to do with the minus 1% organic growth. Think we have today a very good cost structure in EMEIA that if we can get a little bit of positive organic volume growth that we should start to see very good volume leverage and very good margin accretion. But obviously, we need that organic volume growth to come back. EMEIA, as you know, is very exposed to residential, around 45% of what we do in EMEIA is residential. And therefore, to have really true strong organic volume growth, we need the residential market to turn not only in Sweden, but definitely also in the EU.

That being said, I think we are confident that things will improve in EMEIA now in the second half of the year. And we still have that ambition to, over time, go to the 16% target level for EMEIA. But for that 2 things have to happen. The SEK has to be strong or remain strong because the SEK diluted our results a year, 2 years ago in a significant way. It has up now in the last 6 months. So -- but that trend should continue. And the residential market has to turn. If those 2 things happen, I'm very confident that we will come close to that ambition of 16% for EMEIA.

I think we have -- operator, I think this means we have time for one more question.

We now have a question from the line of Andre Kukhnin from UBS.

I just wanted to come back to LatAm. You mentioned a couple of times quite insistently that you're concerned about what's happening there vis-a-vis tariffs. Have you seen your kind of order book deteriorating there already or any other tangible signs of that happening? Or is it just a broader kind of cautioning given what we're seeing in the news?

Sorry, the question was specifically when I made the comment on Brazil's tariffs. But tariffs in general or tariffs...

Yes, Brazil...

Yes.

No, I just meant -- I think there's a couple of times in the call and Q&A where you specifically commented on concerns over, I think, outlook for Brazil and Mexico, given the tariffs announcements. And I just wanted to check if that's something that you're already seeing evidence of demand deteriorating there? Or is that just a concern given the footprint?

No, it's more a concern given the footprint. If you look at the last 3, 4 years, we have had very strong positive development in Mexico and even better in Brazil. So the only negative thing is perhaps the strong comparison with a year ago for Brazil and to a certain extent, also Mexico. But it's not something we see in the numbers. It's more a concern because also the announcement of Mr. Trump was just from a couple of days ago, right? It would be too fast to see those results already on Brazil.

I actually think we can take one more question, operator.

The next question comes from the line of Tommaso Nocchi from Goldman Sachs.

The North America commercial performance that you talked about is related to prebuy linked to tariff, if any of that is related to that?

I think that question came earlier. We don't see that the growth in the Americas is linked to prebuying of the tariffs. It's nothing significant, no.

Excellent. Well, that means it's time to round up the conference now. And if there are any follow-up questions, as always, feel welcome to reach out to Isabelle or myself at Investor Relations. So then it only remains for us to wish you a wonderful summer and a wonderful break, hopefully soon. And we will speak with -- to many of you after the summer break. Thank you for today.

Thank you.

Thank you.