Good morning, everyone, and welcome to the presentation of Assa Abloy's first interim report in 2026. My name is Björn Tibell. I'm heading Investor Relations. Joining me here in the studio are Assa Abloy CEO Nico Delvaux and our CFO, Erik Pieder. We'll start this conference now with a short summary of the report, and then we will open up for your questions as usual. We have set aside about one hour for these events. With that, I'd like to hand over to you, Nico.
Thanks, Björn. Also good morning from my side. We can report a good start of the year. We have a continued strong execution in the quarter. We had a good organic sales development of +2%. We had good sales growth in Americas, Global Technologies, and EMEA, but stable sales in Entrance Systems and APAC. That organic sales complemented with growth through acquisitions of net 2%. A strong execution with a strong EBIT margin improvement, 40 basis points better than last year, and EBIT at 15.3% with an excellent operating leverage of 51%. Cash flow is also a highlight this quarter, a very strong cash flow, 30% up compared to last year. Our electromechanical organic sales continues to outgrow the rest of the business.
We had a 6% organic growth for electromechanical products in the regional divisions. We completed three acquisitions in the quarter. If we look in numbers, sales of almost SEK 36 billion, 2% organic growth, 2% net acquired growth, but then hit in an important way by FX -10%, top line -6% in total. I'm very happy with the EBITDA margin evolution, 50 basis points better than last year at a strong 16.4%. We have the EBIT margin, like I mentioned, at 15.3%, 40 basis points better than last year. EBIT in absolute value close to SEK 5.5 billion.
If we now look a little bit in the market conditions, and perhaps I start to comment for the Opening Solutions geographical divisions in the three main markets, well, I would say there is no difference compared to previous quarters. As well in North America, as in Europe, as in Oceania, we continue to see very good strong momentum on the non-residential side, on the commercial side, and we continue to see a more challenging situation on the residential market. If I comment for those three markets for the other divisions, for Global Tech, mobility is important, and we still continue to see very good mobility in all three regions. It's good market conditions for Global Tech.
The deviation is perhaps in Entrance Systems, where we see in North America, Europe and Oceania, good momentum for everything what is retail related. We see good momentum for our perimeter security business in North America. We see more challenging market conditions for the non-residential garage doors. They are linked to residential market conditions. We have seen also a slower recovery of the logistics vertical in North America than anticipated. We don't see that recovery yet in Europe. As a matter of fact, we see the logistics vertical further going down in Europe. We see in Europe also a little bit slowness, I would say, on let's call it industrial CapEx related decisions for project business. Mainly in Entrance Systems, also a bit in HID.
That gives us the +5% organic growth for North America, the flat development in Europe, and the +3% in Oceania. Very good market dynamics in LATAM, where we have seen a very good growth in all our markets, a +2% organic growth. Africa is a very small part of our total business, -8%. That's mainly related to a difficult comparison with projects that we took last year for HID and Global Solutions. A +2% in Asia, a very mixed picture between Greater China, where the market continues to be double-digit down, and the rest of Asia, where we see good momentum and where we also ourselves see a very good high single- and double-digit organic growth.
If we then go to some highlights for the quarter, some project wins. HID was able to secure a solution offering mobile-first access via Apple and Google Wallet with kind of hybrid support for physical credentials for Bureau Properties, a big important customer for us in LATAM. Kwikset continues to launch new products on the digital side. The Kwikset Aura Reach smart door lock, a connected deadbolt, enabling hands-free intelligent home access with Bluetooth and Matter connectivity. Another, I would say, product launch in that field. Very happy with that. Then on DoorBird introducing the world's first IP video intercom system with integrated 5G, enabling flexible and cable-free access to residential and commercial buildings. Very excited about that, new product launch as well.
If we now look a little bit at the sales growth, 2% organic, 2% acquisition, a bit lower than the previous four quarters. You see that our 12-month growth trend continues. Operating margin at a good level, but hit because of the currency on the top line. Operating margin at a good 16.3%, and then operating income on a good level, but hit by the currency on the top line. Nevertheless, 73% up compared to 2021. We continue to be very active on the acquisition side. We have three acquisitions completed in the quarter.
They represent an annualized sales of around SEK 550 million. Now in the beginning of April, we announced another acquisition. That's our 400th acquisition since we were born 32 years ago. Very happy also about that acquisition. It's a residential garage door company in Portugal serving South of Europe, so complementing also our residential offering in Europe. If we zoom in on one of the acquisitions of Q1, Sennco is a U.S. provider of asset protection technology and solutions for retail security, so really complementing our InVue offering in that vertical. Very nice complement to an exciting vertical. They had sales of around SEK 330 million last year.
If we then go into the different divisions, starting with EMEA, a very good start of the year for EMEA with an organic sales growth of 3%. Strong sales growth in Central Europe, the Nordics, and the Middle East, India, Africa region, but then a sales decline in U.K., Ireland, and in South Europe. Also, very good improvement of the margin, 14.8%, and the basis points are better than last year. You see that organic volume growth continues to boost the bottom line. Strong operating leverage of 40 basis points, and then also helped by FX. The only division actually that is bottom line helped by FX 80 basis points, M&A dilutive 20 basis points.
Americas, very good start of the year with organic sales of +4%, with strong sales growth in North America non-residential segment and in Latin America, and then a sales decline in North America residential segment. Here, very good EBIT margin and EBIT margin improvement at 17.9%, 80 basis points better than last year. We have excellent operating leverage here, and hit by currency and acquisition 2x 30 basis points. APAC, a flat organic sales development with good sales growth in Pacific, Southeast Asia, and a sales decline in Greater China and Southeast Asia, where we see really a big difference between Greater China, double-digit down, and Southeast Asia, double-digit up.
Nevertheless, despite a flat organic sales development also here, nice EBIT margin improvement, 100 basis points better than last year at 5.1%. Also here, excellent operating leverage and then hit by currency 30 basis points. Global Technologies, an organic sales growth of +4% with strong sales growth in Global Solutions and a good sales growth in HID, and a strong EBIT margin for Q1 at 15.3%. We've also here excellent operating leverage, hit in a very important way by FX, 100 basis points dilution and helped by M&A 40 basis points. That's mainly the divestment of Citizen ID business last year.
Last but not least, Entrance Systems, a flat organic sales development with strong sales growth in perimeter security and in pedestrian, but a sales decline in doors and automation and in the industrial segment. Good sales growth in service. Despite a flat top-line development and therefore negative volume, we managed to still post a very good EBIT margin at 16.1%. We have a stable operating leverage, and FX and M&A dilutive respectively 40 basis points and 20 basis points. With that, I give the word to Erik for some more details on the financial numbers.
Thank you, Nico, and also a very good morning from my side. You've heard a lot of the numbers before, but sales were in total down -6%, with +2% in both organic as well as acquired net growth. We're hit in an important way by the currency -10%. Of course, I mean, as you probably are aware of, there is quite a lot of movements in the currency. If you look into Q2, right now we sort of foresee that it's gonna be a -2% impact for the second quarter. EBIT in value was 3% down. If you look on EBITDA, up with 50 basis points. EBIT was up with 40 basis points, and then we're a little bit helped by the interest rates.
Both income before tax, net income, as well as A-EPS is at a similar level as what we had a year ago. Cash flow, as mentioned before, was very strong at SEK 3.1 billion, 30% up versus the same period last year. We also saw an improvement in return on capital employed, up with 20 basis points. Then as we introduced in the last quarter, operational value added, which is EBIT minus the interest cost that we have for our capital employed. There, we also were able to improve that with 1% in absolute value. If you look on the bridge and dissect the organic part, on price was a strong two, which means that volumes were flat.
You see an excellent flow-through of 52% where you can see that okay, there is a bit of positive mix, but also we have positive tailwind that comes from price cost, MFP savings of about SEK 120 million, as well as other operational efficiencies. The currency hits us both on top line as well as on bottom line, 10% on top line, and then dilution of 30 basis points on the bottom line. Then there is a small dilution this quarter of 10 basis points that comes from acquisitions and divestments. Cost breakdown, direct material, positive with 90 basis points, out of which about 40 basis points comes from mix, which is predominantly mix within the divisions. So let's say the true impact is 50 basis points from price versus cost.
We see of course now that raw materials are increasing, but we're mitigating that with price actions. Conversion costs due to the lack of volume was down 40 basis points. SG&A was flat despite that we continue to do investments in R&D as well as in sales, but we were able to offset that with efficiencies within our administrative expenses. Operating cash flow, as mentioned before, 30% better than the same period last year. Cash conversion was about 60%. If you look over the last 12 months, our cash conversion is at a very high 110%, and we have had the operating cash flow positive of about SEK 23 billion . That of course has an impact on our gearing and our net debt.
If you look on net debt to equity, it's gone down, so now it's about 60%. Net debt to EBITDA is at 2.1. If you look on the lower bar there, we have reduced our net debt with more than SEK 6 billion. Where if you remember in Q4 it was a lot related to currency. Now the currency has a much smaller impact, and you can see that our cash flow is really paying off in reducing our debt. We continue to have a very strong balance sheet, so we can continue the acquisitions that we want to do in line with our strategy.
Last but not least from my side, EPS, as mentioned before, was at the same level as previous year. If you look on dividend, we have since 2021 paid out SEK 27 billion. If now the AGM approves this afternoon, we're gonna pay out another SEK 7 billion. With that, I hand the word back to Nico for some concluding remarks.
Thanks, Erik. Like I said at the beginning, a continuous strong execution in the quarter. We have a good organic sales development of +2%-2.3% to be exact, and good complementary growth through acquisitions, net 2%. A strong EBIT margin improvement, 40 basis points better than last year, EBIT at 15.3%. We have excellent operating leverage of 51%, and then a very strong cash flow improvement, 30% better than last year. Can only repeat what I said in previous quarters, we live in a very uncertain world where things are also changing day by day, and we are still convinced that our decentralized model, where we really empower people in the local markets close to the customer, really gives us a competitive advantage.
Through that, we are also prepared for whatever operating environment, economic environment comes to us. Thank you. With that, I give the word back to Björn for Q&A.
Thanks, Nico. Well, that means it's time for us to open up for your questions. I think you know the rules, so please limit yourself to one question each and a follow-up. Then if you can put in your interest again for another question. Operator, this means that you can kick off the Q&A. Please go ahead.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable loudspeaker mode while asking a question. The first question comes from Ines Lefranc, Goldman Sachs. Please go ahead.
Hi there. Thank you very much for the presentation. I just wanted to ask, could you give us some color on the impact from weather and the impact from the Middle East in the quarter, please? Thank you.
First part was the weather?
The weather events and Middle East.
The Middle East. Okay. Yes, we mentioned after the Q4 call that January started a bit slower because of bad weather, mainly in the U.S. For sure, construction customers have lost some days in some parts of the world through that. That also is an explanation why our year started a bit slower. I would say if you look at the total quarter, that is not really something that moves the needle. I think it's not really an explanation for the results we have.
If we then go to the Middle East, the direct impact is rather small in the quarter because as a matter of fact, January and February were very good in the Middle East. We only start to see a decline for the Middle East in March. Also Middle East is relatively small part of our business. It's only around 1.5% of total sales. Of course, there will be and there is some indirect effects of the Middle East situation when we talk about oil and gas prices, about logistics, which drives inflation. Like Erik said, we of course will compensate that inflation through further price increases in the market.
Makes sense. Thank you very much.
The next question comes from the line of Andre Kukhnin, UBS. Please go ahead.
Yes, good morning. Thanks for taking my question. I just wanted to ask about how the Q2 progressed so far versus that sort of relatively slower start of the year with a few things that you highlighted. Then I've got a follow-up on that on Global Tech, please.
Like I mentioned in Q4, January started a bit slower because of weather and perhaps other things. Also February continued to be rather slow. The moment we are a bit concerned, but then we had a very good March giving us the result that you have seen for Q1. We can say now that April has continued on a similar level as March.
That's very helpful. Thank you. Just on Global Tech, Nico, can you help us with thinking about the sort of the quarterly cadence of growth there? I know in the past you said the stars were aligned, and you printed 9% growth in 2025 Q4. Before that, we had only three in Q3. Again, high single digit in H1. Is 2027 going to look like that, in your view, from what you can see right now from the order book, from customer indications? And we've just had one of those kind of slower quarters, or do we need to kind of rethink Global Tech 7% growth potential for the year?
No, indeed, Q3 was +3%. Q4 was +9% with all stars aligned, and now we have again +3%. It goes a bit up and down. We have always said that Global Technologies is a division that should grow faster than our 5% ambition. We should have ambition for Global Technologies to grow higher single digits, and we're still convinced that that is the case over a business cycle. You will continue to see these ups and downs quarter by quarter. This quarter, all the stars were not aligned. We've also seen a little bit of hesitation, I would say, on the project side.
Similar, like I mentioned, for Entrance Systems in Europe, where I would say non-critical CapEx, industrial CapEx related decisions are perhaps taking a little bit longer because people want to understand a little bit better what is going to happen with the world around us. Again, I'm confident the long-term drivers continue to be strong for Global Tech. We stay with our statement that this is a division that should grow higher single digit over a business cycle.
It's really helpful. Thank you very much.
The next question comes from the line of George Featherstone, Barclays. Please go ahead.
Hi. Morning, everyone. I just wanna start with a question on Entrance Systems if possible. I just wondered, like, it's basically a division that has been lagging, I guess, behind the group for some time now. I just wondered in your assessment, how much of this is just purely cyclical effects and how much of it might be structural and whether or not you're reviewing any parts of the portfolio in terms of whether they're suitable for the long-term ambitions of Assa Abloy? That's the first question.
Yeah, I think, yeah, perhaps we can dissect a little bit per segment. If you start with the smaller segment perimeter security, the fencing business which is for us only a North American business, I would say this is a very strong business that has performed on a very high level for the last years with a very strong positioning in the market. If you then take Pedestrian, perhaps to some of your surprise, we really like retail business and the retail business like it is going today. 'Cause yes, it's perhaps true that there is less shops being built, but the shops are upgraded to more you know nicer shops. All the manual doors disappear, and you get more sliding doors. That's good business for us.
Pedestrian also has performed very good in Q1 and you know the same continues the same trend that we have seen for several years. Then we have our residential segment which is today mainly a North America segment, and that's very linked to residential market conditions on which I commented quite a lot this quarter and also previous quarters. Where we don't see that recovery on the new build side and where the R&R recovery is also you know rather small. Last but not least, the industrial segment. The industrial segment depends very much on the logistics vertical, where we start to see a small recovery in North America, where people start to invest again in new warehouses.
Perhaps, you know, smaller recovery than we had hoped and anticipated for. That recovery we don't see yet in Europe, logistic vertical market is further down in Europe, and that hits our results in Europe. That together with what I mentioned earlier, that in Europe we see a little bit hesitation on non-critical industrial CapEx related decisions. I think that what we are in today with Entrance Systems is really market related. We don't have any ambition to change our portfolio. We believe that the four segments are very good segments to be in from an equipment perspective and also from an after market perspective. We have continued to see relative good growth on the service side.
It's just a matter of time, in the first place, for the logistics market in Europe to recover, to see again stronger organic growth for Entrance Systems.
Okay, thank you for that. Just to follow up on your pricing comments. You've obviously made reference to some inflation pressures. Can you let us know a little bit about, you know, whether you've already taken some proactive action on price? What kind of levels are we talking about? Whether or not you see incremental headwinds from any Section 232 changes as well, please. Thank you.
Yeah. Yeah, you see, Erik also commented on the accretion price versus cost. The 90 basis points where 50 basis points is pure price versus cost. We are doing well in compensating through price increases but also through operational efficiencies, negotiation with suppliers to compensate for that higher inflation. Then I saw that recently we have seen material prices further going up. You can name whatever. Steel, copper, zinc, aluminum, everything is up. On top of that, we have the logistics cost inflation, labor inflation, general inflation. Yes, we continue to increase prices. We have increased price at the end of last year, beginning of this year, and now towards the end of Q1 and now also in April we have further increased prices.
When I mentioned earlier that we could reckon with a price between 1.5% and 2% for this year, we can inflate that number a little bit, depending how successful we will be with the price realization of the recent price increases that we announced. But I think we should calculate now with a price increase north of 2% for this year. With that side remark now, of course in Q2, that you should not forget that the price carryover from the tariffs of last year is gone. We had very nice price carryover in Q1 because last year there was no tariffs yet. In Q2, obviously those price-for-tariff got started to kick in.
Okay, thank you very much.
The next question comes from the line of Gael de Bray, Deutsche Bank. Please go ahead.
Well, thanks very much. Good morning, everybody. Can I just follow up on the pricing side and especially regarding the residential segment for you? Obviously it's been fairly weak for a number of quarters now, but I was wondering if there's any need to adjust the pricing perhaps based on the lower demand or what is the need to absorb internally a bigger part of the inflationary pressures?
I suppose you talk specifically about residential North America or residential in general?
Yes, North America.
Our North America residential segment had a small single-digit negative growth in the quarter. If you don't, you know, take price into account, of course volume was negative. Only price will not help us or will not do the trick to further improve margins. We also have taken more cost measures in the residential segment. We unfortunately had to let go quite a lot of people. I think we have, if you take the last 18 months, we unfortunately had to let go more than 1,700, close to 1,800 people in that segment to adapt the cost to the new top line reality.
That led together with the further realization of the synergies in residential, that led to a continued margin improvement for Q1 now compared to Q1 a year ago. Yes, we also increased prices on the residential side. Yes, it's true that it's more challenging in a DIY segment than for, let's say, a relatively smaller end customer. We realize also prices for residential direct and also through the introduction of new products where we have really accelerated the new product development for residential in North America.
Thank you.
The next question comes from the line of Rizk Maidi, Jefferies. Please go ahead.
Yes, good morning. Thank you for taking the questions. Nico, your commentary around March being stronger than January and February, do you think there's an element of pre-buy, because you've been obviously implementing few price hikes, but also seeing lending rates creep up. Does this change your view on the sort of recovery in U.S. resi and the Nordics?
One on pre-buy, no, I don't think it's something that has moved the needle in the sense that we have increased prices also in November, December, January, February, March, April. It's an ongoing exercise, and we did the same year before. That is not something that moves the needle. The second part-
Interest rates.
Interest rates, yes. I think we see interest rates going up again a little bit in North America. There's obviously not helping a faster recovery on the residential side. Like I mentioned earlier, I think R&R has bottomed out and is growing again or recovering again from a low level at a low speed. We don't see that recovery on the new build side yet. If you look at 12-month moving trend for new single family houses in the U.S., I think it's 14% down. The new build recovery will not happen in the shorter term. The interest rates are important. Disposable income of course for the average American is also important.
On one side, you have, of course, the inflation and the higher inflation and the higher gasoline prices on that plays. On the other side also perhaps lower taxes. We'll have to see how that plays out going forward.
Thank you. Just price cost 50 basis points. Now the carryover is lower in Q2. How should we think about price costs over coming quarters, please?
Again, it depends a little bit on how much of the price we will realize now in Q2, but we are confident that we will get good price realization. Therefore, I think you should calculate with another good accretion price versus cost in Q2. Perhaps a bit slightly lower than in Q1, but still a good significant accretion. Then Q3, Q4, we will see where material prices go and what we further do with prices.
Thank you.
The next question comes from the line of Aaron Ciccarelli, Bank of America. Please go ahead.
Hello. Hi. Good morning. Thanks for taking my question. The first one is on your P&L. Gross margin was up 60 basis points and strongly up, and SG&A was flat. I believe in the past you mentioned that you were expecting for the full year SG&A as percentage of sales to be up year-over-year. Can you maybe help me understand if you change your view today, what should we expect on SG&A? You think that you can in fact offset some increase in R&D through efficiencies for the rest of the year, please?
I don't remember us saying that we expect SG&A to go up. It's true that if you look over the last couple of years, most of the accretion has come from price versus cost on the material side, because we have continued to invest in sales and in R&D to boost that organic growth. In this quarter, the SG&A has been neutral, and that is despite the fact that we have continued to invest in R&D and that higher sales cost for the people that we invest on the sales side is in the books. Explanation is on the operational efficiency gains that we realized, especially on the admin side.
We are working a lot on lean in not only our physical operations, but also lean in our offices. Of course, we start to see the first results in our finance from the AI activities and other automation activities that we are carrying out on the admin side.
Thank you. A follow-up would be on Global Technologies. Before you mentioned customer hesitating a bit, could you help me understand what type of visibility you have in this type of business, usually in terms of backlog, please?
It depends very much. Our visibility depends for the different businesses we have in the group. If you take residential aftermarket in Europe or in the U.S., you would say, you could say that our visibility is a couple of weeks because we have delivery times over a couple of days. Of course, if you go to a new project on the commercial side, you have a little bit longer visibility. The longest visibility we have is for loading docks because there, normally if you get an order today, you deliver in six to nine months. HID is a bit in between. They have a lot of day-to-day business for the aftermarket. I would say is the major part of HID.
They have a project business in identification technologies and in IAM, where we have obviously a bit longer visibility. I would say the same is true on Global Solutions, where there is a lot of day-to-day aftermarket. The projects like for hospitality or for marine and the other verticals, we have three to six months, sometimes nine months, visibility.
That's helpful. Thank you.
I can maybe just signal to those of you who are in the queue. We just have two people in the queue, so if you have more questions, there might be a possibility to ask questions.
The next question comes from James Moore, Rothschild. Please go ahead.
Yes. Good morning, everyone. Nico, Erik, thank you for the time. I wondered if I could, Nico, ask some growth rates on specification globally, regionally and LMEC and software. Just understanding how all of that lot's growing in the quarter.
Still continued good momentum on the specification side. We had high single-digit growth of specification in Oceania, Australia, New Zealand. We had double-digit specification growth in EMEIA, and we had low single-digit in Americas. Before you start to read something negative in that was mainly in education and healthcare verticals, the two main verticals for us, and that was mainly because of a very difficult comparison with a year ago. As a matter of fact, also in North America, we don't see any slowdown on the specification business for our commercial segment. That continues to be strong. We continue to see a shift from mechanical to electromechanical on the specification side.
In Europe, we also continue to see a shift to more requests for sustainable offerings.
Would it be possible to talk about the speed of LMEC versus MEC growth in the quarter at the group level and also how your software business is developing in here?
If you take the LMEC growth for the geographical divisions, that grew with 6% in the quarter. If you include Global Tech, if you take the global or the total group, we grew LMEC with 7%. The deviation is also partly explained by the higher growth of software as a service, the recurring revenue part, which sits for a main part in Global Tech, in HID and in Global Solutions. Today, our recurring revenue part is more than 6% of top line. It's our fastest-growing, let's say, product or solution.
Thank you. I wondered if I could just come back on your comments on HHI or U.S. residential. You talked a bit about some new product launches, and I wondered if you could put any kind of numbers to that in terms of innovation ratio or number of products versus what you did in the past. Like, has that impacted sales in the first quarter? Is that a benefit that's yet to come? Do you see it shifting market share and shifting growth relative to the market?
I think if you look at market share, you should look over a longer period. Everybody can say that they grow market share in one quarter. We definitely believe one of the ways to improve our relative position in the market is through new product development. That's why we accelerated new product development as well on the mechanical side, where we also extended our product offering with some new exciting families. Definitely also on the digital offering for Kwikset, where we came, I think with four or five new platforms of digital door locks. As a matter of fact, I think we launched over the last nine months more products for Kwikset that they launched over the last three years before we bought them.
A true acceleration of new product development. Same is true on the Baldwin side, where we extended our offering in a very nice way, and as well for National Hardware. If you look a little bit under the hood, I think we see definitely in those subsegments on the digital side, for instance, those new product developments helping on boosting the sales. Yes.
Thank you. That's very helpful.
The next question comes from the line of Andre Kukhnin, UBS. Please go ahead.
Oh, thank you very much for taking the call . Can I just kick off the M&A? How much do you have now for the year from the acquisitions that you've announced? How's the pipeline looking for the rest of the year at the moment, please?
If you look today, it's about 2% that we have already acquired, and we have a healthy pipeline. You heard from Nico before that we already have closed acquisitions in April. I think it's pretty healthy.
Great. Thank you. Sorry for another technical, but just on FX, you mentioned 2% for Q2. Just wanted to make sure I've got that right. What are we calculating for the full year at the current rates? Just to make sure we've got the right number there.
I mean, we sort of calculated with 2% for Q2, and it is, I think, 3% then for the full year. Remember, I mean, this is period end as of March, and I mean, there is some fluctuation in this, but that would sort of be, as I said, 2% for Q2 and 3% minus then for the full year.
The March, end of March rates or the current rates?
End of March rates.
End of March rates. Great. Can I just follow up on pricing? That's a bit more interesting question. You mentioned that you're continuing to push price increases, but the U.S. tariffs carryover is kind of done as of end of Q1. From what I recall last year, the tariff-related price increases were kind of prolonged through kind of from obviously the Liberation Day. It took a while to get that going from beginning of April. And then there were kind of variations in tariffs that were kind of also reflected subsequently. It sounds a little bit strange to see that the carryover is done already in Q1, and there's nothing for Q2 or the rest of the year, given how gradual it looked during 2025.
I guess the bottom line question, you've indicated more than 2% price for 2026. It sounds like we can get quite close to 3%, or am I miscalculating something here?
Well, we want to stick to our statement that it's gonna be more than 2%. It's true that we will still get some carryover in Q2 from the tariffs. I want to explain that, you know, in Q1 we had zero carryover. We had zero in Q1 and therefore we had full carryover. That in Q2 will be significantly less. Yes, there will be still some carryover in Q2 and even in Q3. Yep, you're correct.
That's great. Thank you very much.
The next follow-up is from Rizk Maidi, Jefferies. Please go ahead.
Yes, thank you for taking the question. Just maybe on the savings. I think MFP, Erik , you said it was SEK 120 million. Can you just talk about what are the other initiatives? I continue to be surprised by how strong the organic drop through is.
No, but if we first talk about MFP, as you know, I mean, we had SEK 120 million then for Q1. Right now, based on what we have today from MFP, we will be a little bit shy of SEK 400 million, but we are also initiating an MFP 11 million, so I think we're also gonna see projects coming in from that. The other part which is, let's say, non-MFP related is what Nico talks about, for instance, when we talk about HHI, because there of course, they do, let's say, personnel reductions then where you don't need to have restructuring money, like if you do in the U.S. and like you do in some places where they have the factories. So those are the other things that are then kicking in and helping us from an operational efficiency.
You also saw on admin as well, where we talked about that we also see efficiencies then in admin, where, I mean, Nico talked about, let's say, efficiencies in the processes. Those kind of things also helps in order then to get a good, or I would say, operational efficiency.
I would add that also, I think our operations teams are doing very good job on day-to-day operational efficiency improvements through automation, robotization, and through good negotiations with our supply chain. I think that's also an important part that explains the volume leverage together with mix and a lot of other things, of course.
Okay, thank you very much. Secondly, maybe just, I probably missed this on the call, but, how should we think about sort of M&A dilutions from the second quarter, whether there was any seasonality in the businesses you're acquiring?
I mean, if you look on Q1, I think you see it more in Q1, where, let's say the larger. I mean, you see InVue has a seasonally weaker Q1, and you see that in Global Tech. Also, SKIDATA is also weaker in Q1, even though I must say that they have improved their result year-on-year, but it's still negative. I would say those would be the two, let's say, larger acquisitions that we have done which have a seasonal impact.
Thank you very much.
Thank you.
The next follow-up is from Gael de Bray, Deutsche Bank. Please go ahead.
Well, thank you very much. I wanted to ask about your exposure to Section 232 and specifically the proportion of your business that has a metal content that is greater than 15%. That's the first one. The second one was, or is on the M&A side. I mean, how does the M&A pipeline look today and whether you're seeing any increase in competition on the transactions? Thank you.
Um, on, uh-
Section 232
On the first one, okay, we are still finalizing the calculation. As you understand, it's a rather complex matter. We believe it will not really move the needle for us. It most probably will be slightly higher cost. If it's a slightly higher cost, we will of course compensate through price increases in the market. It's not really something that will move the needle. When it comes to acquisitions, we are very happy with the pipeline we have. Like we always say, happy but not satisfied, because we can always do more. We are confident that there is several more acquisitions coming now in the coming months.
We have a good filled pipeline of people we are talking to. When it comes to competition, we don't really see any difference as compared to a year ago. As you know, very often the acquisitions we do are acquisitions where we have been talking to the other side for a long time, and often these are one-on-one discussions with these acquisition targets. No real difference as compared to previous quarters.
Okay, thanks very much.
As a reminder for questions, star and one. The next follow-up question is from Aaron Ciccarelli , Bank of America. Please go ahead.
Hi. Thanks for taking my follow-up. I have one on R&R, demand in the U.S. I think you said that demand is bottoming out. I was wondering, firstly, if volumes have started to expand again? Secondly, as demand improves, do you see consumers leaning towards mechanical products or more sophisticated, LMEC products? Thank you.
I didn't understand the beginning of the question.
The first one is demand in the U.S., volume demand, right?
For residential?
Yes. Volumes have actually started to expand again.
Yeah. For residential, you mean?
Yes.
No. Like we said, we had smaller single-digit negative organic growth for the residential segment in North America. That means if you take the positive price out, that we had negative volume.
Second question, is it a mix between mechanical, LMEC and so forth?
Yeah. We see, yeah, like I explained before, we have invested as well new products on the mechanical side as on the digital side. We see a relative better performance on the digital side than on the mechanical side because of the product launches that we have done in that field.
Got it. Thank you.
There are no more questions at this time.
Excellent. Well, that means it's time for us to round up this conference. If you have any follow-up questions later on, please feel welcome to reach out to us at investor relations as usual. In the meantime, we thank you for your interest and participation, and we'll meet many of you in the coming months. We look forward to that. Have a good day now. Thank you.
Thank you.
Thank you.