ASSA ABLOY posts decent Q2, but high interest rates and tariffs loom large in the Americas

STOCKHOLM — ASSA ABLOY credited its decentralized strategy for its positive organic volume growth for the second quarter in a row, but challenging market conditions in the West and a decline in sales for EMEIA and Asia Pacific cast a pall over gains. 

During a recent webcast, President and CEO Nico Delvaux expressed optimism for the company’s performance, backed by 3% organic growth and acquired net growth of 5% for the second quarter. This is despite a decline in growth for China and a global residential market in stasis. 

Residential redux? 

In the global residential market, rate cuts in Europe have yet to produce an expected recovery and high interest rates in the United States continue to dampen progress, Delvaux said. During the Q&A of the webcast, however, one participant noted that despite those high interest rates in the U.S., the residential segment seemed to rise from the previous quarter. 

“If you take North America commercial side, (it) continues to be, yes, good momentum, perhaps not as hot as three years ago, but very good momentum,” he said. 

Tariff threat 

Delvaux cautioned, however, that he doesn’t see much change coming for the Americas in the near future due in part to the looming threat of tariffs affecting Mexico and Brazil.  

“A big explanation there is that the Americas also has an important steel door business,” he said.  
“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, with all the tariff situation, steel will go up again and that will also give us then the possibility to again increase prices on everything that is steel.” 

By the numbers 

• Net sales totaled SEK 38,015 M (37,968), with organic growth of 3% (–1) and acquired net growth of 5% (11). Exchange rates affected sales by –8% (0).  

• Organic sales growth was strong in Global Technologies and good in the Americas. Entrance Systems had a small organic sales growth, while organic sales declined in EMEIA and Asia Pacific. 

• Five acquisitions with combined annual sales of about SEK 800 M were completed in the quarter. 

• Operating income1 (EBITA) increased by 2% to SEK 6,555 M (6,434) with an operating margin of 17.2% (16.9). 

• Operating income1 (EBIT) increased by 1% to SEK 6,155 M (6,085), with an operating margin of 16.2% (16.0). 

• Net income1 amounted to SEK 3,962 M (3,927). 

• Earnings per share1 amounted to SEK 3.57 (3.54). 

• Operating cash flow amounted to SEK 5,452 M (5,604).