Hi everyone, and welcome to the presentation of ASSA ABLOY 's Q3 report in 2026. My name is Björn Tibell. I am heading investor relations, and joining me here are ASSA ABLOY CEO Nico Delvaux and our CFO, Erik Pieder. We will start this conference now with a summary of the report, and when we are done with that one, we will open up for your questions. Nico, I would like to hand over to you then.
Thank you, Björn. Also, good morning from my side. Q3 report, a report with a lot of records. A record top line. For the first time in our history, sales above SEK 40 billion with a good organic sales growth of 4% with the Americas divisions and the EMEIA division contributing in the first place. Also, a record high EBIT for the first time above SEK 7 billion and a record EBIT margin of 17.4%. Excellent operating leverage, close to 50%. And cash flow, second-best cash flow ever, an increase of the cash flow of 6% versus last year. Also this quarter, again, strong growth of our electromechanical product category. They had an organic sales growth of 9% in our regional divisions. Then we completed three acquisitions, and we will also launch our new manufacturing footprint program, MFP 11, in Q4.
If we look a little bit into the numbers, sales of almost SEK 41 billion, 7% up, 4% organic growth, 2% net acquired growth. This quarter, again, a positive effect on FX. That is because of the weaker SEK + 1%. A record EBITA margin of 18.7%, 80 basis points up. EBIT margin, like I mentioned, 17.4%, 60 basis points up. EBIT above SEK 7 billion, 11% up, and our earnings per share 14% up. If we make a bit a tour of the world, starting in North America, and I would say very similar market conditions as I mentioned in Q2 and perhaps as in Q1. In North America, still very strong market conditions on the non-residential side, commercial, institutional, where we continue to see very high activity.
Residential still much more challenging now, definitely also with the Fed again increasing interest rates, where we do not see that recovery on the new build any time soon yet, but where at least on the R&R side, we believe the market has bottomed out, and we see a slight recovery of the R&R business in North America. The logistics vertical, important for Entrance Systems. Also there, still a more flattish development of the market. If we go to Europe, similar picture as in North America. Also here, very strong non-residential market conditions. Perhaps on the residential side, a little bit more positive than in North America. Here we see R&R definitely coming back with a lower growth rate, and we even see new build in some markets like Finland and Sweden starting to grow again. And similar on the logistics side, also here, logistics side, no recovery.
If already something, the market most probably still a little bit down in Europe. In Australia, New Zealand, similar as Europe and North America. Also here, good, strong market conditions on the commercial side, weaker residential in Australia and good residential in New Zealand. LATAM, still good market conditions overall in most markets in LATAM. We have also now had elections in Brazil. Let's see how that plays out. Africa, smaller continent for us. In Asia, very mixed picture where we see good market condition and good growth for us in India, in Southeast Asia, and where we see continuous challenging market conditions in South Korea with housing market down double digit, and then also in Greater China, where the market is not recovering and where we also are still having a negative growth. Some highlights from around the world.
DoorBird expanded its portfolio with the world's first IP video door station with 4G, 5G connectivity, mainly for residential and commercial applications. Entrance Systems expanded their swing door portfolio with a new door operator designed for interior applications, offering a more streamlined solution for everyday use. On the project win side, a very nice project win in Germany for a premium automotive manufacturer with our eCLIQ solution, where the contract includes more than 15,000 cylinders. So very nice, big project win. It is now seven quarters in a row that we see, again, a positive organic growth, and I would say through acquisitions. So top line that goes up and also an operating margin that goes up towards the higher end of the 16%-17% band, which we want to be in. Year- to- date, we are at 16.6%.
On a 12-month moving trend, we are at 16.7%. EBITA, like I mentioned earlier, also at a record high, 17.8% on a 12-month moving trend. So higher top line, better margins, therefore also strong acceleration of our operating income. Record above SEK 7 billion for the first time and 81% up if we compare with 2021. On the acquisition side, like I mentioned, three acquisitions completed in the quarter, 11 completed year- to- date. Those 11 acquisitions represent an annualized sales of around SEK 3.2 billion. If I highlight two of them that we did in Q3, Classic Brass, U.S. manufacturer of premium cabinet and door hardware, complementing, extending our core for the Americas division. They had sales of around SEK 155 million last year. PACLOCK, an acquisition that complements our organic development of padlock product range in North America. Very excited about this acquisition.
It is add expertise in delivering, I would say, customized high security solutions. They had sales of around SEK 155 million last year. If we then dig into the different divisions, starting with EMEIA. EMEIA had another very good quarter with an organic sales growth of 5%, with very strong sales growth in Central Europe, good sales growth in Middle East, India, Africa, and the Nordics, a small growth in South Europe, and then a stable growth in U.K. and Ireland. An excellent operational execution with an EBIT margin of 15.8%, with a strong operating leverage, 110 basis points driven by operational efficiencies, of course, the volume growth, and then a good price versus cost realization. FX was dilutive 10 basis points and M&A 20 basis points. We continue the positive journey, I would say, in the EMEIA division. Also a very strong quarter for the Americas.
We have an organic sales growth of 6%. We have strong sales growth in the North America non-residential segment, a good sales growth in LATAM and in the North America residential segment. I would say excellent EBIT margin of 19.6%, 110 basis points up compared to last year. We have an excellent operating leverage, 140 basis points and M&A dilutive 30 basis points. APAC had organic sales decline of 1%, a small sales growth in Pacific Northeast Asia, and a sales decline in Greater China, Southeast Asia, where, as I explained earlier, you should see this as a double-digit negative growth in Greater China and a strong positive double-digit growth in Southeast Asia. So very different mixed picture. An EBIT margin of 9.8% with a stable operating leverage and FX and M&A both dilutive 20 basis points. The M&A is more an internal transfer.
We transferred a residential business from HHI in Taiwan to the APAC division. Global Tech, an organic sales growth of 4%. We have strong sales growth in HID and a good sales growth in Global Solutions. I would say an excellent EBIT margin of 20%, even higher than the very high 19.8% number of last year. Also here, excellent operating leverage, 80 basis points and FX and M&A both dilutive 30 basis points. Last but not least, Entrance Systems, an organic sales growth of 3%. Strong sales growth in pedestrian and in perimeter security. A small sales growth in doors and automation, but a decline in industrial.
Goods growth in service and an EBIT margin of 17.1% with a strong operating leverage, 40 basis points and an M&A dilutive 70 basis points that is related to the bigger Sentinel acquisition we did in Canada, and also related to acquisition cost for the upcoming Gunnebo Entrance Control acquisition that we are confident we will now be able to close in Q4. With that, I give the word to Erik for some more details on the financial numbers.
Thank you, Nico, and a very good morning also from my side. As mentioned before, we had a record high sales of the first time above SEK 40 billion, 7% up versus same period last year, 4% organic, 2% from acquisitions, and 1% positive from currency. The impact, of course, since the SEK continues to weaken, we expect when we calculate then from end of September, that we are going to have a positive impact from currency in Q4 of about 5%. EBIT also record first time above SEK 7 billion, up 11%. Here, just to mention that we have released a mid-single million dollar amount into our result, which sort of slightly helps it positively. EBITA, as mentioned, 18.7% up 80 basis points. EBIT up 60 basis points. Income before tax, net income, and EPS all are up with 14%. Cash flow also very strong at 6%.
Should also keep in mind that this quarter also had a higher CapEx, which is related to that we have acquired two buildings in Entrance North America. If we exclude these two buildings, our cash flow would have been 13% up versus last year. Also encouraging to see that our return on capital employed is up with 70 basis points and are touching now the 15%. Operational value added also up with 10% and is now close to SEK 12 billion . If we look onto the bridge analysis and look on the organic price was a strong 2%, which consequentially means that volume was a weaker 2%. The currency, as mentioned before, is related to the SEK. The flow-through ended at 47%, which is driven by the organic leverage then from price versus cost, as well as manufacturing footprint saving.
This quarter, it was slightly above SEK 200 million, as well as other kind of operational efficiencies that we can do. If you look on M&A, it was top line, it was contributing with 2%. Bottom line, it is dilutive, but it has to do, Nico mentioned before, the Sentinel acquisition and also acquisition costs coming from that, as well as acquisition costs related to Gunnebo, which we hope to close before the end of the year. If you then look into the direct material or the cost breakdown, direct material is 80 basis points better than last year. Out of that, if I call it the true price versus cost, is +60 basis points. We see, however, in the market now that raw material, electronics, plastics are going up, but we are confident that we can mitigate that with additional price increases. Conversion cost, 20 basis points better.
As mentioned before, we have operational efficiencies, MFP and so forth. SG&A is at the similar level as what it was last year. We have been able to continue to invest in R&D as well as selling, and this has been offset by admin and back office efficiencies, including, I would say, the first results that we see of our AI initiatives. Operating cash flow, as mentioned before, including the buildings, we are 6% better than the same period last year, excluding 13%, where if you look on cash conversion in the quarter, it was 117%. If you look on a 12-month rolling, it is at 109%. Gearing net debt to equity landed at 54%. We continue to drive also down the net debt to EBITA and was now at 2.0x.
If you look over a year period, we have been able to lower our debt with roughly SEK 2.5 billion , and we continue to have a very strong balance sheet so we can continue our acquisition strategy going forward. If you look on the last slide, I mentioned the number before, earnings per share was up with 14% versus same period last year. With that, some concluding remarks, Nico.
Good. So like we said, up to you to judge, of course, but we believe a very good quarter. We have a lot of records. Record top line. We have a good organic sales development of +4%. Record operating profit and record margin, and the second-best cash flow in our history. Like we mentioned, we will launch now in Q4 our manufacturing footprint program number 11. I would say that we are proud of what we have accomplished in the first nine months, and we are confident in our ability to deliver another strong year for ASSA ABLOY. With that, I give the word back to Björn for Q&A.
Thank you very much. Yes, that means it is time to open up for your questions. Could I just remind you to please limit yourself to one question each with one follow-up. Then we will allow everyone to ask questions. Once you have actually asked your question, feel welcome to put yourself in the queue again. I think it is likely that we will be able to come around the queue and start with you over again. Operator, that means that we are ready to kick off the Q&A session. Please go ahead.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. Our first question comes from George Featherstone from Barclays. Please go ahead.
Hi. Morning, everyone. Thanks for the questions. The first one, just beyond EMEIA. Obviously, you talked recently about having some tailwinds from this NIS2 regulation, and the growth has obviously been very strong again. So I just wondered if you could parse out for us what the contribution you think is from that regulation this quarter. Then just on the margin, obviously, it is trending towards the sort of 16% it was before on the EBIT level in the region. But you are having good volume growth. What is the next step to get us back above 16% from here?
Yeah, George, I can say we are very happy with the development of EMEIA over the last four quarters or so, you could say, because we have really seen organic volume growth coming back, and we have seen an acceleration of that organic volume growth. I would say that is very widespread. Yes, NIS2 contributes, but NIS2 contributes most probably around 0.5% organic growth, because NIS2 today is still very much DACH related, you could say, and Nordics related. It still has to pick up at a higher speed in the rest of Europe, and we are confident that that will happen going forward, because that's normally also how things happen in Europe.
Things first start in the Nordics and perhaps in the DACH, and then it spreads more over the rest of Europe as also the local countries start to adapt the European directive into a local law. I would say it's much more widespread. We see very good volume growth on the commercial side in most, if not all, markets. We have, of course, the emerging part with India, Middle East, Africa, that also contributes. Then, like I said, on the residential side, we are a bit more positive than in North America, where we see R&R slightly coming back and where we even have seen new build a little bit coming back in countries like Sweden and the Nordics. Then, of course, next to the organic volume growth, we have also the price component as we continue to see higher inflation.
That also gives us then the possibility to further increase prices in EMEIA. When it comes to margin, you see if you have a little bit of organic volume growth and you see an acceleration of that organic volume growth, you see also a better volume leverage, and that volume leverage then leads to better bottom-line results. If you see in EMEIA, the last three, four quarters, they have been able to improve margin sequentially quarter after quarter, and I'm confident that that will continue for the next quarters as we confidently will continue to see that organic volume growth. They have a very good cost structure that with a little bit of organic volume growth, they can get very good operational efficiencies.
Thank you very much for that, Nico. Just a follow-up on what you said on Global Solutions as well, mostly in the release. You talked about this temporary depressed retail segment. Can you just give us a little bit more context in how temporary that will be, when you think it will recover? Clearly, you can see something in the order book, I guess. Otherwise, you wouldn't have said temporary.
I would not say it's depressed. It's perhaps more an operational execution challenge at two of our bigger customers for the InVue business. Because I think HID and Global Tech had a very good quarter, very good, solid organic growth. Global Solutions, the same thing, if you exclude InVue. InVue is very dependent on a couple of bigger customers that have placed very big orders with us, and they have some delays in operational execution of those projects, you could say. So some of that sales is now postponed till Q4, and most probably even to Q1 next year. I would say there's no drama. It's just a little bit delay in us receiving the sales. And in a way, perhaps it's even good for us because InVue is very seasonal.
Normally, Q1 is very weak, so if we can get now some sales that we should have gotten in the second half in Q1 next year, it will help also due to the seasonality. So that's the reason why perhaps Global Tech is a little bit weaker than anticipated on the organic growth side. Then perhaps you see-
Can you quantify that amount?
Just to comment, if you see then if we have a little bit less organic growth, then we also deliver on our promise that at least we will deliver the bottom line and the cash flow, because you have seen very strong bottom line and cash flow. Sorry, go ahead.
I was just going to say, thanks. Can you quantify the amount of the InVue slippage, in maybe in terms of organic growth?
I do not know, to be honest, exactly the number, but I would say it is between one and. On Global Tech level, it is around 1%, I would say.
Okay, thank you very much.
The next question comes from Phil Buller from JP Morgan. Please go ahead.
Hi, good morning. Thanks for taking the questions. Firstly, I was hoping if you could help us understand if there is any one-offs on the resi side in the U.S. Good growth here seems to be at odds with the leading indicators. Is that a one-off ahead of price increases? Is there anything one-off in the 140 basis points operating leverage, such as a tariff refund? Thanks. That is the first question.
Specific for the resi, there is no one-offs. I would say that in general, it is a clean quarter for the group. Definitely also a clean quarter for resi. Yes. We have seen some growth in resi, some price, and some volume. Like we have said at many occasions, we do not need a very strong recovery on the resi side to see very good margin improvement. As a matter of fact, we had a very good margin for Q3 in resi North America, thanks to that volume growth, because we have that cost structure now that a little bit of growth gives immediately very good volume leverage. It has nothing to do with price increases or anticipation. Then, of course, you should not read too much in one quarter neither.
Like I mentioned earlier, we believe that new build is still very challenging in North America and is definitely not improving compared to three months ago with the Fed now further increasing interest rates, and you see also mortgage rates further going up. If already something, I think the recovery of the new build will be further delayed in North America. Like I also mentioned, we believe that at least R&R has bottomed out and perhaps has started to grow with very low single-digit numbers, perhaps. Of course, we have a lot of growth initiatives where we try to do better than the market. We have launched a complete new padlock range, a product that we did not have in our portfolio before. We have invested a lot in digital door locks and have a very wide product range today.
We have also invested in renewing our mechanical core for Kwikset. There is a lot of initiatives that we launched to try to do better than the market.
Perhaps just to add, because your question was a bit related to tariffs. The mid-single-digit million dollar amount that I talk about, that affected Global Tech and Entrance. There is nothing in the Americas result.
Okay, thank you. Then as a follow-up on that macro uncertainty topic, obviously there is a lot of uncertainty out there and we have got a new restructuring program. Is that in anticipation of perhaps markets getting a little bit softer as we think ahead to 2027? Or is this more of a reflection that you have identified further cost out opportunities as part of the current program that you would have looked at even if the outlook was less uncertain, I guess? Thanks.
No. It has nothing to do with market conditions. As you know, we do an MFP program every around 18 months, and it is 18 months ago that we did the previous one. As we continue to buy companies, we continue also to buy factories, warehouses, sales offices that we then can further consolidate. That is what we will do now also in MFP 11. So drivers are very similar as our previous 10 MFP programs, I would say.
Thank you very much.
The next question comes from Ines Lefranc from Goldman Sachs. Please go ahead.
Hi, thank you very much for taking my question. My first one is just on the manufacturing footprint program. Could you give us any color on expected restructuring charges, targeted savings, or payback period? Thank you.
Not really, because we are still finalizing the numbers. But I understand that you want to have at least an idea. So most probably, the new MFP will be a little bit bigger than MFP 10 because that's normal. We have further grown our company. So if you grow, you can also do more restructuring. I think from a dynamic perspective, factories, warehouses, customer centers will be very similar. I think from which divisions contribute, it will also be very similar, and we are very confident that we will have a very good payback on this one as well. But too early to give you the detailed numbers. That will be something for the next call.
Okay. Makes sense. If I could just ask one follow-up on the tariff impact, that mid-single million dollar in Global Tech and Entrance, is that a one-off for this quarter? Do you expect any tailwinds next quarter too? Any color would be really useful. Thank you.
If I should elaborate a little bit more on the tariffs. First of all, I would say that so far we have received, I would say, a high double-digit million dollar amount in the result in Q3. We have, in reality, a mid-double digit million dollar amount that has been going to the result. Most of that money we have then used for, let's say, writing off PPA initiatives in R&D. Let's say we have invested that in the business. In Q3, out of that, as I mentioned, it was a mid-single digit million dollar that impacted the result. If you have, as I mentioned, a high, which means that we still have, let's say, money left also for Q3. We have to see a bit, let's say, how much will in practice then impact the bottom line.
That is not really clear yet.
Makes sense. Thank you.
The next question comes from Aron Ceccarelli from Bank of America. Please go ahead.
Hello. Hi, good morning. Thanks for taking my question. I have a two-part question on North America. Your largest peers in the U.S. has been printing now stronger pricing than you, at least that is what appears from the numbers, for couple of quarters at least. I was wondering, is this because of your deliberate action to potentially gain market share in a weak residential market, or is something different? Do you expect this gap to persist?
No, I think it is not that we try to gain market share with reducing prices or keeping prices lower. First of all, our price is on group level, and the price component has been higher than group average for the Americas division. That comes because the Americas division is also more steel related and steel has seen important pricing inflation. I think another explanation is that we, as the market leader, we were also the first ones to increase prices when things started with tariffs and also inflation. So our comparison with last year on the pricing component is also more challenging. I think if you look over a longer period, and our colleagues also report price quarter- after quarter. If you look over a longer period over the last three years, you will see that price component most probably is very similar.
Thank you.
The next question comes from Gael de-Bray from Deutsche Bank. Please go ahead.
Thanks very much. I have two questions, please.
Firstly, I'd like to hear your thoughts on the new partnership between Apple and LG to develop doorbells and smart door locks. I think you already have many products that can integrate with Apple's ecosystem. So maybe just your views on the risk there would be obviously much appreciated and perhaps a reminder of your actual exposure to the smart door lock business.
Yeah. This is an initiative in North America. I would say we like the initiative very much because clearly, Apple has a much bigger marketing budget than we have. And I think it's good that people like Apple start to make more publicity in the market for digital door locks. That will help the sales of digital door locks in general. As you rightly said, we have a very wide range of digital door lock products that are compatible with the Apple ecosystem and with the Amazon and Google ecosystem, and with all the new standards that you have in the U.S. If you see also the positioning of this new product from Apple, it positions rather high in the market.
You could say that it's a little bit a competitor of what we used to have with Yale, when we were still the owner of Yale before that divestment, when we acquired HHI. Today we play much more in the middle segment. Yes, we have the ambition to move up to that, you could say Yale, higher-end segment, but that is still today a smaller part of the market. The big volumes are in that value segment. So I think for us, it's a positive thing. It will create more marketing, it will create more noise in the market around digital door locks, and it will drive more business in that sense. When it comes to a part of our business, I think the digital door locks, they are around 5% of the North America resi business. So it's a smaller part of our revenue today, you could say.
Okay, understood. Still pretty small indeed. Then the second question I have is, I did not fully understand the rationale for selling the PKI business unit. It has a strong margin, it includes a SaaS business. Why is it that you cannot grow the business further?
Actually what we divested was a combination of four companies that came through acquisitions long time ago. ActivIdentity, IdenTrust, ZeroSSL, and then HydrantID, and I would say HydrantID was the biggest part. It is a small business altogether. It is around $50 million-$60 million. But this HydrantID, they had this PKI, so Public Key Infrastructure certificates. What they do is they do the life cycle management of those certificates, you could say. It is a very interesting business, fast-growing indeed, and highly profitable, but with very little synergies with the rest of what we do in HID and with the rest what we do within the group. We are a small player in that field. We are a number four or five. There is a couple of very dominant players. As you know, we have always the ambition to be a leader in what we do.
If you want to become a leader, we could not do that organically, we had to buy the number one or the number two. As these are pure software businesses, multiples are very high in this field. Paying a very high multiple to become a number one, paying a lot of money for a business that has little or no synergies with the rest of HID and the rest of the group, we thought that there were better ways to allocate capital. Rather than sticking on an interesting asset and over time having the risk that that would go down and dilute, we thought was a better idea to sell it now at a good price, at a good valuation, and give it to somebody else that is clearly a better owner for that business than us in ASSA ABLOY .
Thank you. If I may, is there any capital gain you expect to book on the transaction?
Yes, we will come back to that in Q4. But like Erik said, like we said, it is a smaller acquisition, so also from a dilutive perspective, it will not really move the needle on group level.
Yeah. Thank you very much.
The next question comes from Alexander Virgo from Evercore ISI. Please go ahead.
Yeah. Thanks very much for taking the question, gentlemen. Trust you well. Could you talk a little bit to the gross margin and Global Tech margins? I guess it is two questions, but same question on margins. Gross margin is close to 44%. I think that is also something of an all-time high. So, just wondering if you can talk a little bit to how we should expect that to evolve over the coming years. And in Global Tech now, I guess north of 20.5x FX and M&A headwinds, and strong incremental margins there. Are we now back to a sort of a new level in Global Tech as well? Thank you.
If I start with Global Tech, we have always said that we have an ambition for Global Tech to have margins above the 16%-17% bandwidth. We should think more about something around that 18%. This quarter was extreme good quarter. Quarter three is always the best quarter for Global Tech. I think you should see this more over a business cycle and definitely over a full year. Today, we are, I think if you look at on a year- to- date trend, we are at 18.5% for Global Tech, so more in line with that 18% ambition that we have.
For the time being, we believe this above the 17%, so 17%-18% is still the right ambition for us because, we have a couple of very mature and very profitable businesses in Global Tech, like the PACS business in HID and Hospitality business in Global Solutions. But we have a lot of smaller businesses that we want to invest in in R&D, in feet on the street that are much lower margin and that we want to bring up volume-wise, size-wise, to similar levels as PACS or Hospitality. That's on Global Tech. On the gross margin, of course, if you look back the last two, three years, we have had a very good journey when it comes price to cost, direct material versus price increases in the market. We have had quarter after quarter strong accretion of that price versus cost. That is one big explanation.
I think we have done the MFP programs, like Erik said, also helping on the gross margin side. I think we have done a very good job to our operational organization in, I would say, using our scale and our growing scale to get also better conditions out of our suppliers. Next to that, all the operational efficiencies like VAVE initiatives that we do in our factories and together with our suppliers. I think it's just a good operational job, well done, explaining the very nice gross margin improvement. I think that's across all divisions. I think all divisions you will see similar pictures.
Perhaps, Alex, also, if we look a little bit more short term, we expect also then for Q4 to have a tailwind on price versus cost. That's a bit how far we see, and then we have to see how it goes in the first quarters next year.
That's super helpful, Nico. Erik, just to follow- up there on that 60 basis points in Q3 then should be closer to 100 basis points in Q4?
I said a tailwind. Normally I would sort of say that I think you're way too high with that. I think it's going to be positive, and let's see if it reaches the 60 basis points.
But it should be another good significant accretion in Q4, Alex, because most probably not on the same level as in Q3 because you see material indexes further going up. You see definitely also energy inflation further going up, logistic inflation and general inflation. But on the other hand, we also continue to increase prices, so we will see how the pricing intention we have plays out in the market. But Q4 should be another-
That's very helpful. Thank you
-good accretion price versus cost.
Thank you very much.
Before we jump over to the next question, could I just. I am being informed we just have one person in the queue now, so if there are any follow-up questions, feel welcome to press, I believe it is star one. Operator, you can probably help with that.
Thank you very much. Our next question comes from James Moore from Rothschild & Co. Please go ahead.
Yeah. Morning, everybody. Erik, Nico, I wondered if I could ask a little bit about the forward-looking picture. Maybe you could please talk about specification. I am sorry if you said it earlier, I got cut off for a moment. And by region and globally, and also talk about the momentum into October, if you could please.
Yeah. The traditional question we normally get is how was the demand over the quarter, and then the exit rate and rate in October. That is the question you now ask, James. I would say in Q3, demand has been quite stable over the three months, and now going into October, sorry, we see a similar pattern. We should not forget in Q4, in theory, we have one working day more, but what you see is, of course, that in October, which is an important month, we have one working day less, and then, in November and in December, you have one working day more, but the working day in December is a working day more in a holiday month, you could say. So very similar from a working day perspective this year versus last year. The spec business, we have seen high single-digit growth of our spec business.
Was a little bit better in the Americas and in Australia, New Zealand. A bit lower in EMEIA, but EMEIA, it was just a difficult comparison with quarter last year where we had a couple of very big projects that we quoted. If you correct for the, you could say the outliers, also in the EMEIA, we had a similar high single-digit pattern. So still very positive on the specification momentum. Still believe good driver going forward.
Yeah. Thanks, Nico. Could I just follow- up with some kind of point on that. We have seen indicators and permits deteriorate in the last three months, and as you point out, rates have gone back up a bit. So I was quite surprised to see your underlying U.S. and European result. It is just a bit better than many thought. And would you characterize that as the market being better before the pain of rates kick back in, or that you have had the initiatives away from those that you talked about in HHI, which you seem to be taking some share in that market. But do you characterize the U.S. non-res or the European resi non-res performance as being a function of any kind of indicators or more just like mix where you have got naturally bigger exposure?
If you talk on the commercial, on the non-residential side, as you know, we are late in the construction cycle, but I would say that at least as far as we can look forward, perhaps a year or so, looking forward, we don't see any slowdown. You could argue that higher interest rates indeed lead to less project. On the other hand, if you look, for instance, in the U.S., if you look at our two main verticals, education, schooling, as you know, it's a lot financed through local bonds, and I think local bonds have never been as high as they are today. So I don't think we see any slowdown there, and on the private side, it's money which is deployed in a different way.
And like we mentioned at earlier occasions, if you want to be in education today in the U.S., upgrading your access solution is a license to operate with all the security concerns and all the shootings going on. I think a similar picture on healthcare, which is our second important vertical in North America. The demographics of population and also the need for healthcare is not going down, on the contrary. So we also don't believe we will see any slowdown there. So we are still very positive on commercial in North America, and I think similar what I said for Europe.
Thanks, Nico.
We have a follow-up question from Aron Ceccarelli from Bank of America. Please go ahead. Mr. Ceccarelli, your line is open. You may proceed with your question.
Hello. Yeah, sorry, I was on mute. I believe your tone on Europe seems incrementally positive. Perhaps, can you give a little bit of a tour by country what drives this level of confidence increasing? Thank you.
If we start perhaps in the Nordics, and perhaps with Sweden, you know that Sweden was the first ones to reduce interest rates. They were nine months before ECB, so they are a bit, you could say, the canary in the mine. They indicate a little bit what happens in the rest of Europe. And we have seen, like I mentioned at earlier occasions, residential market in Sweden coming back first on the R&R side, and today we also slowly start to see it coming back on the new build side. A similar story is true for Finland, which are the two main markets for us in the Nordics. Commercial activity is high, like it is in all the regions in Europe, but it is even further boosted by this NIS2 regulation, where, like I mentioned, Nordics is one of the drivers in applying physical hardware around NIS2.
We have a lot of CLIQ sales and so on. If you go to Central Europe, a similar story. NIS2 further boosts our commercial growth in the DACH region. As you know, in Germany, we are more, if you could call it a niche player. We are not very small on the residential side. We are strong on the commercial side, definitely on the high end of the commercial side. So we profit there also a bit that we are in the best market, you could say, in the DACH region, in Germany in particular. And we see there very good, high single-digit growth numbers, again, also boosted by NIS2. East Europe, good on the residential and commercial side in our main markets like Poland. If you go to South Europe, I would say a little bit more mixed picture.
Spain, Italy have been maneuvering very good through the lower years, last year and so on. And we continue to see good development there where France has been much tougher. Definitely also last year in France, we have a little bit the advantage that we have now an easier comp. Then we will see how all the unrest that we have seen in recent weeks in France plays out because France, together with U.K., are two important residential markets for us. And then U.K. and Ireland, I would say U.K. and Ireland has been flat since Brexit. And year after year have been hoping that U.K., Ireland would recovery. That is not really happened so far. We see now at least some early signs that there might be some recovery, definitely on the commercial side in U.K. Hopefully, those early signs get confirmed now in the coming quarters.
We have the emerging part, like I mentioned, Africa, Middle East, India. Perhaps surprisingly, we see still good development in the Middle East. We see very good development in Africa and India. We were late to enter India. We only entered India in 2018 when I started in this position. But we have seen since then good double-digit growth in India starting from a smaller level. We are confident that that growth will continue.
Thank you very much.
We have another follow-up question from Andre Kukhnin from UBS. Please go ahead.
Yes, good morning. Thank you very much for taking my questions, and sorry if there is some repeat. We had some technical issues here. I just wanted to start with NIS2. Is there any way you could help us quantifying the degree of help that this is creating for the market? Also, how should we think about it in terms of, is this kind of a one-off boost that we need to think about comping at some point in 2027? Or is it a more of a multi-year growth driver where the addressable install base is so substantial that this will take many years to get through?
Yeah, we answered the question when perhaps you had the technical problems, but NIS2 for EMEIA accounts for around half a percent organic growth, we estimate. The reason being is that today it is still mainly focusing on the DACH region and the Nordics, Sweden and Finland, where we have seen a lot of business for our CLIQ solutions or electromechanical solutions. As NIS2 becomes more widespread in the rest of Europe, we are confident that we will see similar patterns in other markets like France, Italy, Spain, you name it, but they are traditionally always slower or later than the Nordics and perhaps also than DACH because they are faster in implementing those new European directives into local legislation. We believe it is more a multi-year activity because even in DACH and in the Nordics, we are far from done.
There are still a lot of companies, basically all mid-size and bigger companies have to do something around cybersecurity, and not only from a software perspective, but also from a hardware perspective. Even in DACH and in Nordics, we are not done yet, and then of course, all the other markets still have to come. We see this as a cherry on the cake, you could say, for EMEIA for several more years to come.
Great. Thank you, and apologies for a big question. If it is another repeat, then just leave it and I will come back to the transcript. I wanted to ask about the MFP program that you are planning to launch during Q4. You indicated that it will be sort of similar to prior programs, but obviously, as the group gets bigger, I just wondered if those MFP programs should also be getting bigger or more frequent over time.
Yeah, the strength of the message is in the repetition. We also gave an answer on this one. We have said that MFP 11 most probably will be a little bit bigger than MFP 10, because as you rightly said, we have grown in the meantime, and so we have also more possibilities, and we have continued to do acquisitions. We have more factories, warehouses, sales offices that we can consolidate. What we said from a mix and from a concept perspective, it will be very similar to the previous 10 MFP programs with all the different divisions contributing and with confidently also a good payback for this MFP 11 program. But too early to give the exact numbers that will come in our next call.
Thank you. Thanks for your patience as well.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Björn Tibell for any closing remarks.
Thank you very much. Thanks everyone for your participation. If there are any follow-up questions, feel welcome to reach out to us at Investor Relations. That means we don't have much more to say. We look forward to speaking and meeting with many of you in the coming days and weeks, and we wish all of you also a safe and secure end of the year. Thank you for your participation again, and have a good day.
Thank you.