Assa Abloy Earnings: Residential Market Conditions Stabilizing, Points to Nearing Cyclical Recovery

Soft construction activity continued to weigh on wide-moat Assa Abloy during the third quarter of 2024. Still, conditions in residential markets—excluding Asia—are beginning to stabilize, contributing to flat year-on-year organic sales during the third quarter, representing modest sequential improvement. Demand in the Americas segment was a bright spot, rising 4% organically in the quarter. The global technologies segment also returned to growth in the third quarter, with revenue rising 2% organically as the comparative eased for the division. Still, top-line growth remains held back in particular by weakness in demand in the Asia-Pacific region, an unsurprising outcome given the ongoing challenges in China’s property market. Demand in the group’s global entrance systems division also weakened, with third-quarter organic sales easing 2%, year on year. Our estimates and SEK 320 fair value estimate remain unchanged, with Assa Abloy shares screening as approximately fairly valued.