Assa Abloy Earnings: Profit Margin Progression Pleasing Despite Softer-Than-Expected Finish to 2023

Wide-moat Assa Abloy delivered a fourth-quarter 2023 result that tracked a touch short of our expectations but nonetheless aligned with consensus forecasts. Full-year 2023 EBIT of SEK 22.2 billion fell 3% short of our forecast as operating margin progression proved less favorable than we’d previously credited—largely the result of organic growth that stalled in the fourth quarter. In particular, fourth-quarter sales for Assa Abloy’s global technologies segment weakened appreciably, falling by 7% year on year. Organic growth for the EMEIA and Asia-Pacific opening solutions segments also faltered, declining by 2% and 1% year on year, respectively. A softer-than-anticipated profit margin recovery for the Asia-Pacific opening solutions segment—following COVID-19 lockdowns that led to cost inefficiencies in 2022—also contributed to the weaker-than-anticipated operating profit outcome.