ASAZF (ASAZF) Q3 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the ASSA ABLOY Interim Report April-September 2026 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Björn Tibell, Investor Relations. You will now be joined into the conference room. Björn Tibell: Hi, everyone, and welcome to the presentation of ASSA ABLOY's Q3 report 2026. My name is Björn Tibell. I'm heading Investor Relations. And joining me here are ASSA ABLOY's CEO, Nico Delvaux; and our CFO, Erik Pieder. We'll start this conference now with a summary of the report. And when we're done with that one, we will open up for your questions. So Nico, I would like to hand over to you then.

Thank you, Björn Also good morning from my side. Q3 report, report with a lot of record top line. For the first time in our history, sales of above SEK 40 billion with a good organic sales growth of 4%, with the Americas divisions and EMEIA division contributing in the first place. Also a record high EBIT for the first time, above SEK 7 billion, and a record EBIT margin of 17.4%. Excellent operating leverage close to 50%. And cash flow, second best cash flow ever, an increase of the cash flow of 6% versus last year. Also this third quarter, again, strong growth of our electromechanical product category. They had an organic sales growth of 9% in our regional divisions. And we completed 3 acquisitions, and we will also launch our new manufacturing footprint program, MFP 11Erik Pieder in Q4. If we look a little bit into the numbers, sales of almost SEK 41 billion, 7% up, 4% organic growth, 2% net acquired growth. And this quarter, again, a positive effect on FX. That's because of the weak effect plus 1%. A record EBITDA margin of 18.7%, 80 basis points up. EBIT margin, like I mentioned, 17.4%, 60 basis points up. EBIT above SEK 7 billion, 11% up. And our earnings per share, 14% up. If we make a little bit the tour of the world, starting in North America, and I would say a very similar market conditions, as I mentioned in Q2 and perhaps as in Q1 in North America, still very strong market conditions on the nonresidential side, commercial and institutional, where we continue to see very high activity. Residential, still much more challenging now definitely also with the [ Fed ] again, increasing interest rates, where we don't see that recovery on the new build any time soon yet. Where at least on the R&R side, we believe the market has bottomed out, and we see a slight recovery of the R&R business in North America. Our logistics vertical, important for Entrance Systems. Also there, still a more flattish development of the market. If we go to Europe, similar picture as in North America. Also here, a very strong nonresidential market conditions. Perhaps on the residential side, a little bit more positive than in North America. Here, we see R&R definitely coming back with a lower growth rate. And we even see new build in some markets like Finland and Sweden starting to grow again. And similar on the logistics side, also here, logistics side, no recovery. Even though that is something the market most probably still a little bit down in Europe. And in Australia and New Zealand, similar as Europe and North America here, good strong market conditions on the commercial side, weaker residential in Australia and good residential in New Zealand. LatAm, still good market conditions overall in most markets in LatAm. We have also now had elections in Brazil. Let's see how that plays out. Africa, smaller continent for us. And then in Asia, a very mixed picture where we see good market condition and good growth for us in India, in Southeast Asia. And where we see a continued challenging market conditions in South Korea with housing markets down double digits. And then also in Greater China, the market is not recovering where we also are still having a negative growth. Some highlights from around the world. DoorBird expanded its portfolio with the world's first IP video door station with 4G/5G connectivity mainly for residential and commercial applications. Entrance Systems expanded their swing-door portfolio with a new door operator designed for interior applications, offering a more streamlined solution for everyday use. And then on the project win side, a very nice project win in Germany for a premium automotive manufacturer with our e-click solution, where the contract includes more than 15,000 cylinders, so very nice big project win. There's now 7 quarters in a row that we see again positive organic growth, and I would say an acceleration of that organic growth, and still complemented with good growth through acquisitions. So top line that goes up and also an operating margin that goes up towards the higher end of the 16% to 17% bandwidth we want to be in. Year-to-date, we are at 16.6%. On a 12-month moving terms, we are at 16.7%. And EBITDA, like I mentioned earlier, also at a record high, 17.8% on a 12-month moving trend. So higher top line, better margins, therefore, also strong acceleration of our operating income, back of above SEK 7 billion for the first time and 81% up if we compare with 2021. On the acquisition side, like I mentioned, 3 acquisitions completed in the quarter, 11 completed year-to-date. Those 11 acquisitions represent an annualized sales of around SEK 3.2 billion. If I highlight 2 of them that we did in Q3, Classic Brass, U.S. manufacturer of premium cabinet and door hardware, complementing, extending our core for the Americas division. They had a sales of around SEK 155 million last year. And the PACLOCK, an acquisition that complements our organic development of PACLOCK product range in North America. Very excited about this acquisition. It's expertise in delivering, I would say, customized high-security solutions. They had a sales of around SEK 155 million last year. If we then dig into the different divisions, starting with EMEIA. EMEIA had another very good quarter with an organic sales growth of 5%, with very strong sales growth in Central Europe. Good sales growth in Middle East and the Africa and the Nordics a small growth in South Europe and then a stable growth in U.K. and Ireland. And then an excellent operational execution with an EBIT margin of 15.8% with a strong operating leverage, 110 basis points driven by operational efficiencies, of course, the volume growth and then a good price versus cost realization. FX was dilutive 10 basis points and M&A, 20 basis points. But we continue the positive journey, I would say, in the EMEIA division. Also a very strong quarter for the Americas, with an organic sales growth of 6%, with strong sales growth in the North America nonresidential segments. A good sales growth in LatAm and in the North America residential segment. And then I would say excellent EBIT margin of 19.6%, 110 basis points up compared to last year, with an excellent operating leverage, 140 basis points, and M&A dilutive 30 bps. APAC. APAC had an organic sales decline of 1%, a small sales growth in Pacific Northeast Asia and a sales decline in Greater China Southeast Asia where, as I explained earlier, you should see this as a double-digit negative growth in Greater China and strong positive double-digit growth in Southeast Asia. So a very different mixed picture. An EBIT margin of 9.8%, with a stable operating leverage. And FX and M&A, both dilutive 20 basis points. The M&A is more an internal transfer. We transferred the residential business from HHI in Taiwan to the APAC division. Global Tech, an organic sales growth of 4%. We have strong sales growth in HID and a good sales growth in Global Solutions. And I would say, an excellent EBIT margin of 20%, even higher than the very high 19.8% number of last year. Also here, excellent operating leverage, 80 basis points, and FX and M&A both dilutive 30 basis points. And then last but not least, Entrance Systems, an organic sales growth of 3%, strong sales growth in pedestrian and in perimeter security. A small sales growth in doors and automation, but then a decline in industrial. Good growth in service, and an EBIT margin of 17.1% with a strong operating leverage, 40 basis points. And then M&A, dilutive 70 basis points, that is related to the biggest Sentinel acquisition we did in Canada and then also related to acquisition costs for the upcoming Gunnebo Entrance Control acquisition that we are confident we will now be able to close in Q4. And with that, I'll give the word to Erik for some more details on the financial numbers.

Thank you, Nico, and a very good morning also from my side. As mentioned before, we had a record high sales of -- the first time above SEK 40 billion, 7% up versus same period last year. 4% organic, 2% from acquisitions and 1% positive from currency. The impact, of course, in the SEK Continues to weaken. We expect when we calculate then from end of September, that we're going to have a positive impact from currency in Q4 of about 5%. EBIT also record first time above SEK 7 billion, up 11%. Here, just to mention that we have released a mid-single dollar -- mid-single million dollar amount into our results, which sort of slightly helps it positively. EBITA, as mentioned, 18.7%, up 80 basis points. EBIT, up 60 basis points. Income before tax, net income and EPS all are up with 14% cash flow, also very strong at 6%. Should also keep in mind that we -- this quarter also had a higher CapEx which is related to -- that we have acquired 2 buildings in Entrance North America. If we exclude these 2 buildings, our cash flow would have been 13% up versus last year. Also encouraging to see that our return on capital employed is up with 70 basis points and are touching now the 15%. Operational value-added, also up by 10%, and is now close to SEK 12 billion. If we look on to the bridge analysis and look on the organic price was a strong 2, which consequentially means that volume was a weaker 2. The currency, as I mentioned before, is related to the SEK. The flow-through ended at 47%, which is driven by the organic leverage then from price versus cost as well as manufacturing footprint savings this quarter, it was slightly above 200 million, as well as other kind of operational efficiencies that we can do. And then if you look on M&A, it's up with -- it was top line, it was contributing with 2%. Bottom line, it's dilutive, but it has to do, Nico mentioned before, the Sentinel acquisition and also acquisition costs coming from that as well as acquisition costs related to Gunnebo, which we hope to close before the end of the year. If we then look into the direct material or the cost breakdown. Direct material is 80 basis points better than last year. Out of that, if I call it, the true price versus cost, is plus 60 basis points. We see, however, in the market now that raw material, electronics, plastics are going up, but we are confident that we can mitigate that with additional price increases. Conversion cost, 20 basis points better. As mentioned before, we have operational efficiencies, MFP and so forth. SG&A is at a similar level as where it was last year. We have been able to continue to invest in R&D as well as selling, and this has been offset by admin and back office efficiencies, including, I would say, the first results that we see of our AI initiatives. Operating cash flow, as mentioned before, including the buildings, we are 6% better than the same period last year, excluding 13%. Whether if you look on cash conversion in the quarter, it was 117%. And if you look on the 12-month rolling, it's at 109%. Gearing and net debt to equity landed at 54%. We continue to drive also down the net debt to EBITDA and was now at 2.0. And if you look over a year period, we have been able to lower our debt with roughly SEK 2.5 billion. And we said we continue to have a very strong balance sheet, so we can continue our acquisition strategy going forward. If you look on the last slide, I mentioned the number before. Earnings per share was up with 14% versus same period last year. And with that, some concluding remarks, Nico?

Good. So like we said, we believe, up to you to judge, of course, but we believe a very good quarter with a lot of record top line, with good organic sales development of plus 4%, record operating profit and record margin and the second best cash flow in our history. And like we mentioned, we will launch now in Q4, our manufacturing footprint program #11. I would say that we are proud of what we have accomplished in the first 9 months, and we are confident in our ability to deliver another strong year for ASSA ABLOY. With that, I'll give the word back to Björn for Q&A. Björn Tibell: Thank you very much. Yes, that means it's time to open up for your questions. [Operator Instructions] operator, that means that we are ready to kick off the Q&A session. Please go ahead.

[Operator Instructions] Our first question comes from George Featherstone from Barclays.

The first one just on EMEIA Obviously, you talked recently about having some tailwinds from this needs to regulation and the growth has obviously been very strong again. So I just wondered if you could pass out for us what the contribution you think is from that regulation this quarter? And then just on the margin, obviously, it's trending towards the sort of 16% it was before on the EBIT level in the region. But you're having good volume growth. What's the sort of next step to get us back above 16% from here?

George, I can say, we are very happy with the development of EMEIA over the last 4 quarters or so, you could say, because we have really seen organic volume growth coming back, and we have seen an acceleration of that organic volume growth. And I would say that is very wide spread. Yes, needs to contribute, but needs to contribute much probably around 0.5% organic growth. Because this to today is still very much DACH related, you could say, and Nordics related. It still has to pick up at a higher speed in the rest of Europe. And we are confident that, that will happen going forward because that's normally also how things happen in Europe, things first start in the Nordics and perhaps in the DACH and then it's spread more over the rest of Europe as also the local counter start to adapt the European directive into a local law. But I would say it's much more widespread. We see a very good volume growth on the commercial side in most if not all markets. We have, of course, the emerging part within the Middle East and Africa that also contributes. And then like I said, on the residential side, we are a bit more positive than in North America, where we see R&R slightly coming back and where we even have seen new builds a little bit coming back in countries like Sweden and Nordics. And then, of course, next to the organic volume growth, we have also the price component as we continue to see higher inflation. That also gives us then the possibility to further increase prices in EMEIA. When it comes to margin, you see if you have a little bit of organic volume growth and you see an acceleration of that organic volume growth, you see also a better volume leverage, and that volume leverage then leads to better bottom line results. If you see in EMEIA, the last 3, 4 quarters, they have been able to improve margin sequentially quarter after quarter. And I'm confident that, that will continue for the next quarters as we -- confident we will continue to see that organic volume growth. They have a very good cost structure that with a little bit of organic volume growth, we can get very good operational efficiencies.

Just a follow-up on what you said on Global Solutions as well, mostly in the release. You talked about this temporary depressed retail segment. Can you just give us a little bit more context and kind of how temporary that will be? When you think it will recover? Clearly, you can see something in the order book, I guess, otherwise in September.

I would not say it's depressed. It's perhaps more an operational execution challenge at 2 of our bigger customers for the InVue business. I think HID and Global Tech had a very good quarter, very good solid organic growth. Global Solutions, the same thing if you exclude InVue. InVue is very dependent on a couple of bigger customers that have placed very big orders with us. And they have some delays in operational execution of those projects, you could say. So some of that sales is now postponed until Q4 and most probably even to Q1 next year. So I would say it's no drama, it's just a little bit delay in us receiving the sales. And in a way, perhaps it's even good for us because InVue is very seasonal. Normally, Q1 is very weak. So if we can get now some sales that we should have gotten in the second half in Q1 next year, it will help also due to the seasonality. So that's the reason why perhaps Global Tech is a little bit weaker than anticipated on the organic outside. And perhaps you see -- just a comment if you see then, if we have a little bit less organic growth, then we also deliver on our problem is that at least we will deliver the bottom line and the cash flow because you have seen very strong bottom line and cash flow. Sorry, go ahead.

I was just going to say that can you quantify the amount of the InVue slippage maybe in terms of organic growth?

I don't know. To be honest, I can't say exactly the number, but I would say it's between 1 and -- on Global Tech, the level is around 1%, I would say.

The next question comes from Phil Buller from JPMorgan.

Firstly, I was hoping if you could help us understand if there's any one-offs on the resi side in the U.S. Good growth here seems to be obvious with the leading indicators. So is that a one-off ahead of price increases? And is there anything one-off in the 140 bps operating leverage such as the tariff refund? That's the first question.

So specific for the resi, there is no one-offs. I would say that in general, it's a clean quarter for the group. That's also a clean quarter for resi. Yes. So we have seen some growth in resi, some price and some volume. And like we have said at many occasions, we don't need very strong recovery on the resi side to see very good margin improvement. As a matter of fact, we had a very good margin for Q3 in resi in North America, thanks to that volume growth because we have that construction now that a little bit of growth gives immediately very good volume leverage. It has nothing to do with price increases nor anticipation. Then, of course, you should not read too much in one quarter neither. Like I mentioned earlier, we believe that new build is still very challenging in North America and it's definitely not improving compared to 3 months ago with the Fed now increasing interest rates and you see also market rates further going up. So it's already something I think the recovery of the new build will be further delayed in North America. But like I also mentioned, we believe that at least R&R has bottomed out and perhaps has started to grow very low single-digit numbers perhaps. And of course, we have a lot of growth initiatives where we try to do better than the market. We have launched a complete new padlock range, a product that we did not have in our portfolio before. We have invested a lot in digital door locks and have a very wide product range today. We've also invested in renewing our mechanical core for Kwikset. So there's a lot of initiatives that we launched to try -- to do better than the market.

Perhaps just to add because your question was a bit related to tariffs. ThE mid-single-digit million dollar amount that I talked about, that affected Global Tech and Entrance. There's nothing in the Americas result.

Okay. And then as a follow-up on that macro uncertainty topic. Obviously, there is a lot of uncertainty out there and we've got a new restructuring program. Is that in anticipation of perhaps markets getting a little bit softer as we think ahead to 2027? Or is this more of a reflection that you've identified further cost out opportunities as part of the current program that you'd have looked at even if the outlook was less uncertain, I guess.

So it has nothing to do with market conditions. As you know, we do an MFP program every around 18 months. and it's 18 months ago that we did the previous one. And as we continue to buy companies, we continue also to buy factories, warehouses, sales offices that we then can further consolidate. And that's what we will do now also in MFP 11. So drivers are very similar as our previous MFP programs, I would say.

The next question comes from Ines Lefranc from Goldman Sachs.

My first one is just on the manufacturing footprint program. Could you give us any color on expected restructuring charges, targeted savings or payback period?

Not really because we are still finalizing the numbers, but I understand that you want to have at least an idea. So most probably, the new MFP will be a little bit bigger than MFP 10 because that's normal. We have further grown our company. If you grow, you can also do more reflecting. I think from a dynamic perspective, factories, warehouses, customer centers will be very similar. I think from which divisions contribute, it will also be very similar, and we are very confident that we will have a very good payback on this one as well. But too early to give you the detailed numbers. That will be something for the next call.

Okay. Makes sense. And if I could just ask one follow-up on the tariff impact, that mid-single-digit million dollar in Global Tech and Entrance. Is that a one-off for this quarter? Do you expect any tailwinds next quarter too? Yes, any color would be really useful.

I mean if we -- well, if I should sort of elaborate a little bit more on the tariffs. First of all, I would say that we have -- so far, we have received, I would say, a high double-digit million dollar amount in the result in Q3. We have, in reality, then we have a mid double-digit million dollar amount that has been then going to the results. But then most of that money, we have then used for, let's say, writing off PPA initiatives in R&D and so forth. Let's say, we have invested that in the business. So in Q3, out of that, as I mentioned, it was sort of a mid-single-digit million dollar that impacted the result. I mean if you have a high -- as I mentioned, a high, which means that we still have, let's say, many left also for Q3, we have to see a bit, let's say, how much will, in practice then, impact the bottom line. That is not really clear yet.

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

I have a 2-part question on North America. Your largest peers in the U.S. has been printing now stronger pricing, I knew, at least that's what appears from the numbers for a couple of quarters at least. I was wondering, is because of your deliberate action to potentially gain market share in a weak residential market? Or is something different? And do you expect this gap to persist?

No, I think -- it's not that we try to gain market share with reducing prices or keeping prices lower. First of all, our price is on group level and the price component has been higher than group average for the Americas division. That comes because the Americas division is also more steel related, and steel has seen an important pricing inflation. I think another explanation is that we are the market leader. We're also the first ones to increase prices when things started with tariffs and also inflation. So our comparison with last year on the pricing component is also morE challenging. I think if you look over a longer period and our colleagues also report price quarter after quarter. If you look over a longer period over the last 3 years, you will see that price component, most probably is very similar.

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

I have 2 questions, please. Firstly, I'd like you -- to hear your thoughts on the new partnership between Apple and LG to develop doorbells and smart door locks. I think you already have many products that can integrate with Apple's ecosystem. So maybe just your views on the risks there would be obviously much appreciated. And perhaps a reminder of your actual exposure to the smart door lock business.

Yes. So this is an initiative in North America. I would say we like the initiatives very much because clearly, Apple has a much bigger marketing budget than we have. And I think it's good that people like Apple start to make more publicity in the market for digital door locks that will help the sales of digital door locks in general. And as you rightly said, we have a very wide range of digital door lock products that are compatible with the Apple ecosystem and with the Amazon and Google ecosystem and with all the new standards that you have in the U.S. If you see also the positioning of this new product from Apple, it positions rather high in the market. You could say that it's a little bit a competitor of what we used to have with Yale when we were still the owner of Yale before that divestments when we acquired HHI. Today, with quick steps, we play much more in the middle segment. Yes, we have the ambition to move up to that, you could say, Yale high-end segment, but that is still today, a smaller part of the market. The big volumes are in that value segment. So I think for us, it's a positive. I think it will create more marketing. It will create more noise in the market around digital door locks, then it will drive more, more business in that sense. When it comes to part of our business. I think the digital door locks are around 10 -- 5% of the Americas resi -- North America resi business. So it's a smaller part of our revenue today, you could say.

Okay. Understood. So still pretty small indeed. And then the second question I have is -- I did not fully understand the rationale for selling the KPI business unit. I mean it has a strong margin. It includes the SaaS business. So why is it that you cannot grow the business further?

Actually, what we divested was a combination of 4 companies, 4 companies that came through acquisitions a long time ago, Active Identity, Identrust, Zero SSL and then Hydrant ID. And I would say Hydrant ID was the biggest part. It's a small business altogether, it's around $50 million, $60 million. But this Hydrant ID, they had this PKI, public key infrastructure certificates. And what they do is they do the life cycle management of those certificates, you could say. It's a very interesting business, fast growing indeed and highly profitable, but with very little synergies with the rest of what we do in HID and with the rest of what we do within the group. We are a small player in that field. We are far #4 or 5. There's a couple of very dominant players. As you know, we have always the ambition to be a leader in what we do. So if you want to become a leader, we could not do that organically. We had to buy the #1 or the #2. And as these are pure software businesses, multiples are very high in this field. And so paying a very high multiple to become the #1, paying a lot of money for a business that has little or no synergies with the rest of HID and the rest of the group, we thought that there were better ways to allocate capital. And rather than sticking on an interesting asset and over time having the risk that, that would go down and dilute, we thought it was a better idea to sell it now at a good price at a good valuation and give it to somebody else that is clearly a better owner for that business than us in ASSA ABLOY.

And if I may, is there any capital gain you expect to book on the transaction?

Yes. We will come back to that in Q4.

But like Erik said, it's -- like we said, it's a small acquisition. So also from a dilutive perspective, it will not really move the needle on group level.

The next question comes from Alexander Virgo from Evercore ISI.

Could you talk a little bit to the gross margin and the Global Tech margins, I guess, it's 2 questions, but same question on margins. Gross margin is close to 44%. I think that's also something of an all-time high. So just wondering if you can talk a little bit to how we should expect that to evolve over the coming years? And in Global Tech, now, I guess, north of 20.5 ex FX and M&A headwinds and strong incremental margins there. Are we now back to a sort of a new level in Global Tech as well?

If I start with Global Tech, we have always said that we have an ambition for Global Tech to have margins above the 16% to 17% benefit. We should take more about something around that 18%. Yes, this quarter was extremely good quarter. Quarter 3 is always the best quarter for Global Tech. I think you should see this more over a business cycle and definitely over the full year. Today, we are, I think if you look at -- on a year-to-date trend, we are at 18.5% for Global Tech, so more in line with that 18% ambition that we have. For the time being, we believe this above the 17% to 17% to 18% is still the right ambition for us because, yes, we have a couple of very mature and very profitable businesses in Global Tech, like the PACS business in HID and hospitality business in Global Solutions. But we have a lot of smaller businesses that we want to invest in, in R&D in feet-on-the-street that are much lower margin and that we want to bring up volume-wise, size-wise to similar levels as PACS or hospitality. That's for Global Tech. On the gross margin, of course, if you look back the last 2, 3 years, we have had a very good journey when it comes price to cost, light material versus price increases in the market. We have had quarter-after-quarter strong accretion of that price versus cost, that is one big explanation. We have done the MFP programs, like Erik said also, helping on the gross margin side. And I think we have done a very good job to our operational organization in, let say, using our scale and our growing scale to get also better conditions out of our suppliers. And then next to that, all the operational efficiencies like VA/VE initiatives that we do in our factories and together with our suppliers, I think it's just a good operational job well done explaining the very nice gross margin improvement. I think that's across all divisions. I think all the dividends, you will see similar pictures.

And perhaps, Alex, also, if we look a little bit more short term, I mean, we expect also then for Q4 to have a tailwind on price versus cost. I mean that's a bit how far we see. And then we have to see how it goes in the first quarter of next year.

That's super helpful. Erik, just to follow up there on that 60 bps in Q3 then should be closer to 100 in Q4?

I said a tailwind. Normally, I would sort of say that I think you're way too high with that. I think it's going to be -- it's going to be positive. And let's see if it reaches the 60 bps.

But it should be another good significant occasion in Q4, Alex, because most probably not on the same level as in Q3 because you see material indexes further going up. You see definitely also energy inflation further going up, logistics inflation and general inflation. But on the other hand, we also continue to increase prices. So we will see how the pricing intention we have plays out in the market. Q4 should be another good [indiscernible] accretion price versus cost. Björn Tibell: Before we jump over to the next question, could I just -- I'm being informed we just have one person in the queue now. [Operator Instructions] Operator, you can probably help with that.

Our next question comes from James Moore from Rothschild & Co.

Erik, Nico, I wondered if I could ask a little bit about the forward-looking picture. Maybe you could please talk about specification. I'm sorry if you said it earlier, I got cut off for a moment, and by region and globally and also talk about the momentum into October, if you could, please?

So this is question we normally get is how was the demand over the quarter and then exit rate and rate in October. That's the question now you ask James. I would say Q3 demand has been quite stable over the 3 months and now going into October -- sorry, we see a similar pattern. You should not forget in Q4, yes, in theory, we have one working day more. But what you see is, of course, that in October, which is an important month, you have one working day less, and then in November and in December, you have one working day more, but the working day in December is a working day more than a holiday month, you could say. So it's very similar from a working day perspective this year versus last year.

Spec?

The spec business, we have seen high single-digit growth for our spec business. Was a little bit better in the Americas and in Australia, New Zealand, a bit lower in EMEIA. But EMEIA, it was just a difficult comparison with quarter last year where we had a couple of very big projects that we quoted. If you correct for the -- you could say the outliners also in EMEIA, we had a similar high single-digit pattern. So still very, very positive on the specification momentum, still leave good driver going forward.

Could I just follow up with some color points on that? Like we've seen indicators and permits deteriorate in the last 3 months. And as you point out, rates have gone back up a bit. And so I was quite surprised to see your underlying U.S. and European results. It's just a bit better than many thought. And would you characterize that as the market being better before the pain of rates kick back in or that you have had the initiatives away from those that you talked about in HHI, which you seem to be taking some share in that market. But do you characterize the U.S. nonres or the European resi nonres performance as being a function of any kind of indicators or more just like mix where you've got naturally bigger exposure?

If you talk on the commercial -- on the nonresidential side, as you know, we are late in the construction cycle. But I would say that at least as far as we can look forward, perhaps a year or so looking forward, we don't see any slowdown. You could argue that higher interest rates indeed lead to less projects. On the other hand, if you look, for instance, in the U.S., if you look at our 2 main verticals, education, schooling. As you know, it's a lot financed to local bonds, and I think local bonds have never been as high as they are today. So I don't think we see any slowdown there. And on the private side, it's money which is deployed in a different way. And like we mentioned at earlier occasions, if you want to be an indication today in U.S., upgrading your access solution is a license to operate with all the security concerns and all the shootings going on. I think a similar picture on health care, which is our second important vertical in North America. The demographics of population and also the need for health care is not going down on the contrary. So we also don't believe we will see any slowdown there. So we are still very positive on commercial in North America, and I think similar to what I said for Europe.

We have a follow-up question from Aron Ceccarelli from Bank of America.

Sorry, I was on mute. I believe your tone on Europe seems incrementally positive. Perhaps can you give a little bit of a tour by country? What drives this level of confidence increasing?

If we start perhaps in the Nordics and perhaps with Sweden, you know that Sweden was the first ones to reduce interest rates. They were 9 months before ECB. So they are a bit, I would say, the canary in the mine. They indicate a bit what happens in the rest of Europe. And we have seen, like I mentioned at earlier occasions, residential market in Sweden coming back first on the R&R side. And today, we also slowly start to see it back -- coming back on the newbuild side. A similar story is true for Finland, which are the 2 main markets for us in the Nordics. Commercial activity is high like it is in all the regions in Europe, but it's even further boosted by this NIS2 regulation where, like I mentioned, Nordics is one of the drivers in applying physical hardware around NIS2, and we have a lot of click sales and so on. If you go to Central Europe, a similar story, needs to further boost our commercial growth in the DACH region. As you know, in Germany, we are -- or you could call it a niche player. We are not very small on the residential side. We are strong on the commercial side, definitely on the high end of the commercial side. So we profited that also a bit that we are in the best markets, you could say, in the DACH region, in Germany in particular. And we see there a very good high single-digit growth numbers, again, also boosted by NIS2. Is Europe good on the residential and commercial side in our main markets like Poland? If you go to South Europe, I would say a bit more mixed picture. Spain, Italy have been maneuvering very good through the lower years last year and so on. And we continue to see good developments there where France has been much tougher. Definitely also last year in France, we have a little bit of advantage that we have now an easier comp. Then we will see how of all the unrest that we've seen in recent weeks in France plays out because France, together with U.K., are 2 important residential markets for us. And the U.K. and Ireland, I would say, U.K. and Ireland has been flat since Brexit. And we have -- we have been hoping that U.K., Ireland would recover. It has not really happened so far. We see now at least some early signs that there might be some recovery definitely on the commercial side in U.K. Hopefully, those early signs gets confirmed now in the coming quarters. And then we have the emerging part, like I mentioned, Africa, Middle East and India. Perhaps surprisingly, but we see still good development in the Middle East. We see very good development in Africa and India. We were late to enter India. We only entered India in 2018 when I started in this position, but we have seen since then, good double-digit growth in India, starting from a smaller level. And we are confident that, that growth will continue.

We have another follow-up question from Andre Kukhnin from UBS.

Sorry if there's some repeat. I had some technical issues here. I just wanted to start with NIS2. Is there any way you could help us quantifying the degree of help that this is creating for the market? And also, how should we think about it in terms of -- is this kind of a one-off boost that we need to think about comping at some point in 2027? Or is it more of a multiyear growth driver where the addressable installed base is so substantial that this will take many years to get through?

We also the question and perhaps you had a technical problem, but it's true for EMEIA, accounts for around 0.5% organic growth estimate. And the reason is that today, it's still mainly focusing on the DACH region and the Nordics, Sweden and Finland, where we have seen a lot of business for our click solutions, our electromechanical solutions. As this becomes more widespread in the rest of Europe, we are confident that we will see similar patterns in other markets like France, Italy, Spain, you name it, but they are traditionally always slower or later than the Nordics and perhaps also than that because they are faster in implementing those new European directives into local legislation. We believe it's more a multiyear activity because even in DACH and in the Nordics, we are far from done. There's still a lot of companies, basically all mid- and midsize and bigger companies have to do something around cybersecurity, not only from a software perspective, but also from a hardware perspective. So even in DACH and in Nordics, we are not done yet. And then, of course, all the other markets still have to come. So we see this as a cherry on the cake, you could say, for EMEIA for several more years to come.

Great. And apologies for a repeat question. If it's another repeat, then just leave it and I'll come back to the transcript. But I wanted to ask about the MFP program that you're planning to launch during Q4. You indicated that it will be sort of similar to prior programs. But obviously, as the group gets bigger, I just wondered if those MFP programs should also be getting bigger or more frequent over time?

The strength of the message is in the repetition. So we also give an answer on this one. We have said that MFP 11 most probably will be a little bit bigger than MFP 10 because as you rightly said, we have grown in the meantime. And so we have also more possibilities and we have continued to do acquisitions. So we have more factories, warehouse sales offices that we can consolidate. But what we said from a from a mix and from a concept perspective, there will be -- it will be very similar to the previous 10 MFP programs with all the different divisions contributing. And we're confidently also a good payback for this MFP 11 program. But too early to give the exact numbers. That will come in our next call.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Björn Tibell for any closing remarks. Björn Tibell: Thank you very much. Yes. Thanks, everyone, for your participation. If there are any follow-up questions, feel welcome to reach out to us at Investor Relations. That means we don't have much more to say. We look forward to speaking and meeting with many of you in the coming days and weeks, and we wish all of you also a safe and secure end of the year. Yes, thank you for your participation again, and have a good day.

Thank you.

Thank you.

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