STOCKHOLM — ASSA ABLOY posted strong numbers for the second quarter, thanks to savvy acquisitions, but interest rates and below expectation housing starts resulted in another weak showing for the company’s residential business. Big picture By the numbers, the company posted a net sales increase of 10% to SEK 37,968 M (34,474), with organic growth of -1% and acquired net growth of 11%. “Good sales growth in EMEA and Americas from an organic perspective, stable sales growth in entrance systems, but then sales decline in APAC and global technologies,” President and CEO Nico Delvaux told investors during a webcast. “But then again, this quarter (it’s) good to see that lower organic sales development is overcompensated with very good growth acquisitions plus 11% in the quarter. We continue to be very active on the acquisition side.” ASSA ABLOY completed eight acquisitions with combined annual sales of about SEK 1,000 M in the quarter, which the company credited for an operating income (EBIT) increased by 11% and amounted to SEK 6,085 M (5,500), with an operating margin of 16%. Company officials said the commercial business performed well, but not up to previous months' highs. A possible reason: Entities like Amazon reducing their investment in warehouses in the previous six to nine months, affecting commercial entrance systems. Residential turnaround? Poor conditions continued to hamper progress for ASSA ABLOY’s residential business in its main markets in North America, Europe, Australia and New Zealand. Delvaux noted that North America seems to be closer to showing signs of recovery. When asked where that confidence comes from, considering available metrics like the Dodge Momentum Index and U.S. housing data, he said: “On the residential side, we see that new build has turned and it's growing.” Delvaux also pointed to internal data showing window hardware delivery to OEM manufacturers is on the rise, but he acknowledged the entrance systems and garage door business remains volatile as it's more closely affected by new build market conditions. “We need some interest rates cut,” he said. “It looks much more likely now that the interest rates will come (down). Therefore, we are also more optimistic now on the residential side, in general, that new builds will follow.” The full webcast and quarterly report can be found online at www.assaabloy.com.
