Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Assa Abloy AB (ASAZF, Financial) reported a record high EBIT of SEK6.3 billion, with an EBIT margin of 16.7%, the highest for Q3 in seven years.
- The company achieved a strong cash conversion rate of 118%, indicating efficient management of working capital.
- Assa Abloy AB (ASAZF) completed seven acquisitions in Q3, contributing to a 4% net acquired growth, and 18 acquisitions in the first nine months of 2024.
- The EBITA margin reached a record high of 17.7%, showcasing improved profitability.
- Positive organic growth was reported in key regions such as North America and Europe, with North America showing a 1% organic growth and Europe 2%.
Negative Points
- The residential market remains challenging across all major regions, impacting overall growth potential.
- Asia, particularly Greater China, experienced a significant decline with an 18% drop in organic growth due to deteriorating market conditions.
- The company faced a negative currency impact of 3%, primarily due to SEK versus the dollar.
- Organic sales in the Asia Pacific region declined by 6%, with negative sales growth in most parts of the division.
- Entrance Systems saw a 2% decline in organic sales, affected by challenging conditions in the logistics vertical and the residential market.
Q & A Highlights
Q: Can you comment on the start of the current quarter and any signs of recovery mentioned in your outlook?
A: It's difficult to judge the run rate due to holiday months, but September and October have shown similar run rates. We haven't seen significant changes up or down.
Q: What prompted the divestment of the Citizen ID business, and are you actively reviewing other parts of the portfolio?
A: We regularly review our portfolio. Citizen ID was divested because we were not a market leader, and it was challenging to meet our financial ambitions. The business model was also different from our core operations.
Q: How do you see your major end markets evolving in Europe and North America in 2025?
A: It's difficult to predict due to political and economic uncertainties. However, we expect to continue operating in a higher inflationary environment, with potential interest rate reductions in Europe and North America positively impacting the market.
Q: Can you provide insights on the SKIDATA acquisition and its margin improvement potential?
A: We aim to bring SKIDATA to double-digit margins within three years. The business currently operates at low single-digit margins, and we expect significant margin improvements as part of the payback.
Q: Could you discuss the pricing dynamics and regional differences, particularly in light of slowing price increases?
A: Pricing remains strong, with a focus on non-steel-related products. We continue to implement price increases where possible, except in China and certain channels. We expect to maintain at least a 2% price increase for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
