ASSA ABLOY AB (publ) (ASSAB) Earnings Call Transcript & Summary

Good morning. Good morning to all of you here in the room. Welcome to our Capital Markets Day 2022. Also welcome to the people that follow us digitally. I must say it's good to meet a lot of you again face-to-face after 2 pandemic years. We believe we put an exciting program together for you today up to you to judge, of course. But the program also where you will be able to meet most of the executive management team. We have the heads of Americas Entrance Systems, HID and Global Solutions participating in the presentations. And we have also the Head of EMEIA here with us. Before I start with my presentation, I would like to give the word to Bjorn and Christian, who will give us some practical details, understood and go through the agenda, right?

Yes. Thank you, Nico. We will go through some of the practicalities and we will soon take the agenda. But before we go there, we want to take you back to our Capital Markets Day 2021 where we opened the CMD by asking the question, how will ASSA ABLOY access further growth opportunities? And how are we working to accelerate our profitable growth going forward in line with our financial targets?

And since then, we have been through a period where we have exceeded the financial growth very much. And the agenda today will therefore focus on how we can continue to execute on the sales growth while improving the margin.

And to improve your understanding for how we will do this, we have prepared an agenda with objective to illustrate how we will continue with both our growth and margin generating initiatives.

And in the first session now, Nico and Erik will take us on that journey and talk -- give us any strategic update. We'll have a break after that. And after the break, we will get an overview of the Americas division by Lucas Boselli, followed by a discussion how we look at the opportunities in relation to mobile credentials together with our heads of Global Solutions and HID.

And after lunch, we will continue with breakout sessions. We will divide you into 3 groups. So you will circulate all 3 stations. One will be led by Massimo Grassi and Markus Kast who will take you through how we have integrated Agta Record into Entrance systems. One station will be with Lucas Boselli, who more in detail, will take you through how we work with our growth in emerging markets with Brazil as a case study. And finally, Björn Lidefelt, will provide an overview of HID and walk you through our product offering with focus on mobile credentials.

And after the breakout session, we will gather here again in this auditorium for a final Q&A together with all the presenters. And that should finish around just before 4:00 p.m., we expect. And for those people who are here in the venue, we'll have networking drinks in the lobby afterwards. So please join us for that one.

Yes. We also have many participants, just as Nico said, joining us online. And for you online via the Zoom tool, when you want to ask a question, you click the Q&A button to send the message to Carl Wahlberg, our Investor Relations Officer. And he will look after that queue and all those participants making sure your questions get asked. So click the Q&A button, and you can start doing that right away.

That means that we are done with the practicalities. So let's get into the proper CMD. So Nico, you're ready? Please, I'll hand over to you.

Thank you, Bjorn and Christian. Let's get started. Let's take the clicker. So what we will do now in the first presentation, I will guide you together with some of my colleagues through these 4 points. I'll give you an overview of where we stand today as ASSA ABLOY as a company. We'll zoom a little bit on the market we operate in and our position in that market. And then we will explain a little bit more in detail our strategic framework with our strategy house and leave you at the end with some key takeaways. If I start with where we stand today, as a company and recap to our Capital Markets Day, the virtual one of last year, where we expressed our ambition to further accelerate our profitable growth in general and accelerate our organic growth in particular. And where we also said that we had the ambition to reach SEK 150 billion top line by 2026 and reach up an operating profit of SEK 25 billion in that same year. I would say that despite very turbulent times, we are well on track to reach that ambition. Our sales has increased by around 20% since the base year 2019, and our operating profit is up 17%. We are further evolving the core if we go back, what is it, 28 years since -- to the moment when we were born, when we merged ASSA and ABLOY together. At the time, we had the ambition to be one of the world's leading lock companies. And throughout the years, our ambition evolved around 2008, we changed our vision to be the global leader in door opening solutions, adding all the things to our core like Entrance Automation, make electronic locks, cards and readers. And then 4 years back, we further widened that ambition to be the global leader in Access Solutions, again, further expanding our core with software solutions perimeter security field service and so on. We define access solution as the combination from one side opening, you could say, a cylinder in a pure mechanical world, and on the other side, an identity, a mechanical key. And then we have the combination of the cylinder and the mechanical key. You could say that on the opening can be just a standard door opening for people, which would be the core of our geographical divisions of our opening Solutions divisions. It can be an industrial door, a garage door, the core of Entrance Systems. On the other side, we have the identity, again, in a pure mechanical world, a key but can be a reader. It can be tech, whatever, the core of our HID division. Then we build services around that access. We do the man in the van, mainly in Entrance Systems. But I would say service man becomes also more important in our geographical divisions. And then we have, of course, all the Software-as-a-Service opportunities as we move now more to electromechanical solutions. And that is obviously valid for all our divisions. And then we built specific end -- solutions for end customer problems in specific verticals, and that will be the core of our Global Solutions division. I would say, well, the opening and the identity overlaps in the middle is where magic happens that this is where traditionally, we would have our patented master key system or patented key with a patented cylinder, a unique combination. And that combination has -- and it's evolving over time. That mechanical key, mechanical cylinder is changing into an electromechanical key cylinder combination. The key is more and more replaced by another identity can be a card, a mobile credential or ultimately, the person itself can be the identity. And on the cylinder side, of course, you get under reader or other identification instruments. So we have the ambition to be the global leader in access solutions. We are truly global but uniquely local company, truly global. We have operations in more than 70 countries. We have more than 1,000 sites, more than 100 R&D centers and around 130 production facilities. We have the ambition to produce locally for the local market. But very important, we also operate locally. We take decisions in France for France with a local team on the ground in France. We take local decisions. For Sweden, in Sweden, we have a local management team in Sweden. We take local decisions in the U.S. with a local team in the U.S. And we believe this is a very strong competitive advantage for us, that decentralized organization by close to the customer, we take decisions. It gives us agility, agility in good and in bad times. It also gives us the possibility to understand in a much better way what the specific needs are of those local customers in the different markets because clearly, we operate in an industry where the requirements -- product requirements, solution requirements are still very different local market by local markets. We have also seen in history that our business model is much more resilient during economic downturns than many other industries. You've seen that in the global financial crisis, we have seen that in the euro crisis, we have seen that to a certain extent, even in the COVID-19 crisis, at least for the top line. But the same is also true for the bottom line with the exception perhaps on the COVID-19 crisis where clearly, it was a very different crisis. It was a crisis about trust. As there was no trust, there was no mobility. And mobility is a very important driver for our industry. But in normal downturn, as 2/3 of our business is aftermarket business, that aftermarket business continues to grow. It has also better margins than new built. And therefore, we are able to protect the bottom line also in more difficult market conditions. If we look how we recovered now after COVID-19, you see that 3, almost 4, you could say, out of the 5 divisions are back and above prepandemic levels. It's only APAC and then mainly because of situation in Greater China that is still below those 2019 levels. And if we zoom in a little bit on the different divisions, starting with EMEIA, a very good, strong recovery after the pandemic. We still see good market conditions in general in EMEIA. But as we mentioned in the Q3 call, we see a weaker residential demand in certain markets, in France, U.K. and Benelux. On the other hand, we see still very strong market dynamics in East Europe, Africa, Middle East, India and other parts of Europe. Clearly, the higher inflation is something we have to tackle. It's true for all our businesses. But perhaps it's more true for EMEIA in the sense that they also have the general inflation. They also have the material inflation. But the labor inflation is perhaps a little bit more outspoken with the systems we have on automatic salary corrections in many markets here in Europe. And then definitely, we also have the energy inflation where today, we still profit in many factories and in many entities from older contracts with lower energy prices. Once they expire, obviously, we will see a significant increase of the energy cost. And then it's clear that EMEIA is in a more volatile market environment. EMEIA, we are also more exposed to residential entrances of the Americas, around 45% of our business in EMEIA is residential, which as a shorter cycle, you could say, and where we watch from very close, what is happening around us. We are definitely very excited about the continued shift and I would say, the accelerated shift from mechanical to electromechanical and digital as well on the residential side, there's on the commercial side and the opportunities that come together with that sort of more cloud-based solutions and software as a service. And then definitely also excited about green drive the green -- drive for green building standards, so I'm opening new possibilities for us, and we will touch in more detail on this subject later in the presentation. Americas, a very strong story since 2019. We continue to see a strong nonresidential activity in the U.S. I know the ABI measurement came out today. It was for the first time since long below the 50 level. So that means a decrease rather than increase. We don't see that in the market yet. We still see very good market dynamics. We still see double-digit growth of our specification business. We also still see good residential activity in the U.S. that most probably also has to do with the fact that we are much more focused on aftermarket refurbishment upgrade rather than -- and are less dependent on new builds. We see normalized growth in Latin America. Of course, it's very difficult in a market and yourselves in the market grows very high double digit on top of very high double digits a year ago on top of a high double digit 2 years ago at a certain moment. You are beaten by mathematics. And obviously, also in Americas, there is the challenge of the higher inflation. Also in the Americas, we are excited of the shift towards electromechanical, digital, the software, hardware bundling. E-commerce delivery to our Luxer One acquisition. Lucas will go in more detail on this in his part of the presentation. And then clearly, also very excited about the HHI acquisition that we now confidently will be able to close in the second quarter of next year. APAC I would say dual story, China. Greater China is still very depressed with the construction market that continues to decline. But solid activity in Pacific and a good recovery after pandemic in the Southeast Asian markets and also smart residential gaining traction in Pacific. Excited about our product line -- product pipeline, sorry, on the smart residential side about the commercial opportunities in China. As a matter of fact, we have positive growth on the commercial side in China despite market conditions going down. But that part of our business is still too small to see it in the bigger picture. And then we did some recent very interesting acquisitions in Australia that should give us very good possibilities in the near future. When I go to Global Technologies, almost back on the 2019 level. Global Technologies was hit the most by the pandemic because they are very dependent on mobility. So the good news is that mobility is back to and above prepandemic levels. The only 2 business areas in global technologies that are still below the 2019 level of hospitality and Citizen ID. And that's perhaps a misconception from many of us. They believe that hospitality is, again, booming because you see in hotels, hotels are fully booked again. So yes, it's true that our aftermarket is back on a very good level, our cards, our credentials. But that's only 20% to 25% of our hospitality business. 75% to 80% of hospitality business is projects, upgrades of access solutions in hotels. Yes, the big chains like the Marriotts, the Hiltons, they continue to invest and upgrade, but if you're a smaller chain or if you're a family owned company and you didn't see a customer for 2 years, obviously, it's not your first priority to now upgrade your access solution. So that will take some time perhaps longer than most people expect before hospitality is back on a good level. We have seen in recent weeks, perhaps recent months, the component shortages pressure easing. Then I talk about electronic components because the components in general has improved since several months. Component shortages in general should not be a reason, anymore, it can perhaps still be an excuse. But clearly, the chip shortages is still a challenge today. It's still very volatile. And if situation improves, it's just because consumer demand is down and therefore, certain chips are more available in the market. It's not because extra capacity came on board. That will not happen before second half of next year. And it's also not because we or other people have changed our rational behavior. We still try to buy every chip we can buy in the market. Very excited here on the shift from mechanic to electromechanical and digital and all the possibilities that gives for Global Technologies. And [ Stephanie ] and Bjorn, Head of HID and Global Solutions will elaborate on that together with Bjorn later during the day. We are leading the shift towards mobile and then definitely our solution provisioning in the other new verticals that we have in Global Solutions in practices like construction, time and attendance, access for construction workers on the construction site, senior care, self-storage and so on. And then last but not least, Entrance System, I think a fantastic success story, continued good positive market environment in North America, I would say, perhaps a little bit more normalized growth levels in Europe because obviously, they work in a similar market environment as EMEIA. Also here, the higher inflation on the steel on the energy side in Europe and on the labor side, I would say as well in the Americas and in Europe is a challenge. Very excited about our service growth. You know that we have the ambition to grow our service high single digit for the coming years. As a matter of fact, the last quarters, we were growing service double digits. So we are definitely where we want to be with that service strategy. We did some very nice recent acquisitions we are excited about. I would say despite the very good improvement of the bottom line, we still see many efficiency opportunities still to be captured in Entrance Systems in that new organization with the 4 segments. If we then look a little bit at the market we operate in and our position in that market, we can say that we are part of a very good industry. We are working operating in an industry with very strong positive market drivers, and we mentioned here 5 on which we will zoom in a little bit more. I will start with increased demand for safety and security. It's just the fact that people have the perception at least today, that we live in a less secure world and perhaps a less safe world than let's say, 5, 10 years ago. So that drives really demand for more access solutions, secure and safe access solutions. And drivers include, I would say, our business resilience, reliability, extreme weather conditions, everything to do with the pandemic where people don't want to save -- where people don't want to touch and want to have touchless solutions. But also everything to do with the active shooting in schools, universities in the U.S. riots, you name it. Then this one, we used to call urbanization. We have widened a little bit the concept in movement of people and geographic change because for us, it's not so important if it's urbanization as long as people move from one location to another, it's good news because then they need new access solutions. But if you talk about the urbanization, it's projected that the urban population will grow with 50% by 2050. All these people will need access solutions confidently. A lot of them will need access solutions from ASSA ABLOY. But you see also the opposite effect after COVID-19, you see perhaps a deurbanization, people moving from bigger cities back into more rural areas. That's good for us, too, because they also will need new access solutions. We have the aging population, and we have, of course, in millennials that now enter the housing market. Digitalization and new technologies, connectivity, IoT, touchless, biometrics, mobile, creating opportunities for us for new business models, Software-as-a-service, cloud ecosystems, shared economy, so another very positive driver. And then sustainability, something we are very excited about. We see a much stronger demand today from customers asking for green buildings, more and more new projects, but also refurbished projects are now built according to one or the other green standard can be a lead certification or something else. And we also helped by regulation. We see regulation increasing for more energy-efficient buildings and access solutions that really create much more demand on, let's call it, the green side, you see here, for instance, that in EMEIA our green specifications and order value are up 45% on a compound annual growth rate over the last 4 years. We want to zoom in a little bit more in detail on sustainability. And therefore, I would like to ask [ Robert Siegmund ] to come on stage. Robert is our Chief Commercial Officer in the EMEIA division, and he is also an expert when it comes to green buildings.

Thank you, Nico. So a very warm welcome to all of you. My name is Robert Siegmund. As I was introduced by Nico before, I'm heading the commercial development in EMEIA. Sustainability is an area that my team and I are very passionate about. I mean, really passionate, will really drive this in the EMEIA organization to develop further. We've got a couple of levers to drive that. But we see that the demand for green specification is growing. As you know, we work with architects and construction companies to help them understand and conform to all the local requirements and regulations. We have about 200 dedicated specification specialists that do this every day. We have seen that there is a real demand in the market for buildings, old and new buildings that offer sustainable benefits. In fact, we have seen an unprecedented increase of number of specification projects for green building by over 150% in the last 2 years. In addition, we have also seen that the average value for an opening that is specified under green standards is much higher, up to 25% on average. So this positive growth has led us to develop processes and methodologies for our products to support this. For example, we have developed a green specification guide that provides guidelines and tools for specification delivery on green projects that follow major environmental schemes such as [ Premium, Elite or DGMB ]. We see a growing need for this with our own specifiers, but also with our customers and the architects. In addition, we see a growing need for so-called environmental product declarations or EPDs as they are known in the industry. These EPDs they help our customers and the architects to achieve the certifications and give them the security that they have made the right product decision. The second lever that we are using is opening studio, so in addition to the green specification guide, there is opening studio, which is our end-to-end BIM enabled information sharing solution that creates, visualizes and, well, performs openings for the planner and for the architect. By using Opening Studio, our specifiers work with the architects and customer to identify, customize and build access solutions and hardware specifications for the green drilling requirements. The tool supports real-time costing, and we see a 20% share already in green building specs and the demand is there and growing. Solution also provides the customer with seamless updates on changes and variations of their projects that allows them to be involved in the whole process from start to end and support them in managing their time better and much more efficiently. Now I would like to share with you a couple of examples of where we have been successful with this approach, with this 2-level approach. This project that you see behind me is in Abu Dhabi. It follows the lead certification following on energy efficiency and environmental design. We've done the specifications with the customer. We provided the EPDs on our products to support this -- the customer certification. So those EPDs there, they provided the customer with a format where they can compare the published product-specific environmental performance. So that allows the customer to understand and compare the environmental impact between goods and services on the one hand and the building element on the other hand. These declarations also serve as a valuable inspiration for us, for innovation because we use the declared data to improve sustainability on our products overall. Another example that I would like to share with you is what our specification team has done here in Poland with this customer. Customer [ Cavatina ] is a developer that is a well-known for the green building projects. And in this instance, we provided EPDs for the products we specified under the BIM scheme, which is focusing on the environmental performance of the building? And how our products contribute to that? So we also provided EPDs for WELL. WELL is another scheme that focuses on the health and well-being of those in the building. So you can see that there are multiple layers of sustainability in a building. We continue to embrace, of course, the need for efficient environmental reporting and reducing our overall impact. And we expect to see many benefits in the continued accelerations of green building specification growth. We aim to become a market leader in green specification for sure, and we really want to contribute to a sustainable future. So all of us all of this activity that we're doing is embedded into many activities that we are driving at ASSA ABLOY to reduce our environmental footprint and to make the company more sustainable. Thank you very much.

And just as a clarification, when Robert, was it 200 you said?

Around 200 specified.

That's only for EMEIA. In the group, we have more than 500 spec writers. And I also think that Robert has been very modest when he talks about Opening Studios. operating Studio is clearly the best software tool for architects and contractors in our industry. It was really a competitive differentiator. We are very excited about the whole sustainability drive because what it does, it's on one side, makes the pie for everyone bigger. Robert explained that, green project is around 20%, 25% more expensive than a traditional project, but it also drives technology up in our industry and it takes the pure cost competitors out of the equation. So a bigger pie to be divided by less players in the market. If we then go to the last driver, we want to highlight local regulations. And there, we will have a product display of EMEIA showing that really with products, what I'm doing here. Lock is still very different in Italy versus Switzerland, Germany versus Sweden. It come because the local legislation is very different. The standards are still very much on a local level. That's also because of history. Nevertheless, those regulations are becoming more stringent as standard is changing all the time. This creates clearly local entry barriers. It's very difficult for one very low cost player to come and conquer the world because he will have to conquer country by country. It also demands -- or the demand for upgrading to be compliant with those more stringent standards has to happen on the local level. So it also makes a strong local customer relations. Where do we stand in that market with strong positive market drive as well, we have a very clear, I would say, undisputable market leader with strong global brands like ASSA ABLOY HID and Yale but also very strong local brands that we then often endorse with one of the group brands like, for instance, Sargent in the U.S. that we then endorsed with the ASSA ABLOY brand. We have, by far, the largest installed base in the market, an installed base that we can now proactively upgrade from mechanical to electromechanical and digital. And we have also the widest product offering in our industry. We are a company that wants to make the difference through innovation. Innovation is really in our DNA. We have increased our R&D spend with close to SEK 2 billion since 2017. And we launched more than 1,200 new products over the last 3 years. In that same period, we also filed more than 500 new patents. And to come back on the sustainability of Robert, we have more than 300 product families that have EPD certification of a green certification. If we then go to the strategy, we explained the strategy internally to our 53,000 people to a strategy house, this strategy house. And in the next slides, I will walk you through the different items on that strategy house. If you start with the vision. We have the vision to be the global leader in providing innovative access solutions that help people feel safe and secure so that they can experience a more open world. If I take a couple of words out, global leader. We are definitely a leader in the Western world, in Europe, in North America. We are a strong leader in many emerging markets like South America, Middle East. But then there is clearly still markets where we are just one of the players, markets like China, India, Indonesia and some other emerging markets. So clearly, we have some work to do, and we have some opportunities to grasp. Take the word innovation or innovative access solutions. Like I mentioned earlier, we are a company that wants to make the difference through innovation. Innovation is really in our DNA and for us, innovation is not only about new products, new solutions. It's also the way we run our processes, the way we run an admin process, a marketing process. It's also the way we run our operations with robotization, automation, Industry 4.0 and so on. And then people, of course, want to experience a more open world. I would say it's the whole Amazon experience. But when it comes to access control, of course, they want to experience a more open world in a safe and secure way. So safety and security offer us two very important words in our vision. Two words that we want to use as a differentiator in the market. We have a long legacy, we have a lot of brands, we have a long-standing history and our synonym for safety and security. And that safety and security, then can give us a more open word. Obviously, we want to build as a mission, sustainable shareholder value. But we also would like to -- I would say, like the purpose -- I would like to serve a more wider purpose. Obviously, we want to provide added value to our customers, our partners and our end users. We want to be a world-leading organization where people can succeed. And then we want, obviously, to conduct business in an ethical, compliant and sustainable way. And then we have our core values and beliefs, the values and beliefs that keep us together as a company, as a family. Empowerment, we have trust in people, innovation. We have the courage to change and integrity, we stand up for what is right. If we then go to the financial targets in the strategy, house, as you know, they remain unchanged. We have the ambition to grow 10% over a business cycle, 5% organically, 5% growth through acquisitions. And we want to do that with an EBIT margin within the 16% to 17% bandwidth. If you look over the last 10 years, we grew 9.2% per year, so very close to the 10% target. And our EBIT margin on average has been 16.1%. So within the band which we aim for. But you remember from previous CMDs, previous discussions that we said that we had the ambition to accelerate our organic growth. We said in the country, we grow 3%. How can we grow 4%. If we have a vertical where we grow 7%, how can we grow 8% because we said that 1% more organic growth in a sustainable way. It's the difference between a good company and a great company. And obviously, we want to be a great company and we are delivering on that ambition. If you take the period 2013, 2017, our organic growth was around 3%. If you then take the period '18 to 2022 year-to-date, our organic growth is around 5%. So clearly, one, acceleration of the organic growth; and two, in line with our target of 5% over a business cycle. I think if you look from '18 to '22, I think you can talk about the business cycle. Yes, we have helped a bit with pricing in recent quarters, but we also had over the 3 years, COVID pandemic and parts shortages challenge in the world. So very happy with that organic growth acceleration. If we then go to our strategic objectives. Our strategic objectives are a little bit like our compass. They guide us in everything what we do. They tell us how to achieve our different strategic ambitions. We have growth through customer relevance. We believe or we are convinced that continued profitable growth starts with understanding our customers. It's an obvious one, I would say. Product leadership to innovation, where we see innovation as an enabler for everything we do and also the most important driver for our organic growth. Cost efficiency in everything we do, where the realized savings from improved efficiency can then be reinvested in innovation and in activities that accelerate our growth. And then last but not least, the solution through people. People are our most important asset. It's really the people that make the difference for us. So developing our people is how we secure our future success and our growth. I will zoom in a little bit more in detail on the 4 strategic objectives, starting with growth through customer relevance. You will see that for all 4, we have 7 to 8 than specific strategic actions. And here, if I pick a couple of them, obviously, price management has been very important in recent times. And in recent times, I would say price management has been mainly passing through cost increases through price increases to the market. But if you look more over a longer period, it's all about value-priced management, making sure that you have the right price for the -- in relation to the value that you offer to your customer. Customer experience, very important. We measure customer satisfaction now as a standard in all the divisions to a net promoter score and perhaps if I pick target from E-business, it's clear that the new generation and even if we are in a very traditional conservative industry. E-business becomes more important in the wider sense, really from potential customers searching and trying to contact with us up till sales after sales. And we believe that the E stream and the physical stream are very much in parallel together and that sometimes a customer will go from a digital contact to a physical contact and back to a digital context. So we have to make sure that both are stringed together. If we then take product leadership through innovation. I would say, if I take a couple of IPs, of course, important, we want to protect our innovations, sustainability. Product development is key to reach our sustainability targets, and then definitely also product quality, safety and security in the unsecured world we work together, cybersecurity is, of course, a very important theme for us for our products, for our solutions, but also for us as a company, I would say. We transform customer needs into organic growth. We see mega trends accelerating market shifts and creating new customer needs. And use innovation and new technologies to capture these needs. We provide innovative factor solutions. For instance, we explore new technologies like energy harvesting, connectivity seamless access and data analytics. We drive the next leap in technology when it comes to smart home access. We partner with tech giants like Apple, Google, to deliver mobile access. And then we more and more also collaborate with industry, peers to develop wider ecosystems for the next generation of seamless access. And then the third one is cost efficiency in everything we do. And therefore, I would like to ask Erik, our CFO, on stage, who will take this chapter for me.

Thank you, Nico. And also from my side, a very good morning. I'll guide you a bit through our strategic objectives when it comes to cost, cost and everything we do. As Nico said before, we roughly in each one of them, we then split it up in 7 and 8. I'll come back to some of them in the coming slides. But this is, of course, one thing that's very important for us, the value analysis and the value nearing, which is then a work that is done operations together with engineering as well as sourcing in order then to, let's say, to find things that we can sort of constantly improve also the cost for the products that we have already in the market. It's a bit then linked to operational excellence or lean, which we today have implemented in most of our factories. We also have that each factory also have a traffic light system or KPI where we follow up things like order fill rate, quality cost and so forth like that. And of course, if we're not happy, we expect to have to have an action plan. For us, this is a bit enterprise IT and digital trust, it's 2 ways. One is, of course, to reduce the cost of our IT systems and then move more and more things up to the cloud. At the same time, you have the trust part of the cybersecurity, which is, let's say, which is important in order then to safeguard our operations as well as, of course, also safeguard our products. So enterprise as well as product IT is important as more as we go into the software world. If we start with the first one, the MFP where we have had 8 programs since 2006 with an annual saving of more than SEK 6 billion. The MFP 9 will now be launched in Q1. The program will be a little bit smaller than the one we have had before, but we will have also in this one, a very fast saving. The reason why it's a little bit delayed is that there are a few projects that we would like to have in here, which we know will generate good savings. A question that I get a lot of times regarding the MFP is that do you only do this for the acquisitions? Of course, we get the number of companies in and then we want to improve there. But it's -- part of it is that. But at the same time, it's, of course, also in the normal operations that was always confined improvements and, let's say, cost reductions, which is important then in order then to continue to have a high profitability in our operations. I can give you an example of our factory in Rychnov where we have then created a center of excellence for cylinders as well as Elmech We have moved or closed 12 production sites within EMEIA and moved into the Rychnov factory. Of course, it's better that when you can run a 24/7 compared to, let's say, when you have a factory somewhere else or you only run 1 or 2 ships. Of course, we get a lot of efficiencies coming out of this. You see like, for instance, the labor efficiency has increased by 5x. You can also get the economies of scale when it comes to sourcing as well as when it comes to production and other support functions. But it's also, like I talked about with the VA/VE, where then the R&D and the production is in the same place, then they can talk daily in order then to continue to improve. We also get here that we get the smart factories where we then can connect the machines, we can do online tracking and by doing that, we can also see how we can also be as efficient as possible. In Rychnov as well, we have also invested and we'll continue to invest in solar panels where the aim is to be self-sufficient when it comes to energy. Next one is our sourcing where we today work much more as a group, where we then sort of use the benefits of the size of the group of working into divisional in order then to work with the OEMs. And then we can then sort of use the division as well. And then, of course, locally in order then to find, let's say, the parts in order then to keep the operations going. Lucas will come back to that today a little bit later on how they work in the Americas. We can also use the info that we get from sourcing in order then to be early in our pricing. And I think especially the Entrance as well as Americas has been very good in using, let's say, the information that they get from sourcing and our experts when it comes to material in order then to be advanced, will be early when it comes to the pricing component. If we then start to dissect it a bit, you see that direct material is 37% of our sales. Out of that, 38% comes from the raw material roughly 1/4 comes from the electronic components. But you can also see here the main and most important raw material, let's say, the most important piece in our direct material is steel. And yes, you have seen that the steel prices has gone up with almost 300%, but you now see that they start to decline. And for us, let's say, in the decline that they're doing today is actually quite good because we can maintain our prices. If we then go into logistics and supply chain I talked before about that we work together when it comes to sourcing. We also work together when it comes to supply chain. We also, I think, have been good in serving our customers in order then to anticipate early when we're going to have supply chain issues. I think here still, even though that we're doing a lot of things when it comes to inbound in order then to make sure that we have full containers that we can sort of negotiate with the shipping companies. I still believe that even though that we have done a lot on the inbound, there is still much more than we can do. And I'm sure there is even more we can do on the outbound. Nico talked before about that we are rather, I would say that we are rather resilient. You can see it on the -- you see it here, like, for instance, also that we have learned a bit also during the way that when you have the raw material were up at 23%, we had an impact of negative minus 50 basis points when the prices went up to 153, we had, let's say, a smaller impact on our results. This comes also, I think, from that we sort of that we have been much better in working with prices. We have also been much better in working with operations. A bit also going forward, I think that now when we come to, I would say, more challenging times, as long as people can move around, we will sort of continue to sort of leverage from our aftermarket business. We are also improving and increasing our service as well as our recurring revenue piece. That's also helping us then, I would say, to bridge. We have seen and that you can also see on this slide that our decentralized model actually sort of works and helps us to go rather fast. And you can also see here that we are pretty flat when it comes to our margin, which means that we are good, especially then in the economic downturn in order then to, let's say, to act in order then to safeguard our profit level. With that, I hand it back to the boss.

Thank you. Our last but our most important strategic objective, our people, the evolution through people. Where like on the customer side, we measure customer satisfaction now standard to a Net Promoter Score. We measure also internal employee satisfaction now standard to employee Net Promoter Score. Our people, most important assets, we had the same positive experience as here [ featured ] in the room. We had our Leadership Summit 2 weeks ago where we get at the 350 leaders from around the globe for 2 days in Stockholm. We talked about strategy, a lot of networking, a lot of those people never met before. And of course, we had fun and we celebrated success. We are working very hard on further creating a common culture, a decentralized organization, but with a common culture, what do we want to stand for as a family. And we built that around our core values and beliefs, and we have the together, we cultural journey together, we grow together, we innovate together, we have fun and so making very good progress there. Health and safety, obviously, very important for us. We want our place to be a safe place for our people to work, and therefore good to see that we reduced our injuries by 20% since 2019, but definitely not happy with the result because every injury is too much. Making good further progress, we are diverse and an inclusive organization. We have 32 nationalities in leading positions. We have 27% females in the managerial position. And then talent management, attract development retain talent are key for our success. You might remember when I started, I also said that I had the ambition to grow more internal talent and have more internal promotions. When I started, more than 70% of all the managers were recruited from outside, less than 30% recruited from internally. We said we wanted to change that ratio around and have at least 70% internal recommitments on higher management levels. We are on that ambition level today. In general, for managers, we are only slightly above 50%. So we still have further room for improvement. But we believe that is very key for us to cost fertilize experiences, cross fertilize our culture and our organization. [ Going to ] strategic objectives, then going to strategic activities. The next block in our strategy house. And there, we have 5 strategic activities to accelerate our profitable growth, continue with successful acquisitions, actively upgrade our installed base, generate more recurring revenue, grow in emerging markets and increase our service penetration. And then we have 3 growth enablers that enable those 5 initiatives, a further consolidation of our footprint and focus our operations on value-added, optimize our logistics, as Erik mentioned, and then reduced product costs through VAVE, operational efficiency measurements and others. For time reasons, I will not go into the growth enablers, but we will zoom in on the 5 accelerators for profitable growth, starting with acquisitions. We have done more than 150 acquisitions since 2012. They're at almost SEK 30 billion sales. And today, we have identified more than 900 potential targets globally. Obviously, we are not talking to all 900 of them, but we have a good filled pipeline of people we are talking to, and we are confident we will be able to continue, I would say, our acquisition machine. We do around 15 to 20 acquisitions per year. Also this year will be a very good year when it comes to acquisitions. A couple of examples, of course, I choose the good examples. I always say that when you do 10 acquisitions on to a fantastic 7, 8 are good, and there is 1 you prefer not to talk about. So I will not talk about that one today. I will talk about the better ones, LUX-IDent acquired in 2019, a leading provider of ID components based in the Czech Republic, HID field. The acquisition [ rationale was to ] further announce our position within smart components and have also operational footprint in Europe and operations that can also handle smaller volume orders, complementing our factory we have in Malaysia, which is more focused on bigger volumes. And as you can see, sales and operating profits have improved significantly more than the group average over the period since we bought this company, very interesting entity. Another very good example Biosite acquired in 2020 in Global Solutions, a leading solution provider of biometric access control to the construction industry on construction sites, access and time and attendance for construction workers. So through solution provider with a very high share of recurring revenue. That was one of the main reasons why we bought this company, very strong in the U.K. And now we have the ambition to expand that to other markets and ultimately become also a global player in this access for construction industry. Also strong sales growth and really a step change of the operating margin. I would say we, as a group, are good in, in buying quality companies, quality companies that make perhaps high single-digit EBIT margin and then bring them over time within that [ 16% to 70% ] band which we aim for and then further grow and expand them either to other verticals to other geographies. We have a clear acquisition strategy. We have our existing strategy based on 4, I would say, foundations. And we have also a very clear investment criteria. So if the different divisions come with an acquisition target, they know what to look for to get a potential acquisition approved. If I comment a bit on the 4. One of them is, of course, to continue to do acquisitions in the core. I would say, continue to do what we have been doing for the last 10 years. We buy a local mechanical competitor. We integrate his operations in our global operations. We give them access to the full ASSA ABLOY product range. So we get operational efficiencies, synergies and we get G&A synergies, still plenty of opportunities on the mechanical side in the world and definitely in the emerging markets, but we see also more and more opportunities on the electromechanical side because there is now more sizable companies on the electromechanical side that become an interesting target. You see a couple of names here of acquisitions that qualify under that expanding the core -- growing the core concept. Then the next one is extending the core. I will stay the same example. A couple of years ago, we bought a Swiss company called Planet. They do very innovative door seals for people doors. Obviously, a door is an important energy consumer or an energy conserver, if you sell it off in the right way. We were not in sales. So when we bought Planet the first tier company, no operational synergies, but clearly SG&A synergies because we can sell it to the existing sales channels. Then afterwards, we bought more sales companies, we bought Lorient, for instance. So then obviously, there is also operational synergies. Then the third one is mainly for Entrance Systems, where we want to buy service companies and distributors and get access directly to the service business. As you know, as I mentioned, we have the ambition to grow our service business high single digit for the coming years organically, and we want to complement it also with growth through acquisitions. So you see a couple of examples that fit under that book. And then last, but not least, new technology, perhaps in the first place, very important for global technologies for HID and for Global Solutions. But I also want to mention Control iD and [ Robot ] to a very exciting acquisitions we did recently, Control iD in the Americas and [ Robot ] in EMEA. So we also continue to expand our technology offering in our more traditional divisions. Our M&A process is very decentralized. It's really the local organizations that come with potential targets. It's part of their strategy, which is an obviously part of the divisional strategy. Every division has an acquisition strategy. Every local entity has derived local acquisition strategy. They go after the targets and they really do all the operational work around the acquisition. And every division has a very small acquisition team. They just give support and they make sure that the process is followed. On group level, we actually only have one person that manages and standardized the acquisition process and make sure that the different cases are presented to Erik and myself in the correct way for approval. We spend a lot of time on the people aspect in acquisitions. As I said, we buy quality companies. Those companies have very good results because of the people. So we always have the ambition to take all the people. Overall, when we do an acquisition, we also look very much -- is there a good fit from a cultural perspective and obviously, from a competence perspective. And then as -- unfortunately, we never can buy acquisitions just for the net assets. We have also to pay some goodwill or some bad will. It depends how you call it. We also have to have clear synergies when we buy a company, and we follow up on the realization of those synergies post acquisition. We have dedicated integration managers in every acquisition we do. And also after the acquisition, the different divisions will then come back to us at group to present how that entity is performing, vis-a-vis, the original plan and if there is deviations, what are then the actions to bring the acquisition back on track. Many of the acquisitions we do are on a lower level when it comes to sustainability. So we really raised the sustainability standard for those acquired companies. There's a couple of good examples here, Amarr. Important shot down on emission reduction Record. And Markus will explain a little bit later on the Record acquisition. They had a much higher accident rates than we are used to in [indiscernible] bringing that awareness up and lifting that level. And then obviously, a lot of operational excellence project in, I would say, most of the acquisitions we do. And to finalize on acquisitions, of course, I have to talk about HHI, and I just want to anticipate already some of the many questions you might have later. We have questions on have you paid too much for HHI because residential market is down, it's going to go down, why does it take so long and your financing is going to cost much more. Does it make sense? And you're spending so much time on that process since a long time. Are you having enough time to run your business. What we can say is that HHI is not for sale today. If HHI would be for sale today, most probably would have paid a different price than we paid a little bit more than a year ago, but they're on a process a year ago. It was a competitive process. We were the winner of that process, and we are very happy with that. The HHI acquisition is for us a once in a lifetime opportunity to give us also in U.S., a stronger position on the residential side. You know that we are very small on the residential side in the U.S. I would say that's a little bit an exception because if you take Europe, we have 45% of our business, which is residential. If you take [ HCA ], they're very similar. If you take South America, the vast majority of what we do is residential. So it's not that the rest is, is not standard. It's more in the U.S. that we are behind them. And now having the opportunity to do HHI gives us that possibility to become also one of the leaders on the residential side. It's true that interest rates have gone up today compared to a year ago, we estimate that our financing cost at the beginning will be around SEK 500 million more than a year ago. That being said, it also means that, that cost will go down very fast because HHI is a good company. It's a good cash generator, and many of the loans will be paid back on a short term. And we'll also see how interest rates further evolve going forward. When it comes to management attention, Lucas, the Head of Americas and Americas management team don't have to spend too much time on HHI. It's really a small team. I would say it's Lucas myself and 1 or 2 people in the Americas division and then supported with a very good competent outside lawyers that work on this HHI acquisition. And if Lucas would already be distracted by this acquisition, I think it's a fantastic distraction because you can see the results of the Americas. So again, we are committed to the HHI acquisition. We are -- what is good is that we will now have a final decision in Q2 next year. So the judge will decide and hopefully confidently decide in our favor because it's clear that we, but definitely also the HHI people cannot wait to join our organization. They see this as a fantastic opportunity. The whole management team of HHI will come over. They know that it will be solved for the last time and then get into a family that will keep them for the rest of their life. We speak the same language. They know that we will invest in HHI, grow the product offering through innovation, widening the product range. They know that we will further build their brands and give them opportunities to be more successful in the market and to serve the American consumer in a better way. When it comes to the U.S. residential market, yes, most probably, it's true that the residential market is slowing down and that you will go through a little bit of a downturn. Interest rates are high. You see new housing permits going down. I think it should make a difference between new housing and then repair and refurbishment. New housing short term will be more of a channel -- more of a challenge, sorry. But again, we buy -- we don't buy HHI for the next quarter. We buy HHI for the long term. And we are very convinced that the residential market is a good market to be in mid and long term for the very simple reason that there is a significant deficit in housing in the U.S. and whatever the economic situation, whatever the interest rates, whatever the [ fact ] decides sooner or later, they will have to solve that problem that there is not enough houses in the market. You also see that the housing age is aging, getting older. So there is also more need for repair and refurbishment. And you see as a matter of fact that repair and refurbishment is still up even today and that is forecasted to go further up. And everything depends, of course, on how much of your business is on new build, how much of your business is on repair and refurbishment. We believe as long as the American families have money to invest, which is the case today. The repair refurbishment will remain a healthy business, yes, perhaps you will see a little bit of a slowdown of the growth short term, but midterm, long term, again, we believe we are convinced it's a good business to be in. We have also reconfirmed our USD 100 million bottom line synergies that we will realize with HHI within the first 5 years. Most of them will come already earlier, I would say, year 2, year 3. We will further increase the brand equity of the brands in HHI and Kwikset in particular, again, through growth, extending all the product range through innovation to adding more value to the American consumer. We will Leverage through HHI also more the transition to electromechanical insight, the house because today, digital door locks is mainly on the front door. We believe we will have the garage door, perhaps you will have your office door or your sleeping room door. You will have cabinets that become also digital. And HHI has the channel to market and the installed base in something we are missing today. We see good opportunities to grow the sales outside of the U.S. HHI is running that today as an export business from the U.S. as having local teams in all the different markets, in the markets where a brand like Kwikset has still very good brand equity. We believe we can do better and grow that sales outside of the U.S. And then clearly, if you are 1 of the more important suppliers to Home Depot or loss. It means that -- and you can do that in a sustainable way, it means that you have also the most cost-efficient operational operations in that industry. So there we can profit from the low-cost operations that HHI has in Mexico and in Asia that we then can leverage to realize cost synergies more on the traditional ASSA ABLOY. So really very excited still about the HHI acquisition. If we then go to the next [indiscernible] upgrade installed base. We want to do that on the residential site and on the nonresidential site. Penetration rates are still very low in general in the market with the exception of South Korea, where penetration is above 90%. You know that South Korea was the inventor of the digital door lock through a company called iRevo that we bought back many years ago, and that plays today still a very important role when it comes to new product development for digital door locks for us. But again, all the rest is still very low penetration, but we see the favorable trends catering for a strong growth ahead. The millennial entering the housing market. The whole in home delivery aspect that is increasing. And then like I mentioned, smart locks penetrating deeper into the homes. If you look on average, a digital door lock has higher average sales price and has a lower lifetime than a mechanical lock. So again, it's a bigger pie to be defined between us and our colleagues in that market. That's true on the residential side. It's true on the nonresidential side. I would say the penetration is still very low. Definitely, when you go into the building and the parameter is perhaps already more from an electromechanical nature, but in an office in a factory, it's still very much mechanical. So all the work still has to be done. And we see there a good in case in investment of upgrade to electromechanical solutions, I would say if something has changed because of COVID-19, it's a further acceleration from mechanical to electromechanical and digital, definitely on the normal residential side. We name here a couple of verticals where this is happening, if I zoom in on 1 education, you see here what the shift to electromechanical and digital means for our different divisions. I will take the same example. The unfortunate shooting in universities and schools in in the U.S., that gives us a lot of extra business because all those Universities, the K-12 schools are now upgrading from a mechanical solution to an electromechanical solution. When a crazy guy with a gun comes into the school. With one push on the bottom, you can lock down all the classrooms and the students and the teachers are locked in the room with bulletproof glass and the shooter counter [indiscernible]. That's, I would say, an unfortunate example of good business for us. Now we have the generation of more recurring revenue, obviously linked to that upgrade for mechanical to electromechanical and digital. The fastest-growing family for us compound annual growth rate of 31% over the last 5 years and now representing 5% of top line back in 2018, that was only 2%. And we still see very good significant opportunities to further grow that Software-as-a-Service recurring revenue aspect with mobile keys, credentials, identity access management and all the other points that you can see on the slide. And perhaps I zoom in quickly on the last mile delivery. Lucas will go more in detail, but we also acquired the company, Luxer One back in 2018 in the Americas division. They do the -- they were packaged local solution for the U.S. market, and they really solve that last mile delivery challenge. They have over 40% recurring revenue. That was also one of the reasons why we bought the company at that time. We see a very nice strong growth potential in general and very nice recurring revenue potential in particular. Growth in emerging markets. I would say dual few, there is emerging markets where we are doing very well. There's obviously some markets like China, where we still have a lot of challenges. Emerging markets represent today 15% of group sales. And we really have the ambition to grow in those markets faster than the group average. And that has to come from a combination from organic and M&A growth, where we will launch products specifically for -- specifically developed for those emerging markets and obviously, we have to invest in, in people and organization in those markets. Lucas will later in the breakout session, explain you our success story in Brazil. So I will not go into detail here. Another good example is, is Europe, for example, here in Poland, where we have a compound annual growth rate of 17% over the last 5 years. And if you see what is for us I would say, success formula is if you enter in a market organically, it's very, very difficult. Most of the time, we try to acquire a market-leading company in a specific product category. And then use that as a platform to grow from scale, from and go into the other product categories and then grow in the market. That has been the case in Brazil. That has been the case in Poland. And again, Lucas will elaborate more on that. Feet on the ground, we want to run that business with strong local knowledge so that we can also develop local solutions that meet the local needs. When we acquired those companies, they come also with a strong local brand that we then endorse with the ASSA ABLOY group brand combining the strength of both. And then we have, of course, the channel and the vertical focus. When I go to the next strategic objective, increase our service penetration. For that, I would like to ask Massimo, Massimo Grassi on stage. Massimo is our head of the Entrance Systems division, so where we do most of that service business, and he will dig a little bit deeper on that. Massimo, the floor is yours.

Thank you, Nico, and good morning, everyone. My name is Massimo Grassi. As Nico just anticipated, I'm running Entrance System Division for ASSA ABLOY. And service is definitely at the top of our strategic list of priorities, and we truly believe that having different customer touch points throughout the entire product life cycle offer us a great opportunity. It starts from installation, we sell and install the door. We would hopefully have the opportunity to have a maintenance contract and certainly or very likely to have the opportunity to repair the door if this become necessary. After a certain period of time, we will have the opportunity to offer an updated modernized installation. And when needed, after, again, a certain number of years, eventually replace the door. So we truly believe that so many customer touch points are an advantage for us. And we try to leverage this advantage with several competitive advantages we have, starting from world-class team of technicians. We have over 3,000 technicians that every day wake up in the morning and strive to make our customers happy and solve the problem. This is one of the most important assets we have, and we are very, very proud of the quality of our service technician. We can certainly offer our customers a quite unique geographical presence, so we can support all of our customers virtually everywhere in the world where they operate. And we can do it, offering them not only doors from Entrance System, but also other product that they may need in terms of their access solutions. So we have collaborations with our colleagues from opening solution rather than global technology. So that's a big competitive advantage we have at ASSA ABLOY. 24/7 availability of parts, which is another very important aspect. Think about one of our customers in distribution and logistics in about a week, 10 days during the Black Friday weekend, the operations need to be guaranteed. So you can't leave your customer down. So having the ability to make our customers feel safe and taken care and offer them peace of mind with 24/7 availability, is fundamentally important. And we can service any kind of door, not just ASSA ABLOY, but every possible door you have, our [ service technician ] can help you having an efficient operations. And as Nico said, innovation is part of our DNA. We are so excited about continued innovation and help our customers to solve their problem. So we have been investing quite massively in these last few years in IoT and connecting our doors. And there is outside here in the lobby, an example of a nice connected door and Martin my colleague at the break or later will be delighted to give you some more details. So this is something that we consider extremely important to offer more value to our customers and offer the ability to have a better total cost of ownership. So we believe it's a real differentiator. And when you look at our offering in service, we start from a reactive proposal, which is the kind of a standalone, which is far to be obvious. I think here, our KPI are excellent, are world-class and serve, it's all about KPI and all about performance. Day in, day out. Then we have a more let me say, developed proposal, which is the preventive. So we engage our customers with contracts that includes visits where we have preventive maintenance. So we try to solve the problem before the problem occurs. And the most evolved one is optimized, which is made possible by the fact that today, we have connected doors. So we can have remote monitoring, we can have KPI available in terms of number of openings and at what time. So this is a great benefit for our customers and also for us because we can eventually intervene before a problem occur. So that's very, very important, and it is possible thanks to our development in terms of connectivity and connected doors. With this, I will hand it over back to Nico. Thank you for your attention.

Thank you, Massimo. Personally also very excited, as you might know about this service business today, it's around 25% of Entrance Systems sales like I mentioned, growing above our ambition of high single-digit growth per year. So a very good job, well done. If we then leave the strategic activities and go to sustainability, I would say sustainability is really embedded in everything that we do. And as we are a global leader in our industry, we also want to be the leader when it comes to sustainability. And therefore, we have also committed to the science-based targets. And you might have seen this morning in the press release that we -- our targets have now also been ratified by the official body. So we have the ambition to reduce our Scope 1 and 2 by 50% CO2 emission by 2030 and then in Scope 3, reduced by 28%. If you go to Scope 1 and 2, I would say we have a 4-point approach to reduce CO2 emission by 50% by 2030. I would say that most peripheral around 80% of what we have to do with clear what we will do. We have identified projects. It's fair to say that for the other 20%, we are not so sure yet. But obviously, we have time til 2030. We are confident that there will be new technologies coming that will help us then to bridge also the gap -- the remaining gap of 20%. So what you will see in order to reach the Paris agreement for Scope 3 is much more important. Scope 3 is 98% of our CO2 emission. So we will have to work very hard on our supply chain, working together with our suppliers doing products dematerialization to reduce that CO2 footprint over the value chain. We are convinced that -- if we bring sustainability in the right way into our operations that it will give us a cost advantage. If we run our operations in a better sustainable way, it will -- we will run them in a more cost-efficient way. We're also convinced if we embed sustainability in the right way in our product development. It will also give us a competitive advantage on the sales side, on the product and solution offering side. So again, sustainability really embedded in everything what we do. So that brings us to the end of the presentation. I will leave you with some key takeaways. So our strategy no revolution, just a further evolution. And we explained and we work on our strategy with our strategy house as the guideline. We have our strategic objectives that really are the compass for everything that we do. They show us the direction to execute on the strategy. And then we have our strategic activities to accelerate the profitable growth, the 5 common ones on group level, complement with a lot of local ones on divisional or on regional level. And then we have the 3 growth enablers that give us the money to invest in that acceleration of that profitable growth. We have and we continue to have the ambition to grow sales with 10% over a business cycle, 5% organically and 5% through acquisitions. And we want to do that with an EBIT margin within the 16% to 17% bandwidth. I would say that we are well on track to reach our financial targets that we set for 2026. You see that our sales has to increase another 33% to reach the SEK 150 billion, or 7% per annum, and our operating profit has to grow another 44%, so 10% by annum. We operate in a very good industry with a very strong positive general market drivers. And in that good industry, we are a clear and disputable market leader. We have a resilient business through our decentralized organization. We can be agile. We have a flexible cost base that supports us in whatever market condition that comes to us. Innovation is for us really a differentiator. It's embedded in our DNA. Innovation goes much wider than just new product development, new solutions. It's also the way we run our operations and our processes. So we believe in a sustainable future, sustainability is embedded in everything what we do and is a competitive differentiator for us. And then last but not least, we have a very strong team, very proud of our team. Our team is our most important asset. We have, as a team, delivered in recent years in very difficult market circumstances, and we are very convinced we also will continue to deliver going forward. Thank you.

Thank you, Nico. It's time to open up for questions now. And we'll do so that we start with the floor here. So if you would like to ask a question -- I'm seeing already hands coming up. Raise your hand is what I was going to say. So we'll start down here with Daniela. While you're getting your microphone, can I just inform those or remind you, those of you who are online, that if you would like to ask a question, please click on the Q&A button at the bottom of your Zoom too. And send a message, which will go then to Carl here, and he will ensure that you get your say eventually. But we'll start, as I said, here online. And with Daniela, please stand up maybe because I think the online views will appreciate that they see you.

All right. So I have 2 things. First, I wanted to ask you regarding pricing. You clearly stated the intention to try to keep it stable, at least regardless of whatever happens to raw materials. But can you talk a little bit about your competitors. Do they normally -- do you see them literally following what you are doing or to what extent is there any difference by regions where you think if stayed lower because raw material is lower at which point you would have to give up or how much market share would you be willing to give up? And then the second point, just on China, I think previously before the pandemic, you aim to get back to double-digit profitability. Then we had a pandemic. Lots of things have happened. Now there's a lot -- no, it's early days regarding reopening but sort of where -- is it just reopening enough maybe to go back to those objectives? Or is there -- how is the underlying operation? Will it take a little bit longer? If you can elaborate on that?

I'll start with pricing. I would say we continue to increase prices. We have also increased prices in Q3. We will also further increase prices now in Q4 and the beginning of next year in general. For the simple reason that we continue to see inflationary pressure. It's true that some of the material cost is down still in particular. But it's also true that general inflation is up and perhaps something people don't talk too much about labor inflation. We had more than 4% like-for-like labor inflation this year. We estimate that to be higher next year. And then like I mentioned earlier, definitely also the whole energy inflation, in particular, in Europe, where we still profit today from all the contracts in many entities that will also kick in. That's the reason why we continue to increase prices, and we'll continue to do so as long as the market follows. We are in many markets, the market leader. And therefore, we have, I would say even the obligation to increase prices first and then see what the market does. If the market follows, we will then further increase prices and so forth, that has been the case. I think also because our more global competitors see the same challenges as us. And then the other competitors are often family-owned businesses that are also in the first place interested in making money and perhaps less interested in how much market share they have. I would say there is one exceptional further increasing prices that is still, still went down 50%, 60% in the U.S. in particular. It's clear that we cannot further increase prices. But so far, we can keep prices and we will do everything to keep the prices up. That's important for our specialty door business in the Americas. Our garage door business and to systems in the U.S. and then our fencing business, our perimeter security business also for Entrance Systems in the U.S. I would say it's the most challenging on garage doors because it's obvious that just steel plates, you could say, whereas on the fencing business, we offer much more solutions. And over recent years, we have also gone more away from the pure commodity fencing offering. And then on the door business in the Americas, it's probably the most protected because often you spec it in together with other things, and so you offer a complete solution to that customer. So far, we can keep prices also for steel, and we are confident we will be able to continue to do so if the behavior in the market has not changed. And therefore, like I mentioned earlier, it should give us a good tailwind as of next year. And when it comes to China, you know that we have had our challenges back 9 years ago, when we acquired several companies and had some issues in those companies. Around 3 years ago, we decided to change our strategy for China. On one side, consolidating our brands and going to market with 2 strong residential brands and one strong commercial brands, [indiscernible] is a quality local Chinese brand on the residential side and then Yale as an international brand on the residential side with a global Yale team for China and a global [indiscernible] team for China, where in the past, there were more sales teams built around the different individual factories. And then on the commercial side, the ASSA ABLOY brands, where we invested a lot in spec writers and then focus on specific verticals to spec in our products and then make sure that we sell that through. We also decided to consolidate our operations, get scale effect and we also decided to consolidate our innovation hubs. I would say, on the operations side and on the innovation side, most of it is done. We are also having these 3 commercial teams up and running in a good way. We continue to invest in them. And prior to the construction crisis, prior to COVID-19, we were making good progress. We start to grow again redesign and we start to improve our margin. Historically, we made very low single-digit margin in China, and we were able to double that prior to COVID-19, by the way never said on [ yellow ] that we would make double-digit margin. In China, we said we will have an ambition to make high single-digit margin in China. We believe that is possible. And we also believe if we are competitive against the local Chinese in China. With those products, we have fantastic products that we can export to Southeast Asia, perhaps even Australia, New Zealand, Africa, Middle East, with very good margins. Then unfortunately, construction crisis hit us. Mr. Shea has decided he wants to change the way they run construction in China, and he's right because the way they were running construction is obviously not sustainable. We have said from the beginning that, that change will take much more than just a couple of quarters. It will take a couple of years because the wealth of the average Chinese sits in construction and also the many of the local authority sits in construction. So it has to be a balanced approach and that's what we see today. So the construction market is still significantly down. And as we were very much skewed towards new builds in China, something we wanted to change because we wanted to change from residential to commercial and from new build to replacement. Obviously, we are still hit very hard because it's the new build, which is hit in the first place. And although we see very good traction on the strategic initiatives that we launched like commercial, I mentioned we grow on the commercial side despite a declining market. We see a good shift from new build to retail replacement, but those shifts are too small to compensate for the big drop that we see on the key accounts, partly because of the market, partly also because we have decided that we don't want to do business with many of those key accounts because at the end of the day, the ambition is to get paid for what you sell. And that is a challenge with many of them. So it will take longer time. We have a double-digit negative growth today in China, and we are having negative profit in China. That will not be solved in the coming quarters. It will take a longer period, but we are confident that our strategy is still the right strategy and that ultimately, we will get where we want to be. Then obviously, the whole zero tolerance when it comes to the COVID is not helping, and there's very little mobility in China. Everybody got excited now because the [ current ] team was reduced with 3 days, but it's still a very challenging situation. We want to go to China. You still have to sit a week in quarantine. And there is still the fear that if you go from one city to the other, there is a COVID outbreak, then you are stuck in that city. So I think it's not solved yet.

Thank you. A few hands. We'll take its next to you.

Rizk from Jefferies. Just a first one on the opportunity on the green buildings. Can you give us a sense of how big that is in terms of sales? Do you see this as more a new construction opportunity or also more on the renovation side? And is this as a big of a theme in Americas as it is in Europe? And my second question, just very quickly if I could just squeeze one in. It's just -- thanks for the update on HHI. Can you perhaps just help us with the costs related to the carve-out of Emtek, [ August ] and [ EL ] in the U.S. if you have to do those as well.

We'll start with the first one. Obviously, green is a drive in the first place in Europe today. It's much more important in Europe than in the U.S. or in the rest of the world. But we are confident that this is a trend that will become a global trend. We see more green buildings, for instance in regions where perhaps you would not expect it directly in regions like the Middle East. So today, Europe spreading around the globe. It's obviously for new build and mainly for new build and for refurbishment. And as you know, we have 2/3 of our business, which is aftermarket -- so it's only on the other part. And it's in that part only on the specified business. But within our spec business is by far the fastest-growing subfamily, you could say. And like I mentioned early, and like shared in the presentation, a green project is on average around 20%, 25% more expensive like-for-like with a traditional mechanical project. So if every project you can transfer, the pie becomes 25% bigger, and there is less players in the market that can offer a green solution. So you take the low-cost players out of the equation. So a bigger pie to be divided with less colleagues. When it comes on HHI, there's different costs. There is first of all, the running cost of our lawyers, they are expensive. We pay around SEK 20 million per month to our lawyers around 2025. We had SEK 80 million, I think in Q3. We had SEK 60 million in Q2. And that run rate will continue till the judge decides, so till mid next year. Then of course, we have -- the bankers that helped us now helping us with the acquisition and the divestment that we will have to pay at that moment when we have a positive outcome by the judge. I would say that the divestment will happen under the condition that we can approve or that we get approval from the judge for HHI. So it's so that we go to the judge with the divestment proposal in hand. We have also the ambition to have the potential buyer in front of the judge as soon as possible. We are running that process as we speak. We get good traction as well from private equity assets from strategic buyers. And we are very confident we will have a good buyer in front of the judge soon. Quality assets, I think it's a very nice business. Our smart resi business, it's a very nice business in the U.S. It's businesses that we don't want to divest that we would prefer to keep with us. But unfortunately, that's the only way we can mitigate for the concerns rate raised by DOJ. I would say the cost around that are limited, just very simple divestment of those 2 businesses.

And we have the next question. I think we take Lars.

Lars from Barclays. Maybe just a follow-up on risk questions around green and regulation. I'm trying to trying to get my head around the Windows opportunity. We've heard a little bit more today about I guess, green and regulation, but particularly auto glass seals, we've had a year where you've closed [indiscernible] Caldwell in the U.K. could Windows be the next door opportunity, if you want to put it that way in the world of ASSA ABLOY. That's my first question. Second question, I wonder maybe to Nico or Massimo. Lots of focus in Entrance Systems, obviously, on industrial doors and pedestrian. Haven't heard a whole lot around the 2 smaller businesses, particularly residential. You closed Amarr, what, 10 years ago, been pretty quiet around that part of the business. What's the strategic future for that within Entrance Systems? And maybe thirdly, if I can, just on MFP 9, Eric, I know there's limit how much you can say, but is the reason why it's delayed that you're rolling out maybe some projects in Europe. We've heard both you guys talk about some additional cost-out measures in the Q3 call. And also on the faster payback, should we think of that similarly to MPF 8 as being less around factory consolidation, more around retirement, early retirement options? Are those some of the reasons why we should see a faster payback on this MFP?

So lot of questions. If we start with the Windows, we are obviously only in window hardware, and we are only in window hardware in specific markets. We have a good position in the U.S. We have a good position in New Zealand, Australia, Japan. And then we have a good position in some markets in Europe. And in Europe, it's in those markets where the channel to market for window hardware is the same as for door hardware. We don't want to be in window hardware in those markets where it's separate channels in Europe because the margins are, I would say, very depressed in those markets and very different from our [ 16% to 70% ] ambition level. So it's a more selective approach, but it's definitely a very interesting business for us. The difference is perhaps also on the hardware side, it's much more an OEM channel. So we delivered that window hardware to the window manufacturers. And I would say they offer them a more complete solution into the channel. So I think it's a different story than on the door side where we also sell the door itself as well in the U.S. as in Europe as in China. When it comes to your second question.

We haven't talked so much about residential. We would love to talk about residential.

In Entrance Systems, perhaps if we dissect a little bit the 4 segments, and we start with the smaller ones and smallest agonize in this case, parameter security. It's around 20%, a little bit less than 20% of Entrance Systems, very nice business, growing very high double digits on top of very high double-digit a year, go to that extent that again, also there, we are now beaten by mathematics. You cannot continue to grow high double digit or high double digit or high double digit. But margins in line with the Americas division. So very accretive when it comes to overall margin for Entrance Systems, done a very good job by the team in segmenting the market and going now to the market with a solution for the different verticals. They have a specific fencing solution for data centers, a specific solution for warehouse specific solutions for high security and the really grew significantly faster than the market in the recent 2 years. So very good job well done. This is a U.S. North American market. The market dynamics in Europe are very different, also very different margins. In the U.S., Canada, you can sell the product and then a dealer or a partner will do the project where in Europe, you have to do the whole project. So you also have to dig the holes in the [indiscernible] The Second one you have your question about second smallest or the third biggest you could say is our residential segment also around 20%, a little bit more than 20% of Entrance Systems, mainly a U.S. business today. We are small in Europe, but we definitely have an ambition to grow significantly in Europe. That was the one when we created the 4 segments with the lowest margin mid-single-digit margin at that time. And we said that the focus was in the first place to significantly improve that margin. And we have succeeded in a very good way, I would say, with that ambition. We knew that it was possible because we knew our colleagues, competitors in the market showed much better margin than us. So we really had a focused approach. And we are there now on nice double-digit margins for that business, growing very nicely, of course, also helped by pricing because it's steel. It's a piece of steel that you start. Then the third one, the second biggest is pedestrian where Marcus will later also talk about the agta record integration. Nicely growing. Though agta record, we also got access to a wider product portfolio that we can further widen our scope. We can go into hematic doors. We can go into security systems for airports and so on. And I have said often that I'm perhaps one of the few that likes nonfood retail because perhaps nonfood retail goes down, but what remains of nonfood retail is of a higher level. So the pure mechanical doors will disappear and are replaced by high-end sliding automatic doors. So for us, it's a good business because we are not in manual doors. We are only in automatic doors. This -- the agta record acquisition gone very well, much faster to realize the synergies than we expected with a very successful acquisition. Although also there, we had to wait 18 months. And also there, we had to divest some of the business, but with inside very, very good addition to the group. And then the biggest one, the industrial segment, I think around 40% if you -- at app. Loading docks section on those high-speed doors, of course, driving on the logistic wave, the building of warehouses, but also with our high-speed doors on the automotive wave, Automotive is an important vertical for high-speed doors. And it's not so important how many cars they make, it's more important how many new models they bring to the market because then they have to really out the assembly line, they have to real out in Tier 2, 3 and then they need a lot of high-speed doors. And in pedestrian and in industrial, obviously, our service is very important. And like I mentioned, very happy with the development there.

And then if we go to MFP, I think there -- I mean if you look on -- I think we had a rather fast payback on the MFP 8. What I meant was that it will be similar on the MFP 9 as you rightly said in the MFP 8, yes, we did a round of pre-retirement. Let's say that we did that in 8. So I think in the 9, you're going to see more of the classical mix of factories, offices, et cetera, et cetera. But as we have already highlighted, the program as such will be smaller than the ones that you have seen before.

The MFP 8 was SEK 1.5 billion. This one, we are still consolidating the figures, but it will be somewhere between SEK 1 billion and SEK 1.5 billion. Like Erik said, with similar, perhaps even better payback than MFP 8. The reason why we will do it now in Q1 is that, okay, it's only 18 months since we launched MFP 8. And MFP 8, of course, there was some extra drive because we just went into COVID-19 crisis so [indiscernible]. And the way we run the process, of course, we also discuss those projects with our auditors. We have to inform the people that are affected by these programs. And therefore, we have to make sure that we do it in the correct way, and that's why we come now in Q1.

Thank you. We don't have any questions online at the moment. So we'll continue here, and I saw Mattias close here. And then -- was there a hand over there? Then later.

Mattias Holmberg from DNB. A quick one on acquisition targets. I think you mentioned on the last Capital Markets Day that you had identified more than 1,000 potential targets. So I would be interested to hear if this number is still accurate or if there's been any development here. And then another question, you mentioned several areas where you intend to grow faster than group average in service sauce and so on. Implicitly, that means there are some other areas where you would allow for below group average growth. So I'm curious to hear which areas those are and why?

On acquisitions, I think we said in the presentation, 800.

900.

900, if we said last time 1,000. Okay, we can debate if it's 900, 1,000. It depends on what you define as an active target. And the message is there is more than enough meat on the plate to continue to play the acquisition game for the coming years. And like I mentioned earlier, we have very good well filter acquisition pipeline. You often hear me saying that I'm happy but not satisfied. I'm definitely happy with what we have in the pipeline today, and we are confident we will do more acquisitions now also in the coming quarters. Your second question on where we have areas where we will grow where we -- really -- I mean if you take mechanical business, which is 25% of group sales. If you look over the last 5 years, that has only grown around 2%. So that's an important one that goes lower than the 5% that we have in an ambition. And then we'll continue to do so as we continue to see a shift from mechanical to electromechanical and digital. We are investing in our mechanical core because obviously, it's still a very good core. It's a good cash cow. It's a good profitable business. And we believe also that through innovation that we can do more and perhaps we can further increase the growth speed on the mechanical side, but obviously, it will be below the 5% group level. So that's one important one. And the other one, we will see China, but China will not turnaround in a very near future that, like I mentioned earlier, will take a little bit more time.

We have a question down here.

Alex Virgo. BofA. A question on Dynamics, Nico. I wondered if you could talk a little bit to the push versus pull on SaaS and green just as a -- how much of this is being driven by you pushing new products and capabilities into market? How much of it is being asked of you? And then second question, just on growth, your 5 versus 3, if you could give us an impression of what you think is the biggest contributors to that acceleration? And as a sort of a housekeeping, how much would you expect underlying price to be from your innovation efforts.

On push and pull for green, we will always I guess, overestimate our own efforts on push. I would say that in Europe, it's definitely a lot of pull from the market. There is a strong driver also through legislation. So in Europe, it's in the first place pull and us following. But clearly, we have an active approach when it comes to approaching architects presenting them our product portfolio, explaining them the advantages, and we have also relatively a higher investment when it comes to new product development around green. I would say in the rest of the world, it says in the first place, pushing in the Americas, in other places in the world, we try to push the concept because we see it as a good business opportunity and a good differentiator for us in the market. Second question was on the 5% growth, which are the main drivers. Clearly, price in recent quarters. Before COVID-19, we were in a low inflationary world where price was 1% per year around. I think if we go forward and one day, we come in a stabilized market. Let's see if that happens one day. I think there is consensus that we will be in a higher inflationary world and then perhaps price will be 2%. I'm just saying something. So that means that we need 1% less volume to get to the 5%. So that was an important driver in recent quarters will, I think, be an important driver also going forward. And clearly, service, like we mentioned, our ambition to grow service high single digit, and we have today, we grow double -- low double-digit service. Third one is everything that has to do with shift from mechanical to electromechanical. You see over the last 4, 5 years, we grow our electromechanical business around 11% or 12% organically versus mechanical only 2%. And then like I mentioned in the presentation, the whole recurring revenue aspect is Software-as-a-Service, which was 4 years ago, and need 2% of top line today, 5% of top line. We would like to add to that also emerging markets. But obviously, with the situation in China, we are not delivering on that ambition yet globally. We see good pockets, like I mentioned, South America, fantastic success story in emerging markets, East Europe, Middle East, but Chinese too big in the total to see that in the total picture. And then your last question was..

No, we answered it. I think price, if you said.

Okay. The price I said.

I know that there are more questions out here, but we're a little bit behind the schedule now. So please save your questions for the final Q&A that we will have in the afternoon, and we'll ensure that you get the opportunity to ask questions then. So with this, I'd like to conclude the Q&A.

Thank you for joining this first session. We will now take a break here in the venue. While the people here are looking at the product displays, we have prepared 2 videos for you. One, with our Head of EMEA, Neil Vann. He will show you EMEA's product displays that will provide an overview of the evolution of the lock industry from mechanical locks to the sophisticated access systems that we offer today. There will also be a second product demonstration of a connected sliding door that we have here in the lobby. This will be demonstrated by Martin Sagnerias, who is Digital Services Manager at Entrance Systems. For those of you who are connected by Zoom, I have circulated the link in the chat forum that you can follow and watch the videos on-demand. If you're following us via the website, we'll now run the 2 videos at once, starting with EMEA. After these 2 videos, there will be a break before we start the next session with Americas. [Presentation]

Welcome to the presentation of the integration of one of the largest acquisitions in ASSA ABLOY's history. Let me start with giving you some background on agta record. Agta record has been founded in 1953 by Heinz Helmut Bunzl. Agta record is headquartered in Zurich and was at that time, listed at Euronext in Paris. It was -- we had about EUR 400 million sales and 2,500 employees. The agta record product offering is the sliding door, swing doors and revolving doors. In these product categories, we have an overlap with the ASSA ABLOY Pedestrian business. Additionally, agta record offer hermetic doors, security entrance control and other special products. Agta record is a global company with a strong presence in Europe. 80% of the sales is in Europe and 50% of the sales in North America and the rest around the globe. We have been present directly in 13 countries and had a dealer network around the world. Let me talk about the rationale of this acquisition. First of all, a strong market position in Europe and in North America. Even if ASSA ABLOY in the Pedestrian business is strong as well in these 2 areas, there's still quite some complementarity in this because ASSA ABLOY in Europe is strong in the Northern part and agta record in the southern part of Europe. And in North America, ASSA ABLOY is a strong in the direct business and record strong in the indirect business. A second very important point is the strong service business of agta record as ASSA ABLOY service is a key focus topic for agta record. Before acquisition, service was roughly 40% of the overall business. In the meantime, it's even slightly higher. Third, strong product technology of agta record. The agta record products are known in the market as very reliable products. On top, they are cost-efficient and suits to customer needs. Fourth, the powerful brand, the record brand is one of the most powerful brands in the automatic door business globally and last but not least, an experienced and knowledgeable team on all levels. This acquisition was definitely a long journey. Basically, it started in 2010 -- in October 2010 with the acquisition of 33% of agta record from Somfy. I personally remember these days because it happened just 1 day before my second round interview with the Chairman of agta record. And I still remember the discussions we had to protect ourselves against this takeover. So that's why we have put in place these days, a shareholder agreement between both of the founder and the French bank for 5 years, and this has been prolonged then in 2015 for another couple of years. Finally then, in 2018 -- early 2018, we have decided to enter in a sales process. And that's why in March 2019, we have signed an agreement with ASSA ABLOY to sell 54% of agta record's share. After that, we have started a quite lengthy merger clearance process. It ended only in August 2020 with the final approval. In February 2020, we got conditional clearance. However, we have been asked to sell 6 of our businesses. And finally, we have completely closed this transaction with the divestment at the closing of the divestment of this company -- in companies in 2020. Now let me discuss about the integration. In an integration process, governance is absolutely crucial. And with this project, we had a very strong governance, starting with the steering committee consisting of senior managers with Erik Pieder Group CFO, with Christopher Norbye at that time, EVP for the Entrance division with CFO of Entrance and this as well the business area presidents. Then we had a full-time integration manager with a small integration office. And we had 9 work streams. And within these work streams, we had shared teams between ASSA ABLOY managers and agta record manager. The 9 work streams were: HR, HR was about HR processes, HR tools and policies. A very important work stream was as well organization. This was about the overall organization, how to combine these 2 businesses, but as well about the organization within our business unit in the areas where we had an overlap in the market. Then communication from my perspective, one of the most important subjects in such an integration and we come to this topic in a minute. Service as well crucial for our success. Service is the area where quite an important part of our synergies came from. In this work stream, we have defined the service strategy -- service organization and as well shared best practices between the 2 organizations. In the equipment/product work stream, we have defined the product strategy. We have been starting with comparing the cost levels and the features of the different products. And based on that, we signed a joint product strategy. We have as well been working on a cross-selling strategy, so to enable the ASSA ABLOY business units to sell agta record product. In the R&D work stream, we have pretty soon merged the 2 R&D organization. This was not at all about cost savings. This was about strengthening our innovation power. In the meantime, we have even more head count in R&D than we had before in the 2 separate. We really focus on innovation in our journey to growth. Operation. Operations was about manufacturing footprint on the one hand and on the other hand, about supply chain, classical sourcing savings, as you might expect in an integration. Then I come to more -- 2 more technical work streams. IT, about IT infrastructure, integration, the record IT infrastructure into the ASSA ABLOY environment. And last but not least, finance and legal. This was about the integration of agta record into the finance reporting schedule and systems of ASSA ABLOY. I must say this was -- it seems to be quite technical this financial integration. However, we got quite some benefit out of this because with the new reporting, we have significantly better information to take decisions. As mentioned before, communication is crucial in such a journey. Soon after the closing, we have started with providing newsletters, newsletters about the organization about products, spotlight on some employees from both sides. We have as well performed a cultural study. We wanted to know more about the differences of the culture of the 2 organizations. In the end, it was quite surprising to see that there are much more things in common than the differences. I would say the major difference was about centralization versus decentralization. But the record organization was even more decentralized than the ASSA ABLOY organization and therefore, slightly more entrepreneurial. What we wanted to do and what we did then in this integration journey is we got the best or we try to get the best out of both worlds. We have checked as well the status of the integration with service. We have asked regularly our employees about this integration, and I come in a minute to the results of that. And then we have launched a joint communication concept under the claim 'growing stronger together. ' We have asked our employee -- our employees regularly some questions. Here in this case, to what extent do you agree or disagree with the following statements. The company is getting larger and stronger, not surprisingly, more than 90% agreed to this question. But as well, more than 80% have agreed to the question that I think the 2 companies are a good fit together. And only 3% have disagreed or strongly disagreed. I can learn for my colleagues as well here, a large number of our employees have agreed, and I have more opportunities to develop and progress as well here, we have a high number of employees that has to this question. Overall, a very positive results and very positive feedback from our employees. And I would say that this is as well underlined by the fact that we haven't lost -- or we have hardly lost any of our key employees during this whole process. Where we are today? Today, we are operating as 1 segment organization. We have roughly 5,000 employees and EUR 1 billion sales. We are operating with 5 geographical organizations and with 5 product units. We are operating with 3 main brands. ASSA ABLOY, we use for the direct channel, Record we use for the indirect channel, and Ditec we use for our gate automation business and as a second brand in our indirect channel. We are present -- directly present in 33 countries, and we have distributors in more than 100 countries around the globe. We are #1 in the pedestrian business globally. We are as well on track if it comes to capturing synergies. The main contributor to synergies are service. Here, we have much better scale and coverage. This gives us a cost advantage. Then we have shared best practices between the 2 organizations, best practices around converting service contracts, creating growth and as well best practice about preventive spare parts and a lot of other processes. Product and Innovation. We have started, as I have mentioned earlier, to cross-sell each other products, mainly the Record product because this was the product spectrum than the ASSA ABLOY one mainly the Record product into the ASSA ABLOY business unit. Very successful as well was the VA/VE work stream value analysis and value engineering. We had a strong team in record working on value analysis and value engineering, and we could benefit from that now in the ASSA ABLOY world. We have, for example, reengineered motor that allowed us to change suppliers and to have significant cost savings. Product innovation now with the merged R&D team, we are significantly stronger in R&D, have our first successes and will have a much higher innovation power as well in the near- and long-term future. If it comes to operations, it's about the classical sourcing savings. That's not surprising in such an integration. It's about manufacturing footprint optimization, and it's as well about merging selected business units around the globe where we had 2 business units operating in the same market. I come already to the end of my presentation. I would like to give you a short summary and the outlook. I think it was a very successful integration of agta record into ASSA ABLOY. First of all, we retained our key employees, the very vast majority of our key employees, and we are successful with the synergy capture. We have as well merged the 2 businesses into 1 operational business segment. We have an increased customer focus. We are closer to the customer. We have a higher density in our service business. And therefore, we have much better customer focus than before. We have as well invested in our product and process innovation. We have jointly defined a new strategy under the claim Aiming Higher. Thank you very much for your attention.

Hello, everyone. I'm Lucas Boselli. In this breakout section, we're going to talk about profitable growth in emerging markets. In specific, we're going to walk through a case of our journey in Brazil, part of Americas division. I'm going to take you back a little bit before we dive into in Brazil to talk about our Latin America extension. As you can see, in the past 10 years, we've grown dramatically in the region, both from an acquisition perspective but also from an organic growth perspective. We opened several distribution centers throughout the region and investing heavily not only new product introduction, but also for the industry. As we think back a look in Brazil as a whole, our business there is about SEK 1.1 billion with a 26% CAGR growth over the past 2 years. We have over 1,500 employees with 5 factories throughout Brazil, both in the Northeast, the center of Brazil, but also in the South. In our business, it's primarily residential, 95%, but I'm going to talk a little bit of the great opportunity that commercial presents to us. And it's still a very heavily mechanical market, but we are playing a very instrumental role in transition the market from mechanical to electromechanical. If you look at where our portfolio lies in Brazil, we have a vast variety of products and solutions and software to different markets. If we start in the residential, which I mentioned is 95% of our business, we have a vast portfolio, both for single-family and multifamily. And when it comes to commercial, we have developed through acquisitions and organically, a variety of access control and mechanical commercial solutions going from the perimeter to the shell to the interior side of the building. But what's most important about that strategy is not only from a portfolio perspective but also from a price point perspective. We have developed a broad portfolio through acquisitions and organically from an opening price point to the medium price points and also to the high price point on the residential side and the hardware. But also looking at other opportunities as window applications metal fire doors and also access control, specifically with our recent acquisition of Control iD in Brazil. Speaking of Control iD, Control iD it's one of the leading developer of hardware and software for access control in time and attendance in Brazil. This gives us a great platform not only to grow in Brazil but also Latin America in the heavy growing biometrics market. Control iD provides a market-leading capability from face recognition and fingerprint recognition, both in the commercial and the residential side and also gives a great operational capability to provide even more capabilities to produce not only the existing portfolio, but other existing portfolios that we have, especially digital door locks for the residential market. If you look at the Control iD portfolio, there's a variety of products that we've been developed over the years, both as a point solution, but also as an element of a larger ecosystem. Control iD has worked with the leading OEM access control manufacturers, not only in Brazil, but also the rest of the Americas and presents a great platform for us to integrate our existing software and hardware as part of a broader ecosystem, not only for Brazil, but the rest of Latin America. If you look at a little bit of the history of our sales in Brazil, it's been a nice and steady growth. Even during the pandemic, we just had a small dip and we're able to grow the business dramatically during the past 2 years. Another -- some of the key drivers that were responsible for their growth varies from the glass hardware, which is a business that we started organically from scratch. The B2C and both B2B e-commerce, which I'll talk a little bit later, are definitely growth in digital door locks with a specific team dedicated to the region, some dedicated channel-specific homebuilders, some penetration in retail and lastly, a non-residential opportunity, although we have grown tremendously there, which means still a lot of opportunities for us. If I deep dive on the B2C and B2B e-commerce, we are the only manufacturer in the region who provides that direct relationship with the end consumer. So we sell direct to customers and consumers in Brazil through our own web shop and are able to deliver the products with less than 24 hours throughout Brazil. Also, when we talk about the non-residential, it's been a market that I mentioned. We have had significant progress, but there's still a huge opportunity ahead of us. As far as non-residential, we focus on a few critical vertical markets by doing 3 things well. First one is a dedicated sales force specific to this segment. The second one is a local specification team who can work with the local architects, local end users and local decision makers. And the third one is the portfolio localization, how can we develop a portfolio that's right for the market and right for the end user. As we look at our strategic focus areas, there's 3 main pillars. The first one is how can we continue to have sustainable profitable growth. The second one, how we're going to continue to gain market share and the third one is customer experience. If we start with profitable, sustainable growth, one of the key things that we continue to do is value-added value engineering. This is a great opportunity from recent acquisitions, especially across product lines we haven't been optimizing in the past few years. Here's an example of a Papaiz Padlock from acquisition that we did a few years ago. The second one is the continued investment in the localization of products and R&D. This is a great investment that we have done, not only in engineering but also product management to make sure that we have the right product for the right market. And third one is NPS, just like the overall Americas, in Brazil, we are very focused on Net Promoter Score and focus around 3 major areas, which is order entry, customer service and delivery times. And lastly, a huge important thing for us is feet on the street to generate demand with our end users, with specifications and our channel partners. We have over 100 feet on the street in Brazil, and we continue to make investments in that area. Lastly, I would like to leave with 3 main thoughts. The first one is sustainable and profitable growth throughout the region through operational excellence, local demand generation and mostly important innovation. The second one is building an agile and resilient local bench strength, having a local organization who is sustainable and stable. It's very important for our long-term growth of the country. And the third one is accelerating the migration from mechanical into digital, not only on the residential side but also on the commercial side. With that, thank you for your time.

Hello. My name is Björn Lidefelt. I'm the Head of HID. And in the next 20 minutes or so, I want to introduce you to HID, the products we have, the businesses. And I also want to take you through in a mobile setting the world that we operate in from the identity through credentials, reading of those credentials and the broader use and the ecosystem of HID mobile. To start with, I want to talk a little bit about HID. We first look at HID, we call ourselves the leader in identity solution, and we power the trusted identities of the world's people, places and things. Every day, millions of people in more than 100 countries, use our products and services to securely access both physical and digital places. Over 2 billion things that need to be identified, verified and tracked are connected using HID technology. And when we do this right, our customers are allowed to work productively, transact securely and travel freely. We are the leader in enabling trusted identity solutions. And there are really 4 things that we are focused on to deliver on this mission. Number one, we want to create significant customer value through the products that I will show you today, but also by being very customer-centric. We want to lead digitization of our industry, and we want to do that across a number of different product spaces. Third, we talk about leadership. We want to lead in a global manner, which means leading and being top 3 in emerging and mature markets. And last, but the most important thing is building and empower an innovative performance-driven culture here at HID, where people come to succeed. We service our customers across a broad range of different verticals, where the government and public administration, health enterprise, financial and insurance and educational institutions are by far the larger verticals that we serve. And our business is broken down into 6 business areas that you can see here on the slide. And as we go through the product, I will refer from time to time to the products and the different software solutions that we have and how they fit into the organizational structure. What I wanted to do is start by giving you an introduction to these, showing you a few movie clips as well as introduce you to our head office based in Austin, Texas. So stay with me for a minute where we walk through the HID portfolio in the eyes of the product and business units. [Presentation]

That's a short way of looking at our product portfolio and our business areas through the lens of the business areas. What I want to do right now is take a slightly different perspective. And we're going to do that using the mobile access or mobile as an example. Everything we do at HID starts with an identity. Identities are created when you're born, but then they're added -- information is added to those identities and kept in databases in our partners' ecosystems. That could either be technology companies, managing your active directory at work, or citizen-type databases managed by our government. We integrate with these and we pull the data we need from these databases to create a credential. That credential is carried using a credential technology. This is something that's very important to HID. It's at the core of what we do. And we work across a broad range of different technologies when it comes to credentials. And the credentials are really designed for the purpose of which type of application you use for it. Seos is our own credential standard designed specifically for mobile access. But we also have external more market standardized credentials. Calypso is one such example, used for mass transit ticketing purposes. And like I said, there's a wide range of other third-party credentials that we not only use but also enable our readers to read. Once you take a credential technology, look at it as a code of software, we combine it with the identity of someone, with or something, we can now create an actual credential. Credential in the mobile space can be carried on phones or on watches or any other digital device. We talk about BLE or Bluetooth-enabled credentials. We also use RFID credentials, which uses the technology on the phone or the watch from a near field or RFID perspective. There's also other types of mobile credentials that use barcodes or other optical type of standards to be read by different readers. So we now have a technology in which we put the identity and we issue a credential. The issuing and provisioning of credential and managing of that credential through the life cycle of the credential is very much at the core of what we do at HID. Those softwares are either parts of an ecosystem that we supply to our partners and allowing them to build out their ecosystem on top of or in some cases, like citizen identity or ticketing, we provide those entire systems or solutions to the integrating customer. We have, for example, access control specific software and integrations, which allow you to provision a credential onto a phone, into an app, they could be an HID app, or it could be into the secure element or digital wallet of a phone. We also have systems that allow you to manage that credential across a variety of other systems. Think about this. You have a large airport with multiple wings and terminals and systems. They can have up to 5 or 6 different access control and security systems that they work with in parallel. At HID, we offer products like HID Safe in the IMS business unit, where we essentially allow the provisioning of one credential to flow through these other systems, allowing an individual to move freely through the airport through different types of systems without having to reissue or manage that credential through the life cycle in 5 or 6 different systems. We do the same thing, not for buildings but for events. When you walk in to watch a sports event or a type of convention, we manage not only the visitors to that event with the ticket but also the staff required to move through that building as if it was a normal workplace. And similarly, for citizen Identity, our goID program allows you to manage virtual credentials like a driver license or national ID in a phone or an app. One such example of how that representation of a credential looks is through our HID app, which is where you basically store within the HID app, a mobile credential, this specific one, is for my office in Austin. We also provisioned these credentials onto the phone to secure elements, allowing you to use, in this case, the Apple Wallet to securely store your mobile prudential. Now once you have this credential and you run it through our ecosystem, one of the most important things you want to do is read the credentials, so it can be verified. HID has a very large range of different types of readers that carry across different technologies, different use cases and different types of applications. If we start with the most traditional and most commonly known, the access control reader, which I again will illustrate with the mobile Apple Wallet credential here, I take the credential and I read and the green light indicates that I can get access. Similarly, we use the same mobile credential through our extended access technologies, and we embedded into, for example, a software program. I can also take the same mobile credential and authenticate to log on to my work computer by integrating with an Apple enabled embedded reader from the extended access technology business area, allowing me to log in to the computer at work. We also have readers for other types of applications. This is a handheld representation of a mobile access or a physical credential reader that allow us to read at scale, either many applications or again, scan your mobile device at a venue or an access point of your choice. All these different capabilities in the form of finished readers can also be supplied to you through HID in an embedded or a chip version, which extended access controlled us. And it allows any partner of ours to integrate RFID and credential technology from HID to extend the ecosystem. It allows you to print or transact with vending machines or access a communal locker at your workplace. There are also other types of readers that allow you to read mobile credentials. In this example here, it's in the shape of a barcode that can be stored on a physical printed version or your mobile phone and read by an optical device. Last, on the reader side, we also have tools that allows you to upgrade and performance manage your installed base of readers in the field. Essentially, all these mobile-enabled or capable readers needs constant firmware and software upgrades. And we are able through HID tools in the physical access control area to do that remotely. Last, on top of the mobile prudential and identity, we can use the power of the phone and the information that we can get from the phone, including location services and analytics to build out services on top of the access or mobile ecosystem that we already spoke about. We do that to, for example, validate that not only have you scanned your credential on the reader, but you can also put a time stamp and a physical location point knowing that not only the right credential was scan, but the person was also present at the point of scanning. We also allow our partners to build solutions on top of this that extends beyond what we consider to be core for HID, really taking the mobile access as part of a feature and extending other features around that to build out, for example, occupancy, efficiency or in the case that I will show you here in a second, onboarding and management of employees in the company. So I want to play you a short video showing how that works with a partner that we recently launched with called Jamf. [Presentation]

So that's a great way of showing how our ecosystem can enable others to build out theirs and provide additional services, which includes mobile access or log in. The last thing I wanted to talk about around this is the world in between the mobile access and the physical -- the mobile credential and the physical credential. We normally personalized a lot of credential here at HID. And what we've done is taken a digital version of the credential or a mobile version that can be issued to a phone and instead, we issue it to a printer terminal, allowing you to print a credential or physical credential is a complement to the digital credential that you keep in your phone. So if you look here, this is a terminal, and this terminal can instead of a phone or a watch, also receive the digital credential allowing you to issue a physical credential, which essentially is then used as a physical identification at work or for other purposes like scanning in to work from time and attendance perspective or allows you to talk about other things like have you taken the right compliance trainings. So this essentially covers the simplified version of our mobile ecosystem at HID. But of course, what we do extends far beyond mobile. Actually, our heritage is far more physical and based on physical credentials. The same logic applies. You have an identity, credential technology, credentials, but when they become physical, we have a whole different range of different type of credentials. That also require different types of management and provisioning of these credentials and the readers remain more or less the same. But in addition to a simple way of provisioning personalized credential, we have a much larger range of personalization equipment, including room size type printers, which allow you to issue citizen identity type drivers license or national ID credential at the speed of thousands per hour. Now I'm going to walk you through a few of those non-mobile related products and show you how they work. If we start with the broad range of other identity-type credentials, they come in many different types of forms, which really allows us to extend the tracking and tracing, not only to people but also to things. And here on the board, you see a large range of RFID tags that works purposely built for different types of applications, including tracking of training golf balls, embedding the reading technology into medical type containers, which allows you not only to read the uniqueness of that container, but also track temperature sensitivity. On this side here, we have active tags, which basically means we power them so they can send signal, making them very, very well positioned to drive not only a density but also position that identity in an ecosystem that you build out. So you have beacons as well as different types of credentials that now be tracked in an environment like a hospital or a workstation. We also have credentials for identification. This is a range of products from passports to national ID to work IDs, where HID not only supplies the physical credential itself, but we also have, like I said before, the ability to personalize these at scale with central issuance equipment. They range from passports to work IDs and national-type IDs. And over here, of course, we have purpose-built readers to read some of these citizen identity type credentials, readers that I'm sure all of you have used as you travel through an airport, you take your personal identification and you pass it on to the HID passport reader. Now of course, these readers are typically not positioned by this. They're embedded into passport control systems, log-in kiosks or other type of boarding equipment throughout the journey of a traveler at an airport. Last but not least, in many times, the last credential that you will always carry with you is your biometric credential. For HID, we use all kinds of biometric credentials, but the more prominent is the finger and that in itself becomes a credential. Although not produced by HID, we provide a large range of different reading equipment or readers for reading and verifying the identity of a person through a biometric credential. Here is an example of an optical biometric fingerprint reader that we can embed in virtually any type of environment may be from a citizen ID booking station when you enroll through criminal law enrollment or again, passing of a border. And last, a version of it which allows police officers to carry not only the reader itself, but also the entire device for storing and managing the credential through a standardized Apple device, a mobile booking station used by criminal law in many countries. All right. That concludes the overview of the business areas, the product ranges that we have both in the shape of the business areas, but also throughout the mobile ecosystem and life cycle. The last thing I want to leave you with is a short snippet to looking at the HID brand and what we deliver to the greater world. Thank you very much for listening, and please enjoy the last clip here of the HID brand movie. [Presentation]

We have come to a remarkable transformation over the last 28 years. as the world has changed, so have we, evolving from a lock manufacturer in the Nordics to a world leader in access solutions. At the time, back in 1994, when both ASSA and ABLOY emerged, our product offering largely consisted of mechanical locks. 28 years later, our portfolio is the most comprehensive in our industry. However, it is changing fast due to digital transformation. Innovation is at the very core of ASSA ABLOY. And this is what stands as out as the market leader. What gives us our competitive advantage to accelerate our growth and drive the lock industry into the future. The core of the business is what made us great. Our heritage, local focus and local products like our cylinder platforms that continue to be a core element of our product portfolio. In EMEIA, our division addresses local standards, local needs, hugely strict local regulations. However, the installed base around our brands tends to be fantastically loyal. In the past 10 to 15 years, we have provided hundreds of millions of cylinders to our markets across EMEIA. You may think where do all those cylinders go? Well, cylinders, like our industry, have local heritage driven by local systems and local brand confidence. Historically, Master Key Systems have had a long life. In some instances, we have systems that have been in place for 50 to 60 years and are still active today with replacement products and extensions being provided. Over time, we have leveraged scale from an operations point of view, for example, establishing our Rychnov cylinder factory, which is a state-of-the-art production facility. We combine Rychnov with local final configuration sites using flexible assembly automation, which enables customization and fast deliveries of cylinders to our customers with really optimized inventory levels. We have so much more potential in our cylinder ranges. We have a huge legacy and recognize the complexity, local standards, coupled with the fact that customers want new levels of flexibility. So with our expertise, we can drive security and control with cylinders to the next level. A mechanical core is on a journey of transformation, and we are seeing a transition from mechanical to digital that's providing us with many opportunities to grow by upgrading a huge installed base. We started this transformation with VERSO CLIQ and ABLOY CLIQ many years ago. And this allowed us to start the journey of evolving mechanical systems into electromechanical ones, and Elmech locking that requires a mechanical key and in addition, the key carriers in electronic code. Innovation has continued. And in 2015, we launched eCLIQ which is a purely electronic cylinder, CLIQ a step change or cylinder offering, and we have continued to invest in new generations of CLIQ. Our latest generation both in eCLIQ and PULSE provide a battery-less offering using energy harvesting for low maintenance and, of course, great environmental sustainability. In some of our biggest cylinder markets, digital cylinders have actually overtaken mechanical cylinders, but there is still a huge potential for the installed base conversion. We have a deep heritage with many brands and local standards in the cylinder market. So the upgrade opportunity is thus, but it is not just about hardware upgrade. We have another significant opportunity. We are now taking access management to the next level with our full access control ecosystem, known as Incedo, which brings all types of hardware together in one control system, allowing customers to determine the time, the person and the location of access with full traceability. We have evolved our strategy and have moved from being a component supplier to providing a complete ecosystem, having more control over all elements allows us to deliver the best performance for our customers as well as integrating into other building systems. What you can see here is in Incedo, our cloud-based access control solution, which brings together electromechanical products such as ABLOY CLIQ, eCLIQ and ASSA ABLOY Readers. Incedo will give us a unified access control ecosystem that integrates our own intelligent devices, but also allows third-party integration to provide the widest choice for our end users. It will enable us to have multiple hardware solution types under one control system, which is a very powerful proposition. We have seen this part of our business grow strongly, and we expect this to accelerate over the next few years. We have used the group's scale to develop this in collaboration with HID using their Origo platform enhanced for our own market needs. We continue to invest in innovation, and this will enable us to accelerate our growth in digital transformation and take the company and our industry into the future.

Warm welcome. I'm Martin Sagnérius. And today, we will talk about connected doors and what value they bring. And we know that you're curious about the added value connected doors can bring. So it's actually not about the beautiful door you see behind me, but about connect the doors, how it works and especially what value it brings internally as well as externally. Our installed base consists of millions of automatic doors and entrances. And traditionally, they have been generating data, which has been available at the control system at the door. Just like in other industries and with other equipment, we are now able to upload this data in a secure way, real time to the cloud. We then offer value-added digital services to ASSA ABLOY Insight based on remote interaction like remote monitor, remote control and remote configure. So let us explain this more in detail with 3 specific examples: sustainability and energy, service efficiency and total cost of ownership. As you know, we make high-quality doors, and the customer simply wants them to work all the time. However, sometimes there's an error for alarm on the door, and then we want to get it back working as soon as possible again. I will now simulate an error on the door, so I will disconnect the battery from the automatic door. With the connected door, we will shorten the time to discover that there is a problem with the door. So instead of a person depicting and recording that there's an error, we can through the system, get a notification across to the customer or to ASSA ABLOY if they have a service contract with us. This will improve problem resolution time. And since we know the problem upfront, we will, from our knowledge and experience also bring the right spare parts to the customer, which will improve the first-time fixed ratio. Data shows that 15% of all service calls coming in could be solved with remote service. With remote service, we can have a better utilization of the service technicians, and they can spend time on qualified visits. We will also be reducing driving, which will improve carbon footprint. Here, you can now see the battery error in the system, and I also get notified in my phone via an e-mail. So the service efficiency value of connected doors is increased uptime with improved customer satisfaction as well as an improved margin for ASSA ABLOY. Let's face it. This is basically just a hole in the wall when the door is open. And from an energy perspective, that's the worst case scenario when energy and air flows through it. We have had a pilot in a retail chain over the last few years where we have collected data on door behavior. And this is what you see in this picture. So we have analyzed over 60 million door openings. So you see the sensors being triggered and then the yellow part is the door opening. So can you imagine in average, how long time and out the door is open in average, it's 3.5 hours in average per out the door and that this data shows. So that's equivalent to GBP 2,700 with today's energy prices. So with ASSA ABLOY Insight, we visualize this baseline in order to put the actions in place to reduce energy consumption. And traditionally, we have been doing this by avoiding open mode on the mode selector when the door is always open. And during cold days, we put it on winter mode as well, which adjust the opening speeds and open time and closing speed basically. So however with connected doors, we can now dynamically remote configure this according to weather forecasts and scheduling. We also have a great feature within ASSA ABLOY Insight, where we can set the door open to long time individually per customer. So if the door has been opened too long, the customer would be notified. So with connected doors, we commit to reduce energy consumption by supporting an optimized store behavior. As an experienced service partner, we help our customers gain a good understanding of the cost of their doors. So with a connected door, I can interact with it remotely like a remote receipt, which I just did. So the door will open and close in a while and be reset in the control system. And this could have a huge impact cost-wise, which I will come back to in a while. With real-time data, we can act more proactively. Since we know the opening cycles of the door, we can avoid breakdown calls and time-based maintenance intervals and move into maintenance when it's really needed. This data gathering is also important for us to move into predictive maintenance in the future. Information on operating expenses are very important in order for the customer to understand their total cost of ownership. So we do this in a transparent way through maintenance where the customer could see their total installed base with their installations. They can see financial information like orders, quotations but also maintenance reports related to their service visits. So we analyze this information together with the customer to make conclusions on their doors. Once improvement areas has been quantified, we can together as partners execute improvement activities and create an implementation plan. So the remote reset I did earlier is comparable to rebooting a computer. And all this without driving to the door and performing the actual reset here, which will save us a lot of cost and time when driving to the door. So as partners, we advise and support in optimizing the total cost of ownership throughout the entire life cycle of the customer doors with an improved lifetime and uptime as a result why they have full transparency, which leads to peace of mind.

So welcome back, everyone, here on site and also welcome back to our online viewers. So we've come now to the last session of the day and the final Q&A. So as you can see, we have Erik and Nico on stage, and we have also all the other participating speakers sitting next to us ready to answer any questions that you may have. And I think Karl and Christian, you're also ready for the online viewers. Excellent. So let's start. And light is so hard on me. I hardly see you, but let's start here, yes.

Mattias Holmberg, DNB Markets. I have a follow-up question on the Green specifications business, where -- it seems like you didn't want to specify how big this business work yet. But I think you mentioned that you had some 200 specialists working in the specification business. How does that compare to the overall workforce in the specifications business in Europe, so we can get an idea of roughly the size of this business?

And that's perhaps a misunderstanding what Robert was saying is that he has 200 spec writers in the EMEA division, and they expect everything. It's not that they are dedicated green spec writers. So the whole EMEIA division, it's around 200 people. On a global level, it's more than 500 spec writers, but they all expect everything you could say. On the -- on how big it is and the potential perhaps Neil head of EMEIA, I can try to shine a little bit more light on it.

From a total percentage of our total specification value, it's currently around 16% to 18% going up progressively at the moment. So about 18% of our total specified projects are green, and that's increasing continually. So yes.

And it's the fastest growing part of the spec business.

Okay. Thank you. We'll move over to the next question. And I think we have the microphone here.

Yes, one final question for me. Can you talk a little bit about for your distributors inventory levels? I think in other areas of construction exposed business, people are increasingly worried about the risk of fast destocking, what visibility do you have on your distributors' inventory levels? And how do they compare with historical levels?

We have quite good visibilities and I ask perhaps Neil or Lucas -- is Lucas still here? Yes, to comment later, perhaps more detail on their divisions, but we have rather good visibility on their stocking levels. We have a close collaboration with our dealers and our distributors. And what perhaps I've learned in the 4.5 years is like you can have whatever KPI, the best KPI is talking to your channel partners and see what they see in the market. And in general, our channel partners are still very optimistic of the business activities that they see in the market. And I would say that in general, they have normal stocking levels, perhaps 9 months ago or so when we start to increase prices significantly, they would overstock a little bit to profit from the lower prices. But as we are in most markets for most products at price in case #4, 5, 6, that is over, and it's a normal level. We have already seen that destocking, as I mentioned earlier, in some markets in Europe, in France, in the U.K. and in the Benelux for the rest, we haven't seen any special movements yet. But clearly, we are the most concerned for Europe because in Europe, we have the highest exposure to residential. And that residential business is completely going through the channel markets. And as we have seen in France, Benelux and U.K., they can switch very fast from one day to the next or we have to be ready to adapt cost if and when they adapt to their ordering pattern. I don't know, Neil, if you want to add something or Lucas, if you want to add something?

It's Nick here again. A question for Erik, please. If the HHI deal goes through, you'll be more financially leveraged than you've probably ever been in the past. At the same time, you've got your 10% a year growth target through a cycle, which does rely on quite a lot of M&A, and you've got a growing dividend as well expected. There could be some conflict in the capital allocation here. Can you just talk us through you see any conflict, whether we should expect a slowdown in M&A for a couple of years? Maybe you're comfortable with the amount of leverage?

I think one thing that is -- actually one of the few things with that, let's say, work in our favor in this case is, of course, that we are able to generate cash in the meantime. And today, if you look, we have a net debt-to-EBITDA, let's say, between 1.3 and 1.4. When now we will close the deal, of course, including the remedies, I think we will be -- or let's say, we will be around 3 flat. And when we've done the calculations on this, I think with a 3 flat, and then we can continue to generate cash. We can continue with the -- I mean, with the traditional ASSA ABLOY way of acquisitions, the 15 per year. I mean, I think 3, which we then will work down would sort of still sort of have the balance sheet would be strong enough in order then to continue our acquisition journey.

It was an important criterion when we bought HHI that the funding was such that we indeed could continue our day-to-day acquisition journey buying those 15, 20 smaller companies per year because that is part of our DNA. And that's a real that is turning, and that's not something we can stop for a year or 2 and then start again. And it's also not something we want to stop for a couple of years. So the financing is indeed such that we can continue that traditional acquisition strategy.

Bjorn, I think we have a question over here.

Okay. Well, let's start with then Andreas, you.

Yes. All right. Just a question on Entrance. I mean I think if we go back a few years, the communication was that well, we can't expect the same kind of margins for Entrance because the industry is more fragmented, et cetera. And since then, it's become much larger, and now the margin is actually slightly above group. And you mentioned something about efficiency potential there. So could you detail a bit what you see in terms of profitability upside in Entrance?

Yes. Perhaps Massimo should close this because we want to push him hard, of course. But with the ambition and we have set at several locations mid term to bring an system close to the 16% EBIT margin. You could say that we are there. If you look at the Q3 result but I think there is a couple of things that play on the short term in our favor. And I think we should look more long-term, and we believe that long-term this or midterm, that 16% EBIT ambition is still a very ambitious target. What is playing in our favor today is one, the pricing as it's a division that has higher steel percentage in their product portfolio, they have also a better pricing than group average, and that gives, of course, a leverage on all the lines in the income statement. And the second thing is that they have a very positive mix. They have been growing much faster in perimeter security defensing business, which has margins in line with the Americas division and therefore, in the mix is very accretive to enter systems. That, of course, will not continue. We will see that mix normalizing again going forward. And I think the third thing is that, of course, seen -- also from a volume perspective, if we exclude price, very strong double-digit volume growth. It gives, of course, fantastic volume leverage. And of course, we hope to continue with high growth figures in Entrance Systems, but most probably it's little bit unrealistic to think that we're going to continue double-digit volume growth in Entrance Systems. So that will more level out now as the -- as the comparisons become also much more difficult Q4 was a very good quarter last year for Entrance Systems, with, I think, an organic growth of 14% last year.

Thank you, Nico.

Andreas Koski from BNP Paribas. A follow-up on green buildings. Because I understand the market share gain opportunity when low-cost producers cannot compete on these projects. But you are saying that the green building projects are 20% to 25% more expensive than other projects. Does that mean that you can sell your products at the price points that is 20% to 25% more expensive? Or where does this cost increase come from for the customers? And are you selling totally different projects products to green buildings compared to other buildings?

Neil or Lucas feel free to add. I think if you're looking green in 2 ways. One is you just need a green certificate because the building has to be green certified. Therefore, you have then to use products that have a green certification. So we then trace back how our products are produced and that they are produced in an environmental way that we meet all the green standards. And that all process, of course, cost money because some of the processes have to be more sophisticated and therefore, you sell those products in a more expensive way. That's one aspect of green. The other aspect of green is that, like I mentioned before, the door opening can be an important energy consumer energy conserver. So depending on how you configure your door opening and if you make it a richer configuration, it will be a more energy-efficient solution. and richer configuration means more hardware and therefore, more expensive door opening. And so therefore, in the total value also an increase. So the 20% is coming as 25% is coming from both. That's an average, it's a very big spectrum depending on the project.

One other I keep running up these stairs. The one other aspect to it, and that is to really maximize the energy efficiency it's having a system of components that work together very well. So maybe a door closure with a correct sealing system with the correct latching system. So we can sell a package of products that work together in a more effective way. And typically, that package is of a higher consistent value. So bringing the packages together also helps a lot on that advantage here.

Vivek Midha From Citi. Just a question on Entrance again. We talked about pedestrian service. In industrial in service, maybe could you give us an update on where you are in that journey, what proportion of sales in industrial or service where that can get to midterm?

What we have said is that service is around 25% of the division. And obviously, the 25% sits for 99% in Industrial and in Pedestrian because perimeter and residential, we hardly do any service also because it's a complete indirect sales model. The service is in pedestrian and industrial now direct part of that business. So therefore, the percentages in industrial in pedestrian are significantly higher and very similar, and very similar growth figures as well. I think it's very similar to I come from the compressor world, compressors with the elevator service people perhaps sometimes think it's stupid industrial door. But if Amazon can't open or can't close the door, it's a lot of money that goes out if the door in factory stays open in wintertime, it's sort of and a lot of complaints of the workers. And the very big advantage we have is that there is forklifts in a factory in those forklift drive into the door. So the door need to repair. The bigger item of such a repair is EUR 200, EUR 300, EUR 400, EUR 500, it's not EUR 10,000, EUR 20,000, EUR 30,000. So the maintenance manager himself can decide on investing that money. He doesn't need 5 signatures and 3 RFQs. So the price pressure is also much lower. So if you give a good genuine service to that the customer, he will be loyal to you, and you will also get the aftermarket business because it's a critical component and a relative low CapEx spend or OpEx spend for that customer.

Thank you, Nico. Karl, you indicated you had a question online.

A written one, yes. So what are some new technologies you're looking to acquire within the global tech space?

Yes perhaps Björn can answer for HID. Perhaps I will answer for Global Solutions. We have in Global Solutions, our traditional verticals. So the hospitality vertical in the marine cruise ship vertical. And over recent years, we have added on different new verticals, self-storage, construction, time and attendees and access control. senior care and critical infrastructure may then have our asset management system through tracker. We want to do acquisitions in those different verticals to expand geographically and to further widen our technology scope and our technology offering. Good example is an acquisition we did in France a couple of months ago of a company called Alcea giving us a much why the product solution offering now for critical infrastructure on a more global level, and we are looking for more of those acquisitions. And then if the right new it comes up to create a new vertical or new verticals. We will, of course, also buy ourselves into those new verticals. When it comes to HID, perhaps, Bjorn, you can comment in detail.

Hello. Yes. So I would mention 3 things. If I look at the physical access control side, many of you asked about the value-added services for mobile credentials, that is a space that we look both to build out inorganically, but also potentially through acquisitions. Unfortunately, a space where multiples are prohibitive, usually, companies are small and they haven't reached critical mass. But that's one area we look at. On the embedded technology side, in biometrics, there's still interesting new biometrics modalities that we continue to look at either additional types of technologies around fingerprint, but also, of course, other like facial where, again, that might be a good complement to the R&D that we do internally. Last, in terms of new technology, I would say, in the IDT area, our RFID business that we have, we continue to roll up that component market, but there are also interesting applications where the components that we sell are also integrated into a software solution or a software platform where we can track, for example, a tag in a world. And typically, those are specific. It could be laundry and hotels, where in addition to the tag revenue, we would also see a software platform providing intelligence on top of that. There are other interesting applications like that where we would see not only the value from the consumables, but equally, the software side of that. So those are a few. But we're always on the hunt.

Thank you, Bjorn.

That past didn't came out very clear during the day. So HID in the first place a solution enabler. So they work together with, you could say, system integrators, people like Lenel, Genetec to offer them through them a solution to the end customer. Like Global Solutions is more a complete solution provider. You could say that in a way, Global Solutions is a system integrator, just system integrator, which is owned by us and we specialize on specific verticals like hotel business, [ crochet ] business and so on because they also sell them directly to the end customer complete solution. And HID is much more about further strengthening that solution enablement bring Global Solutions is more about strengthening the global -- the solution -- total solution possibilities.

It's Andre from Credit Suisse again. Two questions, please. One, if we just follow up on the service side. Could you give us some of those numbers in terms of doors under service and the service contracts, what penetration of connected is, I think you mentioned some of the doors you monitor remotely and can provide kind of high value-added services. And if we can go over as far as maybe some numbers on kind of retention conversions of new installations, so we can maybe try to build those kind of elevated like models for this business and compared to the past. And the second question is if you just go back to Asia and China that hasn't got a huge amount of airtime today. And clearly, we know the issues there. What I wanted to ask is with that kind of maturing of the market and the local competitive landscape now they're kind of emerging, is your sense of urgency to address China rising? Or what you're doing and kind of how you're progressing is kind of steady and you're happy with how it's going.

Yes. Perhaps on your first question, we can't give you the numbers, but I can give you an answer because you want to fill in your model. Let's say that the doors that we have under contract of our own installed base is still very low. It's double digit, but it's lower double digit. So only on our own doors, we still have fantastic potential to further penetrate the market. But the beauty in this industry is that we can also do in a good profitable way service on competitor doors. So in that aspect, you could say that the market is almost infinite. We can go on many, many, many years and continue to grow that high single-digit service. That's not a limiting factor. The limiting factor is more that we have to scale our internal organization. If you have 3,000 service technicians and let's say you grow 10% that means that you have to add 300 extra service technician on top of the ones that leave on top of the ones that retire. And that's a huge task to find them to build and to train them and to make them doing their first billable job in a short possible period. So I would say the ambition of high single digit is more limited because of internal constraints rather than the market potential not being there. When it comes to APAC, we should make a distinction between the rest of APAC and Greater China, the rest of APAC is performing on a good level. Of course, we can always do better and we have to do better. But you could say that the rest of APAC has margins very similar to group margins. It's really Greater China that [indiscernible] APAC top line-wise and bottom line wise. We have, for many years, tried to adapt always our cost structure. Our top line went down, we get more cost -- our topline goes more down -- so 2 years ago, we took the decision to stop that and just invest in those segments where we believe in the future. And we know that we are subcritical and we know that for those investments, we will make a loss, but we have decided to set it out because we believe that's the only right strategy mid- and long-term. So for instance, we continue to invest on the commercial side in spec writers in product range in salespeople that address the specific verticals like transport, hospitals or medical and so on. And we also continue to invest on online channel for our digital door locks and for our retail business moving away from that new build into replacement market, which is obviously more profitable replacement and more profitable commercial than residential. So it's a matter of time before we can -- if we can start to grow again, we will get critical volume and then profitability will also come back.

Nicholas from Barclays. Want to come back maybe just to the growth versus margin debate. You've been on a -- or you are very much on a growth journey right now. It's very clear from the presentation. It's very clear from how you've run the business over the last 5 years. If we look at the underlying margin improvement in the business like-for-like, that would have been 400, 500 basis points over the last 10 years, but that's been diluted primarily from M&A in emerging markets and Entrance Systems. When we look forward over the next 5, 10 years. Should we think of that margin dilution is increasingly coming from Global Tech. We heard a little bit about some of the ambitions you have around ID identification, authentication, is there still a dilutive story coming through in emerging markets as far as M&A is concerned? Or maybe look out over the next sort of 5 years, how to think about that margin corridor and the upside to that, please?

First of all, obviously, we want to come back in the 16% to 17% corridor. We are too long now below. And so we are working hard to get back in that 16% to 17% benefit obviously, the tailwind versus headwind on price versus cost should help us there in an important way. We also need global technology specs business and hospitality business to come back on a good level that we have the right mix and that we have at least the minimum volume for hospitality that is needed to get in Global Technologies, EBIT figures above that 17%, so to speak. And I would say the third one is we need a percent or so better margin in EMEIA. You know that EMEIA has a strong dilution from currency. Out of my head, I think it was 140 basis points in Q3, which, of course, hits us in an important way, EMEIA being a big division. I would say that acquisitions in general are dilutive, unless perhaps the very small, we buy in a very niche, they are very high profitable and then we try to extend them to other geographies. Most of the time, like I explained, we buy quality companies that make high single-digit a bit. And then over time, we bring them into the 16% to 17% bandwidth. That is most of the case, just like that for small acquisitions for the bigger ones, it's transparent. When we bought agta record, there were dilutive around 50 basis points at start. We have said that when we buy HHI at the beginning, they will be around 70 to 80 basis points dilution, that effect we will have to live with, but that's something that in the comparison doesn't matter because every year, it's the same. When you look at our existing businesses, obviously, China is very dilutive. And I hope that tomorrow will be very dilutive. That would mean that we grow 40% or 50% in China because even if we deliver on our strategy and have them high growth in China with a margin high single digit. It will remain very dilutive for the foreseeable future. And then I think the other businesses are dilutive are mostly those where we invest in a new business and a new technology in a new vertical at the beginning, of course, you are subcritical. And therefore, you don't make the margins that you need. Good examples are the other verticals in Global Solutions. Hospitality is by far the most profitable vertical in Global Solutions. All the others, I would argue, are still too small to really be on that level that they contribute even on group level or above group level. But it's just a matter of time. They have to grow. And of course, if you want to invest in software platforms in cloud solutions, volume matters. And those verticals in Global Solutions as a matter of fact, they have grown and continue to grow also during COVID-19 times at the lower pace and not good enough to compensate for the big drop that we have seen in hospitality. For us, it's more a matter of choosing where to invest. It's not that we have limitations on possibilities and opportunities to build those small businesses and make them bigger. It's more to choose the right ones that bring us a good margin and good money and good growth on the shorter-term.

Thank you. Do we have any hands left I guess you have hands left but not in the air. So that's good. Do we have anything online? Nothing new. In that case, I think we'll conclude the Q&A, but -- and we are now getting close to the finish of this CMD but before we finish off, I'd like Erik and Nico to say some final words, so starting with Erik.

No. So thanks very much for the interest today, and I hope that it's been an interesting day for you. Of course, also, when we look today on the economic climate, I think we also have a very interesting set where I think that in some markets, we need to sort of put our foot on the gas and continue to, let's say, invest whereas then in other ones, we need to put the foot on the brake. And I hope that we have given you reinsurance because you've heard me talk about cost, you talked about the VA/VE operational excellence, MFP sourcing. And I mean, basically, you heard an echo today from Lucas. And if Massimo or Neil would have presented, you would have heard the same. So it is very embedded. And of course, we keep very much our ear to the ground in order to see what we need to do. We have, as I said, we will have a MFP 9 coming here in Q1, but also additional to that, we are doing, let's say, efficiency measures in order then to make sure [indiscernible] to give you comfort that we are really working on getting up to the margin that we think that we should have and that we think that the business should be able to do. But I think also there, and right now, we also -- as I said, before the break, we also have as I think a good company should have. We have the contingency plans for some it's in the drawers, for some it's in discussions and for some it's activated. So I can reassure you that if we need to. And in some places, we have where we need to focus on cash and cost, we are doing that. I'll stop there and hand it over to Nico.

No. Perhaps I just want to thank here, first of all, the technical team for a smooth day, and I also want to thank Bjorn and the whole team for a well-organized Capital Markets then and my team for the contribution. We were happy with the way the Capital Markets Day 1, but I would say that is not so important. It's much more important to what you think about it. And hopefully, confidently we could contribute or we could give you some insights in what we do, and you go home with some extra useful information and you become wiser about ASSA ABLOY today than when you came in this morning into this meeting room. I just want to come back on the people aspect. I mentioned that Lucas was a good example of what we want to do with our people internally. I think the other speakers you have seen for instance Björn and Stephanie are also very good examples for different reasons. Björn also is a very seasoned ASSA ABLOY employee Björn has worked in 18 in different positions and works very closely to mean Group as the Chief Commercial Officer for the group before he took up this HID position. Yes, Björn is older than it looks like. I think it's a good asset to have. And as Stephanie is, I think, a good example in the other way, we have also said, if we can't find the right candidate internally, we should have somebody from externally that definitely adds value in a big way to the team. It's like a soccer team, if you do a transfer the person that you bring into the -- and the team should be much better than the teams [indiscernible] places you have on the team, otherwise you better take a player from the team. That means in our case that when we hire managers from outside, they should have the potential to grow a couple of levels in the organization. Stephanie is a good example. She joined us around 4 years ago and was doing the digital access solutions with Neil in EMEIA. And then how she is our first female manager running one of our businesses. So also very proud about that. Okay. I don't want to exclude -- the others think -- true this is for the others, if you take Neil, he was born in our industry. So he joined us even before we were born as ASSA ABLOY? So he has really worked his ranks up, Neil he started when he was [indiscernible] in one of the companies we bought. And then while was working for us he went to University, became a wise man. And then he make the different steps and now he's running one of our bigger division. So I think a very good example of internal promotion and lifelong career that might sound old fashioned, especially for the young people, but that's the ambition we have. We want to hire field people retire because we believe we invest from both sides in that person. And so we should not stop the return on that investment before we have to and we have to when somebody retires obviously.