Assa Abloy (ASSA) Q3 2024 earnings summary

Executive summary

• Achieved record operating profit in Q3 2024, with EBIT up 8% year-over-year to SEK 6.3 billion and operating margin at 16.7%, the highest in seven years.

• Sales grew 1% year-over-year to SEK 37,418 million, with 0.3% organic growth, 4% acquired net growth, and a -3% currency impact.

• Seven acquisitions completed in Q3, totaling 18 for the year, representing annualized sales of SEK 7 billion, including SKIDATA and Level Lock.

• Announced divestment of Citizen ID business, expected to close in Q1 2025, with annualized sales of SEK 1.3 billion.

• Net income rose 10% year-over-year to SEK 4,033 million, and EPS increased 10% to SEK 3.63.

Financial highlights

• EBIT for Q3: SEK 6,255 million (+8% year-over-year); EBIT margin: 16.7% (record for Q3 in seven years).

• Sales Q3: SEK 37,418 million (+1% year-over-year); organic growth 0.3%, acquired net growth 4%, FX -3%.

• EBITDA margin at a record 17.7%; gross margin improved to 42.1% (+1.1 pts).

• Cash conversion at 118%; operating cash flow Q3: SEK 6,341 million (-12% year-over-year); net debt/EBITDA at 2.3.

• Return on capital employed at 14.2%; net debt/equity at 66%.

Outlook and guidance

• Market conditions remain challenging in residential and logistics segments, especially in Europe and Asia Pacific.

• Expect continued tailwind from price vs. cost in Q4 and Q1, though at a slightly lower level.

• Confident in achieving at least 2% price increase for the full year.

• Acquisition and divestment effects expected to add 5% to Q4 2024 sales, with neutral impact on operating margin; currency effects estimated at -3% and dilutive.

• Anticipate gradual recovery in residential markets as interest rates decline, with the US expected to recover before Europe.