Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Assa Abloy AB (ASAZF, Financial) reported an 8% increase in top-line growth, with 2% organic growth, 5% from acquisitions, and 1% from currency effects.
- The company completed six acquisitions in the quarter, contributing to a strong acquisition-driven growth.
- Strong sales growth was observed in the Global Technologies and Americas divisions, with positive developments in commercial non-residential sectors.
- The company launched the MFP10 manufacturing footprint program, expected to yield SEK1 billion in savings by 2027.
- Assa Abloy AB (ASAZF) maintained a strong balance sheet, allowing continued pursuit of its acquisition strategy.
Negative Points
- The operating margin was diluted by 140 basis points due to one-off acquisition and divestment-related costs.
- Sales declined in the Asia Pacific region, particularly in Greater China, due to deteriorating market conditions.
- The residential market faced challenges across multiple regions, impacted by high interest rates and economic uncertainty.
- Operating cash flow decreased by 22% compared to the previous year, partly due to increased inventory levels.
- The company faced significant tariff-related challenges, particularly with a 145% tariff on Chinese imports, affecting pricing strategies.
Q & A Highlights
Q: Can you elaborate on the actions taken regarding tariffs and pricing, and how you expect this to evolve over the year?
A: Nico Delvaux, CEO, explained that the company aims to increase prices by 1.5% this year, excluding tariffs. Tariffs, however, are unpredictable and can change daily. Currently, Assa Abloy produces 70% of its US sales domestically, with 15% from North America and 15% from other regions, mainly China. The company has already raised prices to offset normal tariffs and plans significant increases if the 145% China tariffs persist. Delvaux noted that competitors face similar challenges, and the company is exploring alternative production locations.
Q: How has April started in terms of daily sales?
A: Delvaux stated that February was slightly better than January, and February, March, and early April have shown similar percentage growth compared to last year, when adjusted for working days.
Q: Have you started raising prices in response to the 145% China tariffs, or are you waiting for a resolution?
A: Delvaux confirmed that prices have been raised partially before the 145% tariff announcement. Significant price increases have been implemented for some products, with further increases planned if the tariffs remain. Adjustments will be made if tariffs decrease.
Q: Regarding the Global Technologies margin, how do you expect M&A dilution to affect the year?
A: Delvaux noted that the SEK50 million Citizen ID divestment is a one-off, and similar costs may occur if the remaining part is sold. The dilution from InVue is also a one-off, and the current numbers should not affect Q2 and beyond, except for potential costs from the remaining Citizen ID business.
Q: Do you still see the 16% to 17% EBITA margin range as a good guide for the year, considering M&A dilution and tariffs?
A: Delvaux reaffirmed confidence in achieving a 16% to 17% EBIT margin over a business cycle, despite current dilutions from acquisitions like SKIDATA and HHI. He noted that if China tariffs normalize, the company could slightly overcompensate for tariff costs through price increases and cost savings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
