How will ASSA ABLOY access further growth opportunities, and how do we work with accelerating our profitable growth in line with our financial targets? In the next close to four hours, we will provide further material and insights that demonstrate how this can be achieved. Ladies and gentlemen, welcome to ASSA ABLOY's Virtual Capital Markets Day in 2021. My name is Björn Tibell, and I'm heading Investor Relations. My name is Christiane Belfrage, I'm heading Corporate Communications. Björn and I will be your moderators and do our best to guide you through the presentations and Q&A sessions that we will have over the day. Before we start, and noting that safety is everyone's first priority, we would like to encourage you to look around and locate where your nearest emergency exit is located. For us, the nearest emergency exit is in that direction. I would also like to note that this event is being recorded live on our website, and the presentation material that you will see during the course of the day will be made available on our website after the event. As Björn just mentioned, this is our first virtual Capital Markets Day, so there is a little bit of practicalities to this. You who have registered ahead of the event will be able to participate in a more interactive way via your Zoom browser, where you have a Q&A button. Let's ask Holger how you ask questions when we get to the Q&A session. Holger, please. Yes, thank you very much, Christiane. If you would like to ask a question during our Q&A sessions, you should push the Q&A button at the bottom of your Zoom browser and then type a message to me. You can start to use this function already from now. The message will go through to me, and I will manage the queue line during the day. Please also know that the chat function is turned off today. Thank you, Christiane. Thank you. With that, we've gone through the practicalities. The agenda should now be seen on your screens. The times, they are approximate. There will be three short breaks during the CMD. After now Christiane and myself have finished these housekeeping things, we will start with a presentation by our CEO and CFO, and that presentation will be followed by a Q&A session. We will then proceed with presentations by Entrance Systems, Global Solutions, and EMEIA. After that, we will have a final Q&A session with all the participants before we wrap up the day. With that, we're ready to kick off the presentation with our CEO and CFO. Nico and Erik, please go ahead. Thank you, Christiane, and also from my side, a warm welcome to all of you to our Capital Markets Day. In this first presentation, we will start with our vision and look back a little bit to the history of ASSA ABLOY. We will look how we are positioned in the market, and then we will also zoom in on different strategic activities and enablers that will help us to reach our financial targets. We will finalize the presentation with some key takeaways. Our vision. Our vision is 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. A more open world, it's all the Amazon-alike feeling. As we talk about access solutions, as we talk about your family, access to your house, safety and security of your family, of your children. Those two words, safe and secure, are, for us, two very important words and two differentiators for us in the market. To be a global leader, it's clear that we are a very strong leader in the mature market. We are also a strong leader in many emerging markets, but there is also some emerging markets like China, India, and Indonesia, where we are not that indisputable leader yet, so still room for improvement. If we now look at our history, we are a young company. We are 26 years old. We came out of the merge between a Finnish company, ABLOY, and a Swedish company, ASSA. Although we are only 26 years old, our history goes, of course, much longer back. The inventors of ASSA and the inventors of ABLOY go back more than 100 years. Not to talk even about the strong heritage we have with the Yale brand. We started as one of the world's leading lock companies, and then moved into become a global leader in door opening solutions. Today, we are a global leader in access solutions, where on one side you have the opening, where on the other side you have the identity. Then we build services and solutions around that opening and that identity. You will really find it in your daily lives. It can go from a pedestrian rotating door in a hotel that hopefully and confidently soon you will be able to visit again when you go on vacation. It can be high-security fences around an embassy, around a bank, but it can also be just access control in general, mobile keys in particular. Erik, our CFO, will explain us a bit how our financial journey looks over those years. Welcome on, Erik. Thank you, Nico. Good afternoon, everybody, and thanks all of you for participating. If you look on the journey that we have had during these 26 years, we started as a SEK 3 billion company and has over the time grown to be a more than SEK 90 billion company. If we zoom in a bit on sort of the journey that we've had in the last 10 years, our sales has increased with almost 140%, our profit with 100%, total return is more than 400%, and if you look on the dividend, we have actually almost reached 200%. Until the pandemic, we had 27 quarters of positive organic growth. Okay? It took a pandemic to beat it. The reason for it is, like Nico talked about, that we are a part of everyone's daily life, but of course, when the movement stops, that also, let's say, stops in a way the business for us. Now when the mobility starts to come back, we look forward to re-accelerating our growth again. Which is another part of our DNA, is our acquisitions. We have done, since the start, more than 300 acquisitions, and we are continuing investing in new companies and have already this year been able to close five acquisitions, which is now integrated within our great group. Thanks, Erik. Of course, we started now in Q1 to try to beat that old record of 27 consecutive quarters with positive organic growth. A bit on reflections on our position in the market. We are operating in a good market with very strong, positive, long-term market drivers. If you look into security, if you like it or not, but people don't have the impression that they live in a more secure world today than, let's say, five, 10 years ago. More need for security, more business for us. Urbanization and increased wealth. It's forecasted that another 1 billion Asians will move from rural areas into cities in the next 20 years. They will all need access solutions. Hopefully, confidently, a lot of them will buy those access solutions from us, from ASSA ABLOY. Shift to new technologies in general, and definitely also the shift from mechanical to electromechanical and digital on the residential side and on the commercial side. It, of course, drives technology up in our industry, something we like. Same thing is true for sustainable buildings. Today, if you look at new build, the vast majority is built according to one or the other green standard, be it LEED certification or another sustainable standard. The same is true more and more also when they do a refurbishment project. Again, that drives technology up in our market. If you look like for like, a project built in a sustainable way versus a mechanical product, you get more money out of that project. Then we have the fact that codes and regulations are still very local, but we also see an increased level of codes and security. Good news for us, it makes our market much more complex. It makes it therefore also difficult for a pure cost player who works on volume in the world to enter our market. It makes it also difficult for pure technology players to enter in our market, because obviously they have to conquer the world country by country, and in every country, the solution and the products have to be different. We have a very strong leading position in that market with positive dynamics. We do that with strong global brands, the HID brand, the Yale brand, and of course, the ASSA ABLOY brand. We have also a lot of very strong local brands that we then often dual brand and endorse with the ASSA ABLOY Group brand. We have a very large installed base, the largest installed base in the market, that we now also in a proactive way can upgrade and move from mechanical to electromechanical and digital. The fact that we are a dynamic and decentralized organization served us also very well in COVID-19 times, as COVID-19, the pandemic did not hit in every country at the same moment in time, and as the consequences were very different country by country. Also, the reactions of the local governments also when it comes to support incentives were very different. Us being very decentralized, organized, and being able to take decisions close to the customer, close to the local market, made us very agile, made us to react very fast to changing conditions, and helped us in a very important way to protect our bottom line and our cash flow during this pandemic. The innovation focus, we are really a company that wants to make the difference through innovation. For us, innovation is much more than new product development, new solutions. It's also the way we run our processes, the way we run admin or marketing process, definitely also the way we run our operations. For us, there is always a better way. Leading with sustainable products. It's clear that sustainability is on the agenda also in our market. We want to play also here a role as a leader, and we believe that this focus on sustainability will also help us to further strengthen our competitive position. Synergies through divisional collaborations. If you go back perhaps five, 10 years in the group, in a pure mechanical world where a mechanical lock is different in Italy from Germany, from Sweden, of course, there was not so much need to work together across regions. As the geographical divisions were the vast majority of group's revenue, there was also not so much need to work together across divisions. Today, as global divisions like HID and Entrance Systems have really evolved in an important way and have become much more important relatively within the group, and as we are moving from mechanical to electromechanical and digital, where the electronics on the electromechanical side can be very similar on a global scale, and where the software support, access control can be very similar on a global scale. Of course, there is much more need to work together across regions, across divisions, and that we do through our Together We campaigns within the group. Together We grow, Together We innovate, and so on. Last but not least, we have a proven strategy. We are not revolutionizing that strategy. It will be more an evolution of a proven strategy that has delivered results, a strategy that is built around four strategic objectives: growth through customer relevance, product leadership through innovation, cost efficiency in everything we do, and evolution through people. I would say those four strategic objectives are really the compass for us. They really guide all the actions that we do. They all lead to the same goal of re-accelerating now again our profitable growth in general, and profitable organic growth in particular. Also, we can reconfirm that our financial targets remain intact. We want to grow 10% over a business cycle, 5% organically and 5% through acquisitions. We want to do that with an EBIT margin within the 16%-17% bandwidth. As a summary, you could say we are in a good industry to be in with strong, positive long-term market drivers. In that industry, we have a strong leading market position. We are evolving in a proven strategy that has delivered results in the past and will continue to deliver results in the future. Our innovation focus, our focus on green products, and the cross-divisional collaboration will all be ingredients that will help us now to re-accelerate again our profitable growth. With that, we can then go into activities and enablers to extend profitable growth. Right, Björn? What we have done is we have summarized for you the main items that will lead to an acceleration of the growth: acquisitions, emerging markets, recurring revenue, upgrading installed base, and sustainable solutions. We will also highlight the main enablers for this, our culture, our R&D focus, and our cost focus. Thank you, Nico and Erik, for reconfirming our targets and the strategy. Nico, we have showed now that acquisition is one of our strategic activities. Let's start with that. Acquisitions have obviously been an important part of ASSA ABLOY's strategy since the foundation, and as mentioned by you, we have acquired more than 300 companies since the foundation. Nico, since you joined in 2018, you have been part of acquiring 44 companies, and in the first year after they've been acquired, they will add about SEK 11.5 billion in sales to the group. Can you please discuss and elaborate a bit about what type of companies you expect us to acquire looking ahead? I never made the calculation, but it is not too bad. Of course, we want always to do more when it comes to acquisitions, Björn. Yes, I can definitely explain our acquisition strategy. It is based around four pillars. The first pillar is to continue to do acquisitions in the core. I would say continue to do what we have done over the last 10 years. Buy a mechanical, but sometimes also now an electromechanical competitor, and then integrate his operations into our global operations, and therefore realizing synergies on the operation side. Then also giving that company access to the full ASSA ABLOY product range, and therefore also realizing synergies on the SG&A side. Many good examples over recent years, LOB, a Polish company that we acquired a couple of years ago doing locks really in the core of our geographical divisions. Also agta record, I would say a very good example, doing pedestrian sliding doors and revolving doors also really in the core of what we do in Entrance Systems. The second pillar is to extend that core. Doing acquisitions not in the core, but close to the core. I think a very good example there is Planet. It's a innovative door seal company, Swiss-based, that we acquired a little bit more than two years ago. As doors are an important energy consumer and/or energy conserver in a building, with the whole drive for sustainability, obviously, the door opening also becomes important from an energy perspective. If you seal off your door in a good way, that can, of course, make the difference. Planet has really a fantastic innovative range of door seals. Obviously, when we bought Planet and we bought the first seal company, no operational synergies because we didn't make seals. That will happen, of course, when you buy the second and the third seal company. Clearly, synergies on the SG&A sides because you can sell those seals through your existing sales teams. The third pillar is service. I would say, mainly in Entrance Systems, where we want to get direct access to our install base and then do service on that install base in Entrance Systems. Door Control Inc, a distributor, that we acquired, is a good example to get that direct access to that service. Also agta record, again, Björn, is a very good example because they had a very strong servicing organization complementing our service organization in the pedestrian segment in a very strong way. Last but not least, fourth pillar is new technologies. I would say mainly in Global Technologies, in HID and in Global Solutions, technologies that complement our existing technology range. Good example, Biosite, creating a new vertical in Global Solutions, focusing on time and attendance and access control for construction workers on construction sites. Another good example, Crossmatch, a fingerprint company, border control, mainly in the U.S., that we bought two years ago. I think a clear strategy that we follow throughout all the acquisitions we do. Thank you, Nico. What parameters and criteria are we looking at before we make an acquisition? Erik, can you maybe discuss those and if they have changed? In reality, they haven't changed. We keep to the same when it comes to this. First question is, of course, are we a better owner? Is it in line with our strategy with the group or with the division strategy? It should be within access control. They must either be the leader or give us the technology which will make us a leader. We look on synergies. Of all, we look to see, can this company, either do they make it today or over time, make enough profit to reach the group target of 16%-17%? Things that could change a bit is if we look on the growth potential, the profitability, the synergies, and cost of financing. In general, I would say that we keep to the same financial model as we always had. Where I think we have done a change is more after acquisitions, where we work much more today on the integration of the companies. We appoint on each of the acquisitions, we appoint an integration manager, and we also work quite a lot also with the follow-ups when it comes to the financial follow-ups, and we even report every acquisition back up to the Board. Thank you, Erik. If I turn back to you, Nico. Given that we have acquired more than 300 companies, for how much longer can we continue and acquire companies? In other words, how many companies are on your target list? That's a question we get asked often as you know, Björn. I would say we are confident we can continue this journey for quite some time. As a matter of fact, we have identified close to 1,000 potential targets. Of course, we are not talking 2,000 companies, but we see, if you start really at the beginning of the funnel, companies that would qualify close to 1,000 potential targets, equally spread over the three geographies as you can see on the slide. We can continue this journey for quite some time. That's very reassuring. Thanks. Well, let's now move over to the next strategic activity, which is growth in emerging markets. Growth in emerging markets. We have said, of course, that we have the ambition to be a global leader. We are definitely a strong leader in mature markets. We are a strong leader in many emerging markets. Again, countries like China, India, Indonesia, there's clearly still room for improvement. If you look over the last nine years, we have been showing, I would say, disappointing growth of only 5.4% in emerging markets. Of course, we know we had our challenges in China. China, as a matter of fact, growth down in a very important way. If you exclude China, we would have had double-digit growth in emerging markets. If you look at the potential and you see the sales that we do per capita in some of the Western markets, and you compare that with the rest of the world, you see that there is still fantastic opportunities to do more. Emerging markets are clearly an important driver to now accelerate our organic growth. We have the ambition to grow double digits in emerging markets over the coming years. What you need for that, of course, you need a platform to start from. That platform can come either from an acquisition, and you build them from that acquisition like we have done in many markets, or you choose really a specific niche market where you believe you can be successful in the shorter term, and then start from that as a base to build from there. You need obviously the right products, the local products that fit the local market. I would say the most important, like with all our business, you need the right people. You need the right people with the local knowledge of the market. You need the right people also with the knowledge of assembly. To end on emerging markets, perhaps an update on our China strategy. As you know, we changed our strategy in China around two and a half years ago, where we said we will consolidate our brands and go to market with two strong brands on the residential side and a strong brand on the commercial side. PANPAN positioned as a high-quality local Chinese brand, and Yale positioned as a high-quality international brand on the residential side, and ASSA ABLOY obviously on the commercial side. We have consolidated our R&D centers. We have also consolidated our operations. As a matter of fact, we closed seven factories over the last three years in China. We did all this with a new local Chinese management team. We really wanted to go in this process of stability, profitability, growth. We are definitely today in a stable situation. We have that new, strong Chinese management team in place. We have definitely evolved into profitability, where before this new strategy, we were making very low single-digit profitability in China. For the last five, six quarters, we have been able to do more than double, and today we are cruising around mid-single-digit profitability in China. We have the ambition mid-term to bring that to high single digits, close to 10% margin. So stability, profitability, the next step is growth. We are confident that that will happen now this year. I think we have all the ingredients in place now to start growing again in China. Very happy with the progress we made in China. I propose we take a look at a small video where our Mr. Peng, who is heading our PANPAN business in China, explains on the journey he did over the last two, three years to reposition PANPAN and make us more successful for the future. Hello, I am Zhou Peng, Managing Director of PANPAN, and I am Chinese. In my past 23 years of work experience inside China, I deal with exactly same business model and channel as PANPAN, including two successful business turnaround. In the past two years, we have transformed PANPAN from a traditional door company to an innovative company that meets the needs of modern consumers. Thanks to the technology and R&D strengths of ASSA ABLOY Group, we have been able to introduce smart security doors and smart security systems as part of PANPAN's product range. Young consumers are driving the market trends and brand growth in China. By listening to their needs, we developed 18 exciting new PANPAN door series after an extensive market research. We also understand that the modern consumers expect a unique and engaging experience when they visit a brick-and-mortar store. That's why our stores now have a fresh and vibrant look to provide a better in-store experience for consumers. Last year, we also launched a comprehensive customer service system that will cover a broad network of more than 3,000 cities and towns, operated by more than 10,000 service personnel. The past two years have seen improvements in PANPAN's operations and production capabilities. New modern equipments were introduced to improve product quality and the speed of delivery. An R&D center was set up at Chengdu plant in cooperation with Sichuan Institute of Product Quality Supervision and Inspection. RFID warehouse management system was put in place to improve process efficiency, and a new delivery platform was set up for speedy delivery. In the next chapter of growth, PANPAN will ensure our continued success through ongoing innovation of our products and processes. By achieving manufacturing and quality excellence in its operations. Urbanization is a driver for growth. We will sustain our investments in new innovative products across our entire organization in China. With close to 1.4 billion inhabitants, China will always be a very interesting market for ASSA ABLOY. We are very excited about the journey Mr. Peng. Zhou Peng is doing together with his team for PANPAN in China. Also more excited if you see also the financial results from all the actions coming, which is definitely the case now. I think Mr. Peng is a good example of the quality of the new leaders we have put in place to run our businesses in China. Time to go to the next focus point on accelerated growth to recurring revenue, Erik. Thank you. Today, I will present two. Actually, I will present one in reality, where I will get some help then from Christopher Norbye, heading our Entrance Systems Division. If you look into the field service, that's the bigger one of these two. It today represents roughly, or last year represented roughly 25% of the sales of Entrance Systems. With the acquisition of agta record, it actually went up to 28%. As I said, Christopher will talk a little bit more about it, for us, we're very excited about the growth opportunities that we've had. We have increased quite a lot of service engineers and also introduced new service products into the market. We believe that we should have as a target a high single-digit organic growth target for this. If I move over to the second part, which is today a smaller part, Software as a Service. If you look into the opening solutions divisions, there we will have the possibilities within access control management and also within home services. Like for instance, grocery deliveries, where today we are running quite a few pilots, for instance, in Norway and within the U.K. Also, if we go over to the Global Technologies Division, within the identity management, we will have within the Global Solutions as well as with HID, we will have mobile keys and credentials when it then comes to offices and when it comes to hotels. We also have credentials also when it comes to identity access management, also we have the possibilities then for license fees within cloud solutions and hosting solutions. If we look a little bit into the numbers, we can see that over the last three years, we have annually grown about 20%. It's still a smaller part of our business, and today it consists of roughly 3% of our turnover, but we see great potentials in this moving forward. Thank you very much, Erik. Now it's time to move over to our next strategic activity, which is about upgrading the installed base. Upgrading the installed base is something we have talked about for a few years at ASSA ABLOY. Nico, can you tell us why upgrading the installed base is such an important growth driver? Yes, I can do that. Of course, when we talk about upgrading installed base, we talk in the first place of moving also from mechanical to electromechanical and digital because that's the great opportunity of that installed base. You can see on the slide that if you look at our pure mechanical categories, they have grown very low single digits over the last five years prior to the pandemic. Our electromechanical business, if you exclude Global Technologies, has grown around 13%. We also, Global Technologies, which you could say is also falling under the electromechanical category, has grown high single digits. I would say it's a very important tool to further accelerate our organic growth going forward. Yes, upgrading to electromechanical products is obviously a critical growth driver, and that includes upgrading from mechanical locks to residential smart locks. Many, including us, obviously see a significant growth opportunity in the smart locks given the low penetration in most markets where it's less than 10%. However, in South Korea, close to 90% of all households have a smart lock, and we have been part of that journey, Nico. Can you please share something about the background we have in South Korea and our journey that we've had there? Yeah, I can do that because we always get the question, of course, how is penetration going in markets where you enter with digital locks? Unfortunately, there's not so many good examples of markets that are already fully mature in the penetration. South Korea is most probably the only one. I think, one, we have a very strong position in South Korea, and I think one of the reasons why we are also a technology leader on digital doors is thanks to South Korea. Back in 1997, we bought iRevo, and iRevo was, you could say, the inventor of the digital door lock. On this graph you see the evolution in quantity of how many digital door locks we sold in South Korea over the years going back from 1999. You see that despite the fact that penetration rates indeed today are above 95% in South Korea, you still see an acceleration of those quantities. If you take, for instance, the period between 2010 and 2015, our volumes went up five times, that journey continues. That's good news for all the markets where we have still much lower penetration rates. In most markets, obviously, penetration rates are still below or single digits, if they're already double digits, it's perhaps in the 12, 13, 15% range. Still plenty of opportunities to go forward. Yeah, let's hope that we see that journey in other countries we are in now. At the same time, Nico, you have stressed that the largest opportunities are really in the commercial and institutional segments. Can you elaborate why? Of course, smart locks for residential applications are definitely our fastest-growing family. If you look at the total business, it's only around SEK 3 billion. If you look at the total Elmech business, which is around 31% of group sales, so in the total picture of Elmech, the smart residential locks for residential applications only represent a very small part of the total. We believe indeed that there is plenty of opportunities on the commercial side. Also, their penetration rates are still very low. We also believe that there is better recurring revenue possibilities on the commercial side than on the residential side. You can see on the graph in absolute value how much sales we do electromechanical side, and also the fantastic growth journey that we have seen for that category over recent years. Thank you, Nico. Well, let's then move over to the next strategic activity, which is sustainable solutions. Nico, why are sustainable solutions listed as a growth driver? What growth opportunities do you see? Of course, an easy answer could be that it's also important for shareholders, potential shareholders in the financial world, because it's clear that there is a lot of focus on sustainability by those stakeholders. We see also customers like us improving their focus on sustainability. I would say for us, the main driver is definitely the business opportunity. On two fronts, we are convinced that if we can run our operations in a more sustainable way, that also means that we will run them in a more cost-efficient way, meaning that we, again, improve our relative market position. We are also convinced if we put more focus on sustainability in new product development and new solutions, that that will also help and strengthen our relative position in the market and therefore will also be a boost to our organic growth. Thanks. Well, as a concrete example of what you just mentioned, we contacted Drew Shula, who is the CEO of Verdical Group, a construction company in Los Angeles. We asked Drew what is driving clients' increased demand for sustainable buildings. There's a couple big market drivers. The first is just operational cost savings. If you make a building more efficient, it's more energy efficient, more water efficient, and you're reducing your utility bills. There's also the marketing benefit. A lot of large companies, Fortune 500 companies, are trying to attract the best talents, the best people. If you have a healthy building, a healthy space with wonderful daylight and ventilation where people can do their best possible work, you're going to attract people to work in a building like that as well. Sustainable products, sustainable building products are extremely important in the overall big picture of what it takes to make a green building. It used to just be architects would look at the aesthetics design of the product, they would look at the cost of the product. There's this third level of screening that happens to also look at the environmental performance, the sustainability performance of the product. I think that clients today on leading-edge projects, the most progressive projects and clients are definitely willing to pay a premium for sustainable products. I think my big-picture response to the question is that I think in the future, you won't consider it a premium at all because every product will be sustainable. That's just the direction that we're headed. Every product in the future will be sustainable, Drew Shula says at the end of that video. Well, the increased demand for sustainable buildings also means that the requirements on our own operation will increase from a sustainability perspective. Erik, could you maybe please tell us what progress were made in relation to sustainability in our own operations? I think that we have had a quite long journey when it comes to this. We started with the first programs in 2007. There it was more or less the implementations of procedures, structures, and policy. In order then, I would say, to drive the sustainability into our day-to-day life and into our operations 2010, we launched the first sustainability program, which was then followed by another one in 2015. There we focused on things like injury rate, greenhouse emission, and also water intensity. We have seen good results of this. The injury rate, for example, has gone down with more than 60%. Greenhouse emission is reduced with almost 80%, and water intensity with more than 70%, actually. We also, in 2017, integrated the sustainability compass within our product development. The compass consists of eight different parts. We have, for instance, in there, we have recyclability of our product, we have carbon footprint, and energy use. That is, of course, also things that we can sort of from ourselves, from our own operations, also bring over to a customer advantage. Thank you, Erik. Nico, last year we launched a new sustainability program and some new initiatives. Can you please tell us more about the forward-looking ambitions in relation to sustainability? Sure. Like Erik said, we launched our third sustainability five-year program now, 2020-2025. I think, again, very ambitious targets around the same focus points as the previous two programs that Erik mentioned. We also decided to commit to science-based targets. Reducing by 50% the absolute carbon emission by 2019 and then become carbon neutral by 2050. We are convinced that sustainability will be key for our industry in the coming decades, and we have decided we also want to play a market leader role when it comes to sustainability in our market. In relation to how we will achieve this, we asked also our Head of Sustainability to explain how we can continue or achieve this 50% reduction in the carbon emissions. Please play the video. We've reduced our total carbon emissions by 47% over the last five years, which is already a substantial reduction. This means that the easier things or the quick wins have already been done. We need to have a very clear strategy in order to reduce our carbon footprint by a further 50%, and we see this strategy made up of four key components. Firstly, it's to consolidate our sites where we have a duplication of our processes, and this makes our overall operations much more efficient. Secondly, it's to phase out carbon-intensive production processes. Thirdly, it's to review our top 20 most energy and carbon-intensive production sites and review major overhauls and upgrades of those sites to substantially reduce their carbon footprint. Finally, we have our continuous improvement. This is the implementation of our green teams and rollout of our green team playbook. This brings lots and lots of little actions together that have a big impact. It's conducting energy workshops using the lean Kaizen methodology and to procure renewable energy where available throughout the group. It will be interesting to follow our progress in relation to these KPIs and our carbon footprint looking ahead. Before we proceed now to the enablers to accelerate growth, I would like to check with Christiane and Holger if we have received any questions. Thank you, Björn. Yes, we are receiving so many questions. Holger, please, can you read the first one out? Thank you very much, Christiane. One of the first questions we have received is from William Mackie at Kepler Cheuvreux. He wonders if we see any differences in the market fragmentations and competitive landscapes between emerging markets and developed markets. Perhaps I can take that question. It depends a bit because emerging markets is a very wide definition. If I try to generalize a little bit, yes, I would say that that is definitely the case. It has to do with the maturity of those markets. As the standards and norms are not as developed yet in many emerging markets like they are in mature markets, you see also much more pure cost players, people that compete with a basic product only on cost in those markets. As those standards are not evolved yet to the same extent as in more mature markets, there is also more overlap between residential solutions and commercial solutions. The good news is, as those markets start to mature, standards become more stringent. When standards become more stringent, of course, technology goes up in that market, and that makes us also stronger. That's what we have seen in many emerging markets. If you take, for instance, East Europe, which today I would say is a mature market, that's exactly what happened there. Of course, there is the big emerging markets like China, where obviously there is a very big number of local competitors. I would say in a way, in China, you could say that the whole consolidation still has to happen. Thank you, Nico. I think we have time to take yet another one. Please, Holger. Thank you, Christiane. A second question we have received is from Vivek Midha at Citibank. He wonders if we have any parts of the group's portfolio of products that we see as less strategic and how it's fitting with the rest of the group. I think this question is for you, Nico. Of course, we have a very wide product portfolio, and we are, I would say, on a constant basis, looking in our product portfolio and decide, is this specific activity an activity we want to continue to do long-term? Is that an activity where we really want to allocate resources and capital, or is there better ways to allocate capital resources and investments? That's something we do on a permanent basis. We also, from time to time, take decisions to divest some of the activities. Of course, we have the ambition to be a strong net acquirer positions after divestments. We have a couple of good examples where we decided to divest activity because we believed we were not the right owner for the future. We recently, last year, divested a residential door business in Italy called Gardesa, because we felt that type of business is more commodity type of doors, where we could not make the margins in line with the ambitions we have as a group. Another example is let's say there's an elevator sensor company in Switzerland that we divested also around a year ago, because obviously we are not in elevators and not in elevator sensors. We knew too little about that market to make that a sustainable business for us going forward in the future. I think a very interesting business, but better chances for that business with another owner. That's things that we evaluate on a permanent basis, Holger. Thank you. We will have a longer Q&A session when Nico and Erik's presentation is finished, so please continue and contact Holger in the Zoom browser. We will continue with the three enablers to accelerate our growth. Now it's time for a little break, and we will resume at 3:00 sharp. While we have the break, we play a bit of a video from our different products and different units. See you again after the break. Thank you. Welcome back from the break. We have now gone through our five strategic activities, and we'll move over to three enablers to accelerate our growth. The first one is how we're working with our common culture and how we're strengthening our common culture. Nico, since you've joined us at ASSA ABLOY, you have put a lot of energy and efforts into working with our internal culture. Can you please explain why have you done this? No, indeed, that is definitely a passionate subject for me, as you know, because people clearly are our most important asset. You can have the most fantastic ideas, most fantastic products. If you don't have the right people, it will never work. What struck me a bit when I joined ASSA ABLOY was that when we looked at promotions and how we fill vacancies, that more than 70% of all managerial positions were filled by external candidates. Less than 30% of the roles were filled by internal people. When I came, I said that I really wanted to turn that around and have at least 70% of all vacancies filled in, managerial positions filled in with internal candidates. I think it has a lot of advantages. Of course, when you do that, you get mobility in your organization, and you get cross-fertilization of experience. We have a lot of individual experience in the group. If you can share that by moving people around, you make the company stronger. You will get, of course, cross-fertilization from the culture. We are still a young company. We are still building that culture. You will also keep retention up because if people see that they can make a career within the group, they will not go and look outside for the next opportunity. What we also say to younger people is that we really have the ambition to give to people when they join us a lifelong career, and that sometimes sounds a bit old-fashioned, but it's really what we want to do. We say we are a big group, 50,000 people. We are represented in many countries all around the world. If you start a career with us in engineering and you have the ambition to move into marketing or sales, you can do that. If you want to make a specific technology career and be a specialist in materials, you can do that. The group is big enough. If you want to make an international career, start somewhere in Långshult, in Sweden, and go to U.S. or China, we are looking for that type of people. I mean, if you are part of a family, and in your family, you like the values and the beliefs, why would you change family? You should stay part of the family. We invest in you as a family member, and you invest in the company and can do that till it's time for retirement. That's also why we launched, when I came, three core values and beliefs for the group. Empowerment, we have trust in people; innovation, we have the courage to change; integrity, we stand up for what is right. Those three really give us a skeleton of this is the culture we as ASSA ABLOY want to stand for, and if you want to be part of the family, you should, of course, fit in that culture. Another dynamic that we created is all the actions around the Together We campaigns. Together We grow, Together We innovate, where we really want to benefit from more cross-collaboration, collaboration among different departments, different countries, different areas, different divisions. We see plenty of good synergies, more to come to realize on that side. Quite happy with that whole subject. Obviously, building a culture is a long-term initiative and a never-ending task. It's now after three years, can you see any progress? Yeah, we definitely can. Like I said, the one that I'm most happy with is that indeed today, if you look at higher management, we have more than 70% of those manager positions filled in with internal candidates. If you go lower down in the organization, there's still work to be done, but we are making good progress. I think that also leads to lower turnover rates for the employees. We are improving retention in an important way. We keep knowledge and experience within the group. It's a good thing. Definitely also on the diversity side, we see very good progress and not only on gender diversity, but diversity in general. We are a global group. We also want that to be represented in our teams when it comes to diversity. We have 32 nationalities represented in our senior management team. We are making good progress in general. Of course, I can praise the whole culture. Perhaps sometimes it's better to listen to the people to see if they see the change. I propose we hear to what two of our employees have to say on this subject. I am Iiris Heiskanen, CFO for ASSA ABLOY Global Solutions based in Joensuu, Finland. I was very excited to join ASSA ABLOY nine years ago, and my first position was with ABLOY Finland as their Finance Manager. It was from the first day that I received a lot of responsibility and new challenges that really pushed me forward. I was promoted to a role of Senior Controller for the market region Finland. After a couple of years, I moved on to Global Solutions to work as Business Controller for ASSA ABLOY Critical Infrastructure. It was less than a year after that in 2020 when our previous CFO moved on to a new position within the group, and I was offered this very exciting opportunity to start as the acting CFO for Global Solutions. I applied for the role and was appointed a couple of months later. It is this increase in internal opportunities that has been a trend in the group during my years in ASSA ABLOY, that we focus on people development and we focus on diversity. I can tell from my own experience that I have benefited off this as my managers have offered me interesting roles. They have trusted that I can learn, I can grow on the job, and then prove that I can meet their expectations and deliver the results. I started in the fall of 2003. I had just moved from Canada to Israel, and I got a job at Mul-T-Lock in Israel as a marketing communications manager, actually filling in for someone who had just left on maternity leave. Since then, I've had seven roles in the group. They've been in three different countries, and I've worked in two divisions. My current position is as the President of the Door Group in the Americas. I would say one of the most significant is that when I joined, it was very much about individual brands and less about ASSA ABLOY as a brand, and there was very little collaboration between brands and almost no collaboration between divisions. As I fast-forward 18 years, ASSA ABLOY as a brand is much stronger. We don't just talk about products, we talk about solutions. As such, we need that collaboration between the brands. There's much more collaboration also between the divisions. There are definitely things that have stayed the same. Probably some of the best things have stayed the same. That is the culture and the structure, really in the sense that we are decentralized. As part of that decentralization, the strategy serves as a framework. As a business leader, in fact, in any position in the group, you really have the opportunity to impact the business, and that's always been the case. I would say the culture. I've worked, again, 18 years all over the world, and everywhere I go, you see that common cultural DNA, which is really about people's personal integrity, humility, always trying to do the right thing, and really having the attitude of rolling up your sleeves and doing what's required to service our customers. I think two good examples of gender diversity, but I would say in the first place, good examples of people making a career within the Group. People giving them the possibility to take the next step, taking a challenging job where perhaps sometimes they're not 100% ready for yet, but supporting them in a good way that they can further develop and giving a good return on investment for the person itself and also for the company. We're very happy. Thank you, Nico. It's time now to move and discuss the next enabler for growth, which is R&D and product innovation. As a group, we have almost doubled our investments in R&D since 2015, and set in proportion to sales. The proportion has increased from around 2.5% in 2015 to more than 4% last year. Nico, can you please tell us why you also are so passionate about R&D? I'm also half the people, I'm definitely also passionate about R&D, Björn. I would say it's really in our genes, in our DNA. We are a company that makes a difference through innovation. We have more than 25% of our sales that comes from products launched over the last three years. We have more than 9,000 active patents. We have close to 3,000 R&D people working in the group. We launched more than 400 new products in a pandemic year, 2020. Again, innovation is, for us, much more than just products and new products and new solutions. It's really the way we run our processes, the way we run our mapping process, the way we run our marketing process, definitely also the way we run our operations. First, there's two dimensions. There's the continuous improvements. Every day do better, and continuous innovation. Then from time to time, also making this breakthrough innovation, doing a quantum leap, where you put yourself ahead of competition for a couple of years. We have historically always invested on the mechanical side. We continue to do that because even if the mechanical part of our business is not growing so fast, it's still a very important part of the business, very profitable and a very important cash generator. Over recent times, we have invested heavily also on the electromechanical side to support that shift from mechanical to electromechanical and digital. Also, as we now are adding software platforms, control systems on top of those electromechanical products, we also are further increasing customer value. So definitely a very important enabler for us. Like I said, we have, on a constant basis, launched new products and worked on new R&D initiatives also during the pandemic. We did not slow down. That was a conscious decision to continue and even accelerate our speed because as you rightly said, our R&D spend in 2020 versus value was higher than in 2019. That led to a lot of new products. I would just highlight this one. The new Linus lock, I think fantastic new product for European markets. I am a proud owner of one of them, Björn, as I told you. I think a very good example of how to seek synergies in companies that we acquired, because most people will know that we bought August, a startup company in California around four years ago. They had invented a motorized lock that you can retrofit on an existing lock on the U.S. doors, open and close your door remotely with your mobile phone, with an app on your mobile phone. The first thing when we did when we bought them, we took their software, which is definitely state-of-the-art technology when it comes to smart residential applications, copy and pasted the rest of the world. As a matter of fact, if you today open your Yale lock in Sweden, it will be based on the same August platform. We rolled that out on a global level. We took also the technology further and also then developed from there a motorized door lock variants for Europe on DIN standards. Different variants because obviously Europe is a more complicated market. It's not one uniform market. With those different variants, we can cover a vast majority of the DIN cylinder market in Europe today. You just can retrofit it on an existing mechanical lock, and do the same thing as August has been doing for many years in the U.S. Very excited about that product. I think behind you there's another very good, nice new product. Our new Yale Doorman, which I think is an icon. The name Doorman is an icon in your country, being Swedish. Perhaps you can explain me better, Björn, what it's all about with the new product. Well, I'll try at least. Well, this is the Yale Doorman. It's version three, which was launched here in Sweden toward the end of last year, and I bought it myself in March this year. From an investment perspective, it's probably interesting to note that this version of the lock, so version three, is about 30% more expensive than version two. What are the new features then with this lock? Well, firstly, the most obvious one is you see this little button here. It's a doorbell button, which has been requested by the customers that we should integrate into the lock, and we have done that with this lock. This Yale Doorman lock is using the Yale Access app, which is a more user-friendly version, which Nico mentioned before, and this builds on the August IT platform that we are rolling out across the world. This lock also communicates directly with my mobile through Bluetooth, which is a new function. As with all new locks, we also have a new design. What's new with this lock is that it's redesigned so it can fit a wider range of doors. In Sweden, as doors become thicker and thicker, we need also to change the lock design so it fits them. The lock connects with Google Home, Alexa, and Airbnb. The main advantage, of course, is still that the lock, I can operate my home door from here in the studio. I can open up for an electrician who happens to actually be in my home today. Even more importantly, I can see when my kids are coming home from school, and that is really comfortable to know. In summary, Nico, it's an icon. Maybe in Sweden, it's becoming more and more of an icon, and it's an excellent lock. Yeah. I think it's also a very nice, modern, slim design. Your children are still too young, but later you will also be able to see when they come back from the party. Yeah. A lot of other products also launched in COVID-19 times. A new interior door operator with mobile functions so that you can open doors without touching them with your hands. The Incedo access control ecosystem, software platform where we really bring all our access control hardware together on the same platform. Very excited about that development. For ABLOY, a Bluetooth padlock, mobile app, and digital key for critical infrastructure applications. I can go on with many other examples. We also had specific new product launches as a response to COVID-19. Other antibacterial keys, touchless door hardware so that you don't have to touch the door with your hand anymore. In HID, different solutions around location services for contact tracing so that we guarantee social distancing and beyond, but also that if I or you would be infected, that we can inform the people that have been in close contact with you. That solution we can also use to trace critical equipment in a hospital or trace even COVID-19 patients. A lot on the plate, and the story is not finished yet. More to come. Thank you, Nico. We will now move over to the next enabler for profitable growth, which is cost efficiencies. Erik will now share how we are working with cost efficiencies. As said, one of our four strategic objectives is cost efficiency in everything we do. Cost efficiency is important, of course, for us because it helps our profitability. It also helps us by the savings that we can do through efficiency to invest more in product innovation, which in a way further will help us to increase the growth. I will today focus in on two topics. One is related to sourcing. The other one is to operational manufacturing footprint. If we start with sourcing, I would say here we have done a bit of a change, where we now focus much more, I would say, on our largest suppliers. We have strengthened our sourcing team when it comes to by commodity, and as I said, we focus on our largest suppliers for cost reasons. We also, as Nico talked about before, use the Together We concept and collaborate much more over the different divisions. We still haven't forgotten, let's say, we also need to focus on the tail in order then to create a higher customer satisfaction when it comes to, let's say, features and options, why this is also an important part for us. This is probably after Q1, the most frequently asked question, the raw material, and what is the impact? The starting point is that you can see here that steel has in the U.S. increased since August with almost 180%. In Europe, it's a little bit less, but still, it's 110%. We also have other raw materials. As an example, brass has increased with 61%. To put this a little bit into perspective, the direct material is roughly 35% of our sales. If we then dissect the direct material even more, you can see that 35% of this is related to raw material. If we go one step even further, you can see that out of the 35%, 60% is related to steel. Of course, even if we do an excellent job when it comes to sourcing, this will of course have an impact. We need to work with price increases. That's something that we alluded to already in the April results, that this will have an impact for us. We increased in Q1 the prices for the group with roughly 1.5%, but in order then to compensate for the full, we need to increase the prices with roughly between 3.5%-4%. We're confident that we're going to be able to do it over time, there will be a timing lag of this. This is why we highlighted this, that this will be an impact in 2021. It will not be as big as the one that we had in 2018, where it was roughly 50 basis points. Still, even though we can work with prices, it's also important that we work with professional sourcing according to what I explained before. Now our COO, Chief Operating Officer, David Simonsson, will talk a little bit more about how we work with professional sourcing. Direct material is, as you know, the biggest share of our P&L, direct material consists of large suppliers as well as multiple smaller ones, many of these are also shared between divisions. Historically, there has been very little or limited collaboration between divisions when it comes to approaching suppliers with one voice. There has perhaps been a little bit too narrow a focus on cutting the tail of suppliers rather than understanding the root cause for having the tail. What we did in 2019 was that we launched what we call a Top Supplier Program, focusing the three largest categories, metals, electronics, and architectural hardware. What we did was that we selected a set of large suppliers shared between more than one division and launched an initiative that really fostered collaboration and a Together we spirit. This meant that divisions together approached the suppliers with one voice, and as a result, we had about 2% savings out of that program, and that program covered about 20% of our direct material spend. In 2021, we are expanding this program to what we now call the Divisional Top 20s, which is about 100 suppliers and about 40% of the direct material spend being addressed with now this more structured approach to sourcing. The second topic that I will talk about is a Manufacturing Footprint Program. Programs that we have run now, we're now up to the eighth program, where we realize operational efficiencies that we have within our operations. The first program that was launched in 2006, and since then we have closed almost 100 factories, and we have a total saving of about SEK 5 billion. Last year in Q4, we announced the eighth Manufacturing Footprint Program. It's the largest one so far, and it also has the fastest payback time. For 2021, we expect to have a saving of roughly SEK 750 million. We're now on the eighth program. I'm sure there will be a ninth and a 10th program because in a way, it's good to create focus within the organization, and we can also focus on traction, and we have also very good success rate, and I think it's also very transparent what we do. We will continue with this. We not only do these manufacturing footprint programs, we also work with, let's say, day-to-day operational efficiencies like lean and continuous improvements. This is also important in order then to, let's say, to be more efficient within our operations. David will now show a video from one of our American factories in how this works in practice. The second initiative I would like to share with you is in the field of manufacturing. It's in our North American garage door manufacturer, SDA or Amarr. Amarr suffered from poor delivery performance, low productivity, and staff turnover. There have been quite many leadership changes. There have also been quite a few technical efforts that might not have paid off as much, and the staff turnover continued to be a big issue. By end of 2019, we used our multidimensional operational excellence program or structure that we launched early 2020, and that is a holistic approach to operations covering technical, managerial, and people aspects. We formed a cross-functional team with experts from group and division and local team that together developed a six to eight-month very detailed roadmap for lifting the plant performance. What we can see to date is that we have a 40% productivity improvement, and we are now at a productivity level, which is also enabling us to make necessary adjustments to the shift pattern. A shift pattern that I believe has also been one of the real root causes for the big staff turnover. A little bit more related to, so that we can show actually what we did in 2020, where we sort of put up as a target to reduce 5% of the fixed cost. I would say in the situation that we're in 2020, we could really see that our decentralized organization, it really worked. In order for them to fulfill, let's say, the target that we had set up. If we look a little bit on from where it was coming from, roughly SEK 600 million came from MFP activities. We had roughly SEK 1 billion coming from what I call semi-permanent actions, such as reduced traveling, marketing, premises, and consultancies. There was roughly SEK 600, which was related to other kind of temporary and permanent savings. If you look in total, we reduced the permanent headcount with roughly 5%. I talked about these ones, the semi-permanent. Of course, when business starts to come back, certain of these things will, let's say, come back a bit. I can assure you that we will keep a very tight control of our cost also going forward. Thank you, Erik. We have now discussed five strategic activities and three enablers for how we can accelerate our profitable growth. It's now time to wrap up this part of the program. Before we do that, I would like to ask you, Nico, if you can go through what ambitions and targets you have for the different units and divisions we have in the group. I can do that. Of course, we have the ambition to re-accelerate our profitable growth as well on the acquisition side, but definitely we focus on the organic side. In that aspect, we have reconfirmed our ambition and our target to double the size of Global Technologies, so as well Global Solutions as HID, over the next five-year time frame. That obviously has to come from acquisitions, but it also has to come from a high single-digit organic growth. We see all the service opportunities, mainly in Entrance Systems, where we've also said that we have the ambition to grow our service business in Entrance Systems high single digit for the coming years. In Entrance Systems, of course, we have the integration of agta record, which is on its way, where we are ahead, I would say, of schedule. Where we have the ambition within maximum three years to bring agta record from a profit perspective to margins similar to historical Entrance Systems division level. We, of course, have the turnaround in China as explained, where we have the ambition to grow double-digit and bring the margins close to that 10%. Last but not least, an important organic growth accelerator, the move from mechanical to electromechanical and digital, as well on the residential side as on the commercial side. Thank you. Earlier today, you reconfirmed our financial target to grow 10% annually with a margin of 16%-17%. If the strategic activities and enablers pay off that we have discussed today, and we deliver in line with those financial targets, are you willing to discuss what we will deliver in terms of sales and profitability in, let's say, five years' time? Of course, it's easy because it's just a mathematical calculation, Björn, of what we said before. If we reach indeed our financial target, it should be possible to come close to that SEK 150 billion by 2026. If we, on top of that, do that with an EBIT margin within the 16%-17% band, which should also be possible to come close to that operating profit of around SEK 25 billion by the same period. Quite exciting numbers. They are very exciting. Thank you. Let's wrap up now with some key takeaways. Yes, we can do that. Like I said, we are in a good industry to be in with strong positive market drivers. In that industry, we are very well-positioned with a very strong market leader position. We are deploying strategic activities and enablers to now re-accelerate our profitable growth through acquisition, but strong focus on growth organically. We have not changed our strategy. Our strategy remains intact and will evolve as we go. We have a strong team with a common culture and common values. If we really are able to deliver on all these plans and respect our financial targets, we should aim and have the ambition to become a SEK 150 billion revenue company and a SEK 25 billion operating profit company by around somewhere 2026, Björn. Thank you. Christiane. Thank you, Nico and Erik, for this very comprehensive presentation. We have now come to our first longer Q&A session. We realize that you have found the Q&A button in the Zoom browser, asking questions and lining up in the queue that Holger Lembrér is managing. If you haven't found it's there. Keep posting messages to Holger, and he will handle the queue. Holger, who is first in line now? How many questions? Do we have questions? Yes, indeed, we have questions, Christiane. Thank you. First in line, we have Daniela Costa from Goldman Sachs. Daniela, please unmute and go ahead and ask your question. Hi, good afternoon. Hope you can hear me well. Thanks for handling the Q&A. Yeah, I'll start with one question, basically. When you talk about your 10% target, the 5% plus 5% target, ASSA ABLOY has had that for a number of years. We obviously recently have seen several promises of stimulus, both in Europe and in the U.S., particularly some of the Biden plan talk about housing, healthcare upgrades in terms of renovation, and you have fairly strong positions, I think, in those segments. Is that factored in at all in your 5% organic, or would that come sort of as incremental upside that maybe you haven't factored in yet, given it's not fully firm decided? That's my question. Thank you. Daniela, you want to put our ambitions even higher. We thought that the five plus five was already very ambitious. If you look over the last 10 years prior to the pandemic, we grew 9%. You can look in two ways. You can say we failed miserably because the ambition was 10% and we only did 9%, or you can look at it like I look at it was a fantastic achievement, and I would sign immediately to do again 9% for the next 10 years. Of course, it has to be a combination of acquisitions and organic growth. If I can choose, I prefer more organic growth over more acquisitions because clearly organic growth is the strongest value creator, but obviously, we'll be happy with both. I think all the market conditions, the positive things that we explained before, and then all the internal activities that we are deploying will confidently lead to reaching that ambition of coming close to that ambition of that five plus five. Again, we believe that's already a very ambitious target. We have no intention to further lift that up. Specifically to the stimulus programs, can you comment on how they impact you and whether they're in the five? Which programs you mean? Sorry, I didn't hear that. The Biden plan, which includes several measures for housing and schooling and hospitals and segments where I guess you have a strong presence. Yeah. Obviously the U.S. market is the most important market for us. We are not so exposed to new builds in the U.S. The vast majority of our business comes from replacement market. If you take the Americas division, around 80% comes from the U.S., the other 20% from Canada and emerging markets. In that 80%, of course, the vast majority is on the commercial side. Very happy to see now architecture billing indexes and other construction indexes going up again very much in the right direction. I would say this is more leading indicators. What happens with ABI indexes today, we will see that in our business in a year, 18 months from now. Might be a little bit shorter because obviously when things went down, there was a very big backlog of construction work. What has happened is that the backlog became a little bit smaller, you come also faster in at the end of the funnel, it might speed up things a little bit. Definitely things that might speed up more is all the Biden incentives and so on. You take, for instance, particular schooling and universities, K-12 universities, if they decide to invest money in refurbishments, those cycles are much shorter, and there we should then see faster an uptick of our business. Thank you, Daniela. I think we will move over to the next person in line, which is Rizk Maidi at Jefferies. Rizk, please turn on your camera and go ahead. Yes. Hi. Thank you for taking my questions. I hope you can hear me well. I just have two. Perhaps the first one is on that case study with regards to the South Korean electromechanical or residential electromechanical locks business. We see that it went from sort of early stages to now sort of more mature market. Can you just share with us how the profitability evolution of iRevo was over the last few years? I guess one of the main pushback is that your U.S. digital door business is currently margin dilutive. Do you think that that business, based on the experience of iRevo, could actually close the gap to the group's target in the South here? Yeah. I think the main point for profitability is probably the maturity of the market and how much you are in that replacement cycle versus new build. I think that's also true for digital door locks. Of course, the dynamics in South Korea are very different from, for instance, the U.S. I don't know how much you can extrapolate it. To answer your question, if you look at profitability in South Korea today for digital door locks, it's on a similar level, even slightly better than for our mechanical part. Once it's in a mature market, it's a normal profitability level, I would say. It's true that we have always said, and that's still the case today, that in general, if you take in the world that smart digital door locks today are dilutive to growth in the sense that we make less margins on digital door locks than on the rest. We are also making good progress there on the cost side and on the pricing side also with new product launches that we have done in a very intensive way over the last nine months. We see also there margins improving and the gap becomes smaller in general. Good stuff. Perhaps just a follow-up if I could. Just on the M&A integration, I think you've mentioned some of the sort of new changes, appointing an integration manager, reporting M&A to the board, this is essentially tackling the new deals that you're doing. What are you doing with previously acquired businesses that haven't been sort of, say, sort of completely integrated? Anything there? I would say the financial follow-up, the one that I talked about, let's say that we have an increased follow-up when it comes to, let's say, the performance of the entities and also on the performance of the entities. That, of course, includes also acquisitions that was done prior. I would say that we also make sure that we include them also in the bucket of improved follow-up. Also looking, of course, also in these ones, are there additional synergies that we can find out of this? Well, like Nico talked about with August as an example, where we now use August, their software platform, also for the Yale Doorman locks. I would say when we do an acquisition, we have a clear plan on synergies and what we want to integrate, what we want to keep stand-alone, and we just execute on that plan as long as we don't see deviations and as long as that delivers results. Of course, with acquisitions, it's like with running or biking. The more you do, the better you get at it. As we do 15, 20 acquisitions per year, I always say there is perhaps one or two that are perhaps not so good. There's one or two that are fantastic. The vast majority are very good acquisitions and are done in a very good way, again, because you have a process in place. Of course, if you do many of them per year, you can also permit as an exception that from time to time you have one that is perhaps not 100% as you expect. I think it's also proven in our results that our track record when it comes to acquisition is very strong, and track record also over recent years. Thank you, Rizk. We'll move over to the next person in line. The next person in line is Mattias Holmberg from DNB. Mattias, please go ahead. Mattias, we can see you, but we don't hear you, so maybe unmute. Mattias, do you hear us? We don't hear you. Shall we, in that case, try and take the next person in line, and then we come back to you, Mattias? The next person in line is Lucie Carrier from Morgan Stanley. Lucie, do you hear us, and can you unmute yourself and turn on your camera? Please go ahead. I think I have. Can you see me and hear me? Yes. Great. Hi, everyone. I will try to keep myself to two questions. The first one is around the margin dynamic, and thank you for giving us some data around your SaaS business and also recurring revenue. I guess what I was wondering is you are keeping your margin range the same in the long term, but I would have thought that those business around recurring revenue and Software as a Service would carry a higher margin than your OE business or your general kind of business. How do we think about the margin dynamics here in terms of comparing the profitability of those businesses, considering that you're not changing your margin target despite those businesses apparently growing significantly more than the rest of the business? We've always said that if we can choose between further improving our margin above the 60%-70% bandwidth or see if we can grow faster, we will choose the latter because we believe growing faster is a stronger value created than further increasing the margin. We should not forget, if we talk about service development, if we talk about recurring revenue development, that you also have to invest. You have to invest in R&D, you have to invest in software, you have to invest in a service organization, so that growth does not come for free. You also have to invest definitely in the beginning when you are ramping up those new initiatives. When you talk about mix in EBIT, I think there is so many dimensions that it's very difficult to explain in an easy way. First of all, you have already the geographical mix. Of course, if we can grow faster in the Americas and grow faster in Global Technologies, it's very accretive to the margins. If tomorrow we do a fantastic job in China and we grow 20% or 30%, it will be with single-digit EBIT levels, and of course, it will be dilutive to the group margin. If we enter a new market and are very successful in entering that new market, it will be in the first place with new projects, new builds. Again, at the beginning it will be dilutive. Afterwards, it will then become accretive. Again, we still believe that the 60%-70% bandwidth is for us the right target to aim for. If you look over the last 10 years, we have been most of the time within that bandwidth, but rather on the lower end of the bandwidth, sometimes also just slightly dropping out and then coming back. From there that we reconfirm the 60%-70% EBIT target. Can you hear me now? Yes. Okay. If I may just ask a second question around this investment you are talking about to develop your service business. I remember you had already mentioned that at a capital markets day a few years ago around leveraging the install base. Can you maybe help us understand what is concretely being done at the moment to really leverage that massive install base that you have globally? Which type of result have you seen so far? In all fairness, maybe from the outside, it's not so obvious that it has been game-changing up to now. Just to understand a little bit better what maybe from the outside we do not necessarily see, but obviously you guys are working on this every day. Well, I'm quite sure that you've asked yourself where the very good profit margin improvement in Entrance Systems comes from. Of course, there are different arguments, but definitely one argument is also our service business because we have said if we can grow our service business faster than our equipment business, that will be accretive to margins because we make better margins on the service side and on the new equipment side. If you go back four or five years ago, we were growing our service business only low single digit. It was more a passive way of developing our service business. Prior to the pandemic, we really then increased quarter after quarter in a very good way that growth, and we came to the beginning of the pandemic to high single-digit growth for service, the level where we want to be at. Obviously during the pandemic, that put us back again because also often our service technicians were not even allowed to come on site. As of the second half of last year, we have seen service picking up again. Now in Q1, we are again having a high single-digit service growth. We are confident that we are delivering on that strategy of delivering high single-digit service growth. What does it mean in practice? Of course, investing in people. If you have more service business, you need more service technicians, you need more service salespeople to sell that service business. You also have to invest in your back office and in your systems because if you grow your organization, you also have to make sure that the systems and the customer support grow together with it, because otherwise you will give service to the customer, will not be happy, and you will just lose that service business again over time. Thank you, Lucie. Well, let's now try a second time with Mattias Holmberg at DNB. Mattias, go ahead, please. Mattias, do you hear us? Please go ahead. No, it doesn't work. That's a shame. Well, Mattias, let's work on your technology. You can come back maybe to the next Q&A session. We will in that case move to the next person in line, and that's Andreas Willi from JPMorgan. Please unmute yourself, and we look forward to your question. Yeah. Good afternoon, everybody. I have a question first on your hardware and doors business. You showed us a slide earlier showing that has slightly declined over the 2015 to 2019 period. Can you maybe elaborate a bit on that in terms of your ambitions as well for that business and how big that business is today? The second question I have is on your R&D. Mainly on R&D productivity. Are you happy with what you get out of the increased R&D and also the higher level of R&D against some of your competitors? At least from outside, it's not easy to spot that higher R&D investment has driven higher growth than, for example, at Allegion. If I start with the first question, I should look at the details, Erik can add. I believe the main reason is there China, our door business in China. Of course, we had the challenges a couple of years back where we also had a conservative approach of creating stability, profitability, and growing back from a lower level. That would explain, I'm quite confident, the difference you see on the graph. When it comes to doors, if that's the question, if we see that this is important for us, yes, we see this as essential and as part of our core business. We see more and more projects where you sell the door together with the door hardware. Neil in his presentation on EMEIA will further elaborate on that. We see that as a competitive advantage for us if we can sell the whole package that we from specification all the way to sales can pull through that offer in the market. When it comes to R&D, happy or satisfied, I would say I'm happy. I'm never satisfied. Of course, we always want to do better. You can always compare with competition. For sure we have different views on how the relative performance is. When we talk about R&D as a group, of course, you should not forget that you have on one side R&D and Entrance Systems. You could argue there's not so much synergies in that R&D with the rest of what we do within the group. Of course, we have a very important investment in R&D and everything what is Global Technologies as well on the Global Solutions side as on the HID where you clearly saw prior to pandemic that higher growth and higher than the market growth, I would argue as well on HID as for Global Solutions. When you look purely on R&D for the mechanical side, of course, you have to do R&D in every market. As the mechanical part is different, again, in Italy from Germany, from Sweden, from the U.S., you have to do, you could say four times R&D. If you only sell locks in one market, if you only sell them in the U.S., for instance, of course, you can concentrate your R&D activities on only making one range which fits for the U.S. market. You miss out, of course, on all the opportunities that you have in South America, in Europe, and in the rest of the world. If you want to grasp those opportunities, you have to invest also R&D on the mechanical side there. Where I think we definitely can do better and have to do better, that's a matter of time, because we are maturing is on the electromechanical side. Like I explained, if we are convinced that electronics and software can be very similar on a global level, with then having the advantage that the mechanical part is still very local. We being by far the biggest in the market, we should be able, over time, to leverage that scale to our advantage. That's something we are working on, and we are confident we will see improvement going forward. Thank you very much. Just maybe a quick follow-up on your target, the 5% organic. Do you see that as a through cycle or as a target during a normal economic cycle, so outside recessions? We see that over a normal business cycle, you could say. Yes. Yeah. Thank you. Thank you, Andreas. Well, let's move then to the next person. I would just like to note that there's a hands up button in the Zoom browser, and some of you have clicked on it. You need actually to send a message to Holger. He needs to respond to you so you can get through to ask questions. We have a few people in the line, so we are not in shortage there. Also, we want to give you the opportunity to ask questions. The next person in line now is Anders Roslund from Pareto Securities. Anders, please go ahead. Anders, are you there? If we don't get anything back, we will move to the next person in line. That's Guillermo from UBS. Guillermo, please unmute yourself. The stage is yours. Good afternoon, everyone. I guess 15% margin range. Do you think that with the current set of variables that we have in the market, can we get there this year? The second question regards to the growth in emerging markets. Can you explain a little bit how dilutive it is at the moment for the group margins to grow at that level? How do you expect that to move in the subsequent years? If I start with the first question, if I got the question correct. If you look in Q4 and in Q1, Q4 last year, Q1 this year, and you normalize and you take also out the dilution of the acquisition of record, which is around 50 basis point dilutive on group level. You could say that we are on very similar profit levels as prior to the pandemic. Yes, we should continue to see the margins recovering and coming back into that 16%-17% bandwidth. Again, there is a lot of moving variables. There is the material inflation, there is the electronic shortages, but there is also in an important way, our own internal mix. More growth in the Americas, more growth in Global Technologies means much easier to come fast back to the margins. More growth in China or in APAC in general means more difficulties to come fast back to the margins. As such, I hope that I can come in the coming quarters and the coming years and tell you that the margin is dilutive because we are very successful in China. Obviously, we want to see how we can accelerate growth in China and in other emerging markets. When it comes to the second question on profitability in emerging markets, it is very difficult or impossible to give a uniform answer. If you take the more mature part, East Europe, South America, margins are very much in line with our group ambition. If you take the complete opposite side of the spectrum, China, we have said that prior to when we started our new strategy, our margins were very low single digit, and today they are only somewhere mid-single digit. It really depends, again, market by market, the maturity of the market itself, the level of the standards implemented in those markets, how much there is a split between residential and commercial offering. Also on our maturity of where we stand in the market. Are we just entering the market and are still building up the install base, or do we already have a good install base that we can draw from and then profit more from the replacement market? Thank you, Guillermo. We actually have now to round up this Q&A session. I'll hand over to you, Christiane. Thank you. There we are. Thank you for this session. We will now take a short break before we continue with the presentations from Entrance Systems, Global Solutions, and EMEIA. After the presentation from EMEIA, we will again open up for a Q&A session with all the presenters from today. We will resume in 10 minutes' time. That's 10 minutes past 4:00 P.M. in Swedish local time. See you after the break. Welcome back from the break. We hope that this first part of the presentation has provided you with a deeper insight and understanding of our potential and strategy. We will now move over to the next part of the agenda, which is to go a bit deeper into three presentations, Entrance Systems, Global Solutions, and EMEIA. First out is Entrance Systems, where Christopher Norbye, who is heading the division, is located at our site in Landskrona in the south of Sweden, and he will now present Entrance Systems. Christopher, please go ahead. Thank you very much, welcome to ASSA ABLOY Entrance Systems here in Landskrona, Sweden, one of the two global divisions within the ASSA ABLOY Group. I will start today and talk a little bit about the division, where we have today 14,000 dedicated people around the world, which includes 3,500 service techs. In 2020, we reached a turnover of SEK 28 billion. Our business model is truly global. We have direct and indirect presence in over 100 countries all over the world, we are growing in key verticals such as logistics, data centers, high security, healthcare, and all door automation. We also serve all types of customers, ranging from small local companies to global key accounts, we work with them with equipment, monetization and upgrades, and of course, service. Our strong business model has proven to be very successful in the past. We could also see the performance here in 2020 that confirmed that our business model also is set up for the future. If you go into more of the financial side of the business, we can see here on the sales side that we have grown a lot through acquisitions in the past. Also, if you look specifically at 2020, you could see that we only dropped 2% of organic sales, but we added a lot of sales to our acquisition of the agta record and AM Group. We also had a very good start to 2021, growing 11% organically and 12% through acquisitions. If you then move over to our margins, I believe we've made some good steps forward to improve our margins, and we could see that coming through at the end of 2020. We also saw a good continuation of this in 2021, and we expect this to continue. Finally, on the cash flow side, this continues to be strong. It's part of our business model, and this will also continue in the future. Maybe moving on to one of our most impressive slides or the best slides we have. If you can see this fantastic development ongoing in 2002 from SEK 200 million to in 2020, SEK 28 billion. Of course, a fantastic growth journey, consolidating the market, buying the best companies out there. This is not over yet. We still see good opportunities in our different segments and geographies to continue and consolidate and drive the market. If you move over to that, we changed our organization here in the beginning of 2020. We created four business segments to drive the business. We created a pedestrian segment, the industrial segment, the residential segment, and also perimeter. This reason for doing this was mainly to accelerate our ability to make fast decisions, work with scalability, also drive synergies, and we can already see good effects of this new organization. It's working out very well. I also to educate a little bit everybody listening in today on our product portfolio, and I'll start with the pedestrian segment. Here we have by far the vastest product portfolio of any company around the globe. We are the market leading within sliders, swingers, and revolving doors, but lately with the record acquisition, we have also added physical access product, sensors that'll be critical in our future, and all this supported by the world's best and largest service organization. We now move into industrial offering. It's a similar story as the pedestrian, global leading product portfolio from dock levelers to industrial doors, to hangar doors, to high-performance doors, and also here supported by the world's best and largest service organization. Moving into the residential offering, where we have one of the market leading positions in North America on the garage door and operators. Also here, we're moving forward more and more in the segment, working together with our sister division, Yale, and connecting our products, working with their ecosystem, because of course, that's a trend that's happening out in the market. Finally, our perimeter segment, working in very high growth verticals like high security fencing, also in bollards, in crash vehicles products. Here we also see a global or North America leading product portfolio that will continue to develop. If we then move over more to the future, focusing on our strategy going forward, we have set a strategic plan per segment supported by the ASSA ABLOY core values. Here we have set the financial targets of growing 10% per year in the future and also moving the EBIT to 16%. We will also continue to drive by being number one or two in our segments and going to the market direct and indirect. Here I will summarize some of the initiatives to drive our profitable growth that the rest of this presentation will focus on. Of course, product leadership, core to our business. Also service, where we're expanding our investments even more to drive growth. Also emerging markets, big organic growth driver for us in the future. Also focusing on verticals such as logistics, healthcare, and high-security fencing that I mentioned before. M&A, that will continue to be core to our development in the future. Finally, operational excellence. That's the platform for everything to come together. If I move into then product leadership and talk a little bit about that, is that we will continue and invest and drive our core portfolio that I just went over with you. Also on top of that, we're investing more and more in our service product offering and also connecting service with the equipment. You'll see this a little bit later when I talk about connectivity, how this works together. Sustainability, it's the core of our products. Of course, energy efficiency, that we work with all our product automation speed in our products. Finally, we may call the new kid on the block connectivity, where we now are connecting all our products that we are selling and also ability to connect our own products to work with our customers to drive their business and also our service organization. Here we'll show you a little clip of one of our solution in the docking business in the U.S. under the brand 4SIGHT. Let's take a look at this video. Let's demonstrate how 4SIGHT Connect can help create real-world solutions for challenges inside everyday supply chain cycles with 4SIGHT Connect Digital Gate. The distribution center's shipping office schedules the appointment using the 4SIGHT Connect Digital Gate application and sends the appointment request and other essential details back to the product carrier. The carrier then sends the appointment request with the date, time, and company name to a delivery driver to pick up the much-needed supplies from the distribution center. The delivery driver receives the information and schedules the pickup and delivery of the goods. Before arriving at the pickup location, the driver conveniently pre-checks into the distribution facility using the Mobile Express features in the 4SIGHT Connect Hub mobile app. This notifies the facility via 4SIGHT Connect Digital Gate that the driver is on time, on schedule, and will be arriving shortly. This pre-check-in notification allows dock managers and dock workers at the distribution facility to begin preparing the products for loading before the driver arrives. When the driver arrives at the facility, they can easily complete an advanced check-in by scanning the pre-check-in generated QR code at the 4SIGHT Connect driver control. The gate opens, and the driver is routed to a designated location at the facility. At the same time, the distribution center is alerted of their arrival. Loading of the truck is complete, the dock manager hands the driver the bill of lading and grants approval to depart. The driver receives the message he can depart the facility and uses the Mobile Express features in the 4SIGHT Connect Hub mobile application to finalize his checkout. The driver leaves the facility and heads to the product carrier's location to deliver the goods in order for stores to restock their shelves immediately. Let 4SIGHT Connect Digital Gate help you lead the way and transform your facilities into smart, connected warehouses. Thank you very much for that fantastic video focusing on how connectivity in key vertical like logistics will continue and drive our business. We will now move on to our core products and product development within our pedestrian segment. Here we'll go over more of our traditional product, but some really cool features and development that we have in the pipeline and as we have launched. I will hand over here to my colleague in the product side, Johan. Please, Johan, the floor is yours. Today, I'm excited to introduce some of the products in our portfolio. I will start with our new exciting collaboration with LG Electronics. We strive to be the global leader in entrance automation. We challenge the status quo and go the extra mile to find smarter ways to improve our customer business and life. With that in mind, imagine what an automatic sliding door could be, not only a convenient offering, but also a great opportunity to promote brands and communication. We partnered with the technology leaders at LG Electronics. The result is a door like no other. Introducing the revolutionary transparent OLED automatic door. This state-of-the-art door features a combination of ASSA ABLOY's proven sliding door functionality with LG's cutting-edge transparent OLED display. Here's how it works. The display is integrated into the glazed door, and it turns an otherwise unused space into a unique opportunity to display a brand or a message. Picture walking into an airport and seeing advertising on the door, maybe the latest store opening of your favorite clothing brand, or walking into a grocery store and seeing ads for products available in the store. You can program the door to display customized advertising in perfect quality, show dynamic animations, crisp and clear videos. With a transparent OLED door, the possibility are endless, and this is just the beginning. We are planning future collaborations with thought-leading companies worldwide. Here at ASSA ABLOY, we are constantly looking at the needs of the market, and we have built a reputation of being one step ahead with new products that will benefit our customers. I would like to talk a bit about the growing demand for door operators with smart functions, how we, in 2020, met that demand with the launch of the innovative SW60. We developed it to meet the needs of architects and building designers looking for a slim operator that would easily blend in with its surroundings. A sleek and modern product that even won the Red Dot Product Design Awards in 2021. We combine it with a smart and touchless feature that end users have come to expect. The result is a game changer for our industry. This product offers a seamless fit into any environment with a germ-free touchless function, and you can easily control it with a smartphone. Just like this. As you can see, it is safe, seamless, and easy to control the doors in your facility. With the successful launch of the SW60, ASSA ABLOY has set a new reality for door automation. During the past year, COVID-19 has triggered innovation across the world, as the pandemic has affected our day-to-day lives and influenced the way consumers behave. These are challenging times for many business owners, who have to take new regulations regarding permitted people capacity and social distancing into account. The ASSA ABLOY Flow Control is an automatic counting solution that supports social distancing by limiting the number of people in shops and buildings. The sensor count the number of people entering and leaving the building while displaying the current occupancy in real time. When the limit is reached, the LED strip switches from green to red, and automatic door is put in exit only mode. Please wait here. The door is locked from the outside, and a voice message let you know that you can't enter. Please enter. When a person exits the premises, the traffic light switches from red to green, and a person can enter. With this product, there is an automatic limitation of the number of people that can enter a building, making sure the business owner's compliance with local regulations and the customers and employees feel safe. There is no need to hire extra security guards, leaving the business owners with a peace of mind to focus on their business. Thank you, Johan, for a fantastic product demo. I'm sure all of you watching this video are interested in our OLED screen door, we can continue and talk about that after this presentation or during the Q&A, of course. Moving on to the next profitable growth driver we have is service expansion. I think that you know by now on Entrance Systems, of course, service is part of our core. I think the biggest difference here going forward now is we're also working much more on a vertical offering in logistics and other verticals to have an even better offering for our customers. We're also connecting all our doors, where we can see now the efficiency in service improving and also the speed we fix things for our customers, which means that our first time fix is going up, we get better response to our customers. Of course, this also leads long-term to a different type of business model where we can work with uptime, we can even fix the door before it breaks. It's very exciting times in our service organization. Also just to show an example on the service side, and we talked a little bit from the U.S. and connectivity, we also signed an agreement here with DB Schenker on one of the new logistics center, where they're also buying our dock management system, which means that all their doors will be connected for them to get more and more information and drive efficiency, and for us also for our service organization to be more efficiently and fix door problems before it even happens. It's a win-win for both companies, and this is very exciting for us going forward. We then move from service into the emerging markets, and we showed on a couple of our first slides that we only have 6% of our sales in emerging markets, and we believe we can grow this sale significantly going forward. I think the biggest difference from the past is that we now also identified our key markets. We're also in these markets investing in R&D, product development, local supply chain, and manufacturing. We can already see a good progress in some of the markets. If we focus a little bit of our largest market, China, where we already have a good presence, the difference now is that we have local product development, R&D, and organization to drive and support our growth. Looking at the example I will show you, we also see success here because we recently signed a frame agreement with a local Chinese real estate developer who's actually refitting all their residential buildings with automatic doors, which is a trend in our market. This would have never happened in our old structure because it's a local developed product, working together with a customer, both on the cost, design, and this is the reason we won this project, and there's more of these in the pipeline. Finally, moving into growth through acquisitions, which has always been part of the core for Entrance Systems, and will continue to be part of the core. Here we still see big opportunities in different parts of the market. We drive our acquisition on both a market presence, and these smaller mid-size acquisition will continue to roll in every year. Then we'll also look at how we can expand in certain markets or regions where we don't have the strongest footprint. On top of this, we continue to look at products or portfolios that will be a good add-on to our products. For example, agta record is partly this, but also the AM Group, these companies will continue to be part of our strategy going forward. Final, we're also expanding into looking at technologies. We're looking at flow, we're looking at different sensors, we're looking at other parts that will drive our business going forward. We think also here it's an exciting times with a good pipeline going forward. A small summary or update on agta record that we finally closed in September 2020 after a very long process. This is one of the largest acquisitions in the history of Entrance Systems and ASSA ABLOY. We, of course, had high expectation when doing this. As now, when we are merging the companies, we can confirm those expectation and even some upside to them. We have an ambition here to grow agta record into the same profit level at 16%. We have some really good initiatives to do that. I think the keys here to this is, of course, how we integrate our service organization, all the tools around it, and also the product side, where we get new exciting products in our portfolio, and of course, from the cost side, when we're driving the synergies through. All in all, a very promising start to the integration. We'll see more and more of this as we move forward together. If we wrap everything up to be able to create this growth and margin development, we also need the operational excellence. Here we drive and work with, of course, every single day. I think a couple of things to highlight here is, of course, safety. We have a lot of, I said 3,500 service techs. We have a lot of factories and people around the world that we want to make sure they come home safe from work. I think the other part is as we continue and consolidate our business and add acquisitions, our manufacturing footprint or supply chain will continue and consolidate. Which means that if you look at this, we've closed almost 200 sites over the last 10 years, and this trend will continue. Also putting the operational excellence all together, we also focus on automation, and of course, a key driver as we increase our volumes in our business. Here I want to show an example. One of our factories based in Texas, in the U.S., was focused on making dock levelers, a factory that over the last five years have improved their productivity or expanded capacity by over 50%. Here, let's take a look at our factory and automation in the dock leveling business in the U.S. As the global leader in automated entrance solutions, ASSA ABLOY Entrance Systems has a large portfolio of industrial doors and docking solutions that facilitate logistics and increase safety and workflow for our customers. We have some of the strongest brands in the market within these product categories. The top-tier product brands, Kelley and Serco, have more than 60 years of experience and lead with excellence in quality, function, and design. With an impressive 40,000 tons of steel running through our assembly line in Carrollton, Texas every year, our products are manufactured with expertise and technologically advanced machinery every step of the way. The factory was established in 1997 and became part of ASSA ABLOY in 2012 when 4Front Engineered Solutions was acquired. Dock levelers, vehicle restraints, lifts, and control panels are carefully crafted by over 150 dedicated team members every day. We aim to output the most reliable, quality-driven, and safety-enhanced products. They are trusted by some of the world's largest companies through our zero-defect and continuous improvement processes. Heavy machinery usually needs a complementary partner. Our control panels area produces standard and customizable panels. This process is perfected with the use of robotics, ensuring our facility workers can focus on the actual build and not on the moving parts. We constantly strive to improve all aspects of our operations in order to better serve our global customers. Shipping dock levelers is no easy task. Our customer experience does not end when a product is shipped. Fulfilling expectations and proper follow-up is key to fostering relationships, and we are happy to do so. As added features, we provide ways for clients to engage even further. Our 6,000 sq ft academy gives a perfect opportunity to delve into each product with one-on-one demonstrations. If they can't visit us at our facility, we take our mobile showroom on the road and travel to them, giving a sneak peek of our offerings. It is a competitive advantage that's highly sought after. Operational excellence and maximized efficiency through automation in our supply chain puts us ahead and is indeed an essential enabler for our future growth. To summarize this presentation, I would like to focus on some key points. We had a very solid performance during a challenging 2020 and a good start to 2021. We have a new organization in place, and we can already see the result of this new organization. We have accelerated our focus on driving product leadership and also added focus within service and connectivity. We are present in a lot of high-growth verticals, such as docking and logistics, healthcare, and security fencing, and data centers. We have started a good integration process and good potential within the agta record acquisition. Finally, we believe that we now have also the platform for the profitable growth and reaching the 16% within Entrance Systems long term. With that, I would like to thank you very much for listening, and I will hand it back over to Stockholm. Thank you very much. Thank you very much, Christopher. Very interesting. You will be back for the Q&A session in a little while. Before we move over to Global Solutions, I would like to ask Nico if there's anything in relation to what Christopher and Francis just shared with us that you want to comment on. I think it was a good presentation, fantastic story. If you see and go back 2002 when we bought Besam, small, SEK 200 million Swedish company, you see the journey we made and the growth we realized mainly through acquisitions and the value we created. I think it's a fantastic story, and as Christopher said, much more to come, and I think also very high ambitions also going forward. I also would like to take the opportunity to thank Christopher Norbye for his contribution in that journey over the last years, because most of you know that Christopher will leave us. He will become the CEO of Beijer Ref. I hope I say that correctly. Of course, we have started the process now to find his replacement. Thank you, Nico. Thank you. Let's now move to Global Solutions. Christophe Sut is heading Global Solutions, and those of you who have covered ASSA ABLOY for a while will remember that he presented at our CMD back in 2017. A lot has happened with Global Solutions since then. Christophe Sut is now located in our Global Solutions head office in South Stockholm. Christophe, please go ahead. Thank you, Bjorn. I would like to wish you welcome in Global Solutions. During the next couple of minutes, I will try to give you a glimpse of what we do. As an organization, we are 30% of Global Technologies. We are about 2,000 people spread all around the world, four factories, but 31 operations in 31 different countries that are mainly service organizations. We are extremely focused on innovation and have a big part of our revenue coming from product recently launched. Let now go a little bit more in depth with what we are doing. As an organization, we are focused on understanding specific vertical segment that we are targeting, identifying the pain point of our clients, and out of it, building security solution that create added value for our clients. The way we do it is by delivering three components that you will always find. The hardware components, mainly a lock, that will be the base of the solution. This is the device that will help us at a later stage to build all the functionality we need for our customers. On top of that hardware, we sell software platform that enhance the experience and bring functionality that create added value for our clients. Finally, we offer services, and the services are here to make sure that the solution we provide is constantly available with a high level of reliability. I would like to give you an example to help you to understand how it works in practice. Let's go to the hospitality industry that I'm sure you are very familiar with. We started our journey there by providing hotel locks that will be used to secure the guest room. We realized that by adding a software layer to it, we could create added value to our clients and to their clients. The first thing we did was launching mobility by adding a software layer that will allow our clients to give the capability to hotel guests to check-in in their hotel room, bypassing the reception. As we were close to those clients, we have realized that they face many other challenges. One of them is the security of their staff, because they want to make sure that if someone gets in trouble, they can assist the person and help the person as much as possible. Based on that, we realized that our technology would be able to bring a lot of value to those clients and developed a solution called Location Services, applying an HID technology to the hospitality industry. We made sure that that solution will be managed by the same software that you use to manage your room, to create a seamless experience for the hotelier and to allow a very easy deployment. Today, we have a software platform based in the cloud called Vostio that allow our clients to consume many different services from our portfolio: mobile key, Location Services, room and access management. This is the way, being close to our clients, we create added value. We create a long-term relationship. Realizing that that approach could create value for other vertical, we are starting to expand the number of market where we will produce the same approach. Hospitality was the first one. We majorly in 2016, made a major investment for the marine industry in order to also provide unique experience and added value. We have step-by-step increased the number of vertical market where we develop the same type of approach and develop dedicated solution, starting with senior care, then education, critical infrastructure, key asset management, and finally, construction. As a second example, I think that it may be interesting that we stop on the construction vertical. This is the last vertical we have started to penetrate. We did it by acquiring beginning of 2020 a company called Biosite in the U.K. that is focused only to provide security solution. The reason why we decided to focus on the construction industry is because we realized that this is an industry that has benefited the less of the gain of productivity over the last decade. We believe that digitization can be a game changer. Let's understand more in detail what Biosite is doing. Within the construction business area of ASSA ABLOY Global Solutions, Biosite is supporting the digital transformation of the construction industry as a market leader in biometric access control and workforce management. Biosite changed the way the construction industry approached access control by developing a unique fingerprint algorithm for the low-quality fingerprints found in construction. Our approach focuses on the capture of accurate data and establishing an individual work profile and visibility of workforce data at both a site and group level to improve efficiency, safety, and compliance. Our systems have been deployed on thousands of construction sites with over 1 million operatives registered on the system. Our range of innovative software and hardware solutions developed by our in-house team turn data into valuable insights and digitize paper-based processes. We also provide leading solutions for wireless fire alarms, digital tools, CCTV, and guarding for construction. From conception to deployment for both software and hardware, we are in control of the product development process. With a nationwide fleet and network of engineers to respond to site needs and provide the best customer experience. We are now focused on expansion in Europe and Americas to support the digital transformation of construction on a global scale. As you could see, by using standard technology and tuning them to a specific industry, we can create great value for our customer. They gain in productivity, and they get enhanced security. In summary, we allow our clients to create value out of their security solution. How we do it is by being vertical-focused, having a strong direct relationship, in many cases through direct sales, and making sure that we allow our clients to scale the solutions all around the globe. What we do is we build security platforms out of software that allow us to change our revenue streams to more recurring revenue by using technology that is available all across the group, from our geographical division to HID. Now let have a look at some financials to see how that strategy has impacted our development. Between the end of 2016 towards the end of 2019, we doubled our size. Obviously, the last 12 months that we have been through have made us go a little bit backward. Let's try to understand how it impacts the different vertical and business area that we have. One way to look at it is to split the business area that are dependent to the tourism industry, hospitality and marine, and on the other end, to put all the markets that are not tourism-related. When you look at that picture, you can clearly see that even if we had a significant growth between 2016 and the end of 2019, the last 12 months have brought us back to the level we had at the time in terms of revenue. In the same time, we have continued our strategy to invest in other vertical market, even during the pandemic, we have kept growing those markets. We believe that it gives us a very strong combination on the long term, having a diversified portfolio, but a way to approach those market that is pretty similar. In the same time, it has transformed the way we collect our revenue. Obviously, we keep having a project part that is significant because it constitutes the base for future recurring revenue. We have started to increase our recurring revenue components. One of the very significant components that has taken off during the last four years is Software as a Service solutions. Mobility was the first we launched on the market, but it has been complemented with solution for senior care and construction. This revenue has grown by more than 3,000% since the end of 2016 towards the end of last year. All of it is possible because we keep being very close to our customers and continue to innovate, building new solutions that they appreciate. We started with the hospitality vertical, bringing Mobile Key to the market. As you saw earlier, we have complemented it with location services solution and access management software in the cloud with our Vostio platform. We have also a number of new innovations that have come to the market over the last 18 months that are really making the difference to their industry. Bit for critical infrastructure, solution for key management for the automotive industry with Traka. Biosite that is evolving its offerings towards more feature and more capabilities. All those solutions are recognized and seen by our clients and by the industry as the best available on the market. They will help us to move forward towards our new goals. We believe that those innovations will allow us to continue the digital journey we have started with our clients, allowing them to bring value out of software towards their security solutions. We will scale the solutions and continue our geographical expansion. At the same time, we are going to continue to explore other potential vertical markets we could penetrate and grow them through organic growth or new acquisition. Those three elements will allow us to double our size again during the coming five years, but also to keep a level of profitability above the group average. I would like to thank you for listening, and let's go back to the studio. Thank you, Christophe. Very interesting. You will also be back for the Q&A session in a little while. Before we move over to EMEIA, I turn to Nico to ask if you have anything you want to comment on what Christophe and Global Solutions just shared with us. No, it was an important division when it comes to accelerating our growth. As a matter of fact, this division was growing the fastest prior to COVID-19. Of course, COVID-19 hit us, and today they also hit the most from all the divisions by the pandemic because obviously all the tourists part, as Christophe explained, and it will take some time to recover. Definitely once we come out of that pandemic, they will be again a very important growth driver for the group. That's also why we are differentiating, diversifying also into other verticals away from hotel business and marine business. I'm very excited about this division as well. Thank you, Nico. With that, we are heading towards a break. We will have a short break and resume again at 4:55 P.M., 4:55 P.M., and then we'll get a presentation from EMEIA. See you in a few minutes. We have now come to the last part of today's program, and we will listen to EMEIA, where Neil Vann will present. Neil Vann is actually another very good example of a person who has made a very successful internal career with ASSA ABLOY. He joined Union and Chubb Locks in the U.K., 1987, and at that point as an apprentice. Now 34 years later, he's heading the division. Neil, please go ahead. Welcome, and hello to you all live from our Portobello factory here in Willenhall in the U.K., the ancestral home of locks in the U.K. In EMEIA, we lead the development within door openings and products for access solutions in homes, businesses, and institutions. Our extensive offering includes doors, door and window hardware, locks, access control, and services. We have continued to lead the market in access solutions through a combination of great people, great processes, and the best products. We have a team of over 12,000 dedicated people in over 60 countries spread across 12 market regions from the U.K. and Ireland, Western Europe through to East Europe, Middle East, Africa, and now reaching as far as India and the SAARC countries. Europe, Middle East, India, and Africa make up 21% of the group's sales, or SEK 19 billion, and 18% of the group's EBIT. We have a footprint of over 39 factories and close to 80 office locations that all play a key role in delivering our products and services. New products play a huge part of our growth strategy. However, we've also acquired over 50 companies in the last 10 years. Primarily, our sales are in mature markets. However, 13% of our sales come from emerging markets, and the recent addition of India and the SAARC countries provide us with a new 1.4 billion potential customer base. Our customer balance is 60% commercial and 40% residential. From a product point of view, the core of our business is still strong, and 47% of our sales are in mechanical products. Importantly, security doors now equate for 17% of our sales. Electromechanical and access control is a major growth driver, and we have established a great presence with over 36% of our sales in 2020 from electromechanical products. 2020 saw an unprecedented impact of the global pandemic, which unfortunately meant that we had negative sales growth after 27 consecutive quarters of growth. Now we see a progressive but strong bounce back in the early part of this year. Our operating margin was also impacted during COVID, our cash flow accelerated and was strong during 2020. Efficiency improvements will become the fuel for our investment in growth. We have a clear strategy for our growth drivers, which I'll talk about later, importantly, I want to talk about our operational activity and the efficiencies which will be the fuel for our growth. In operations, our factories, offices, suppliers, and logistics teams are where it all happens. Our efficiency improvement plan is based around four key areas. We aim to deliver EUR 20 million-EUR 30 million of efficiency improvements every year. The first efficiency activity is around our operational footprint. We've been working very hard on improving our production footprint and overall manufacturing efficiency. The site that we're at today, Portobello, is what I call a final configuration factory and is a great example of how we've consolidated our manufacturing footprint. This single site has absorbed the manufacturing activity of five previous acquisitions over the last few years. Every factory that we have has a defined mission, whether it's a full manufacturing site with heavy investment in automation, like our center of excellence for cylinders in Rychnov, or a specialist door factory like our Polish Mercor site. It could be a close-to-market final configuration site like this one here in Willenhall. A final configuration site like this one will have machinery and automation for fast final configuration of products close to the market, like the master key machine you can see behind me and the cylinder assembly machine that you can see on the other camera. The second part of our program is around logistics. After we've produced the products, then our logistics is a crucial opportunity to drive not only efficiency but improved service throughout our supply chain. As we develop a linked network of distribution centers across Europe, we can consolidate inbound shipments with fewer suppliers, reduce our warehouse footprint, and where we can share stock across multiple regions and improve our service. We can improve our outbound logistics spend by having that consolidated footprint. However, in order to deliver efficiencies and improvements, we will need to also introduce new logistics tools and systems to support the changing dynamics in our marketplace. The third part of our operational strategy is around procurement and VAVE. We will leverage our procurement activity through radical supplier reduction, and the development of key partners will be a crucial part of our strategy. We're also working with value engineering and value analysis programs to drive the right level of functionality into our products and minimize costs. Driving operational excellence is the fourth and final step in our operations strategy, and it's based around our Operational Excellence Program. Our Operational Excellence Program, which is focused around lean principles, will continue to be an integral part of our success. Looking to the future, I'm proud to call Rychnov, our cylinder factory in the Czech Republic, a new prototype for our digital factory of the future or Factory 4.0, which will take us to the next level. By investing in new equipment and automation and then seamlessly linking processes, machines, and people together, we will enable us to increase our efficiency, our quality, and the supply parts produced. As you'll see from the footage I'm about to show you, we have a whole host of automation within the factory and a state-of-the-art digital command center that tracks all parts of the production process. This is a big change from where we were five years ago, and it's the model of the future in digitization of manufacturing and our journey of transformation. I'm going to show you a video of our factory in Rychnov, which will give me a chance to get back to one of our product showrooms where we'll be able to talk about our commercial strategy moving forward. We've come from our factory floor. We're in one of our product showrooms. This product showroom is actually set up as a residential house where we can demonstrate our smart residential products. Here I'm going to talk you through our commercial strategy. We built a clear and strategic framework which is in line with the group vision. Whilst building the plan, our market regions have provided input to ensure that we can deal with local market differences and standards whilst being totally aligned as a division on our growth plan. Our growth drivers are built around three core areas. The first is about maximize the core. Our core is what made us great, our heritage, local focus, and core products like cylinder platforms, lock cases, doors, and seals. You might say the traditional side of our business. You might think that this mission is complete, but it's far from it. Geographical expansion and range expansion are still big opportunities for us. Driving efficiency in our product platforms is important. A great example is the success that we've had with PERK, our new European cylinder platform, which has performed extremely well across all of our regions, providing good growth and good efficiency. Having a full specification portfolio, including doors, will be very important for us as we move forward, helping to drive our commercial business. We believe that specification and working with architects early in the process is a crucial ingredient for our success. The growth in green buildings is another important area and will contribute to our commitment to science-based targets. Expanding our product portfolio, particularly in emerging markets, will be done through product development, but also through acquisitions. Lastly, we'll expand our mechanical business around Yale by introducing product platforms like Boron padlocks and local initiatives like new multi-point locks in the U.K. As you are all well aware, there are some big changes happening in the market, the second part of our plan is about capturing the big opportunities in digitization from both the commercial side of the business as well as smart residential, whilst capturing the recurring revenue streams that really help fuel our investments. We recognize that both residentially and commercially, there is a big opportunity for converting our huge installed base, we are not just talking about this, we are in process with this. Here are a few things that we've done. For smart residential, we have capitalized on the market-leading technology that the group got after acquiring August in the U.S., using that platform is a great opportunity to expand and accelerate our offering in EMEIA. Following on the great success with Yale Doorman in Scandinavia and products like ENTR in parts of Europe, we have now launched a platform that gives us multi-country opportunities with Linus. Linus is a product that can be used across borders with local variations. In addition to Linus, the new Yale Doorman L3 is a new breakthrough product in our core Swedish market. As you may be aware, both Linus and Yale Doorman have accelerated very, very quickly after launch, demand remains very high. It's not only about locking, it's also about generating a total ecosystem using smart alarms and smart cameras in that residential space. When it comes to commercial access control products, we have evolved our strategy and have moved from being a component supplier, i.e., just providing the electromechanical lock, to a complete ecosystem provider to allow our customers to fully control access and integrate this into other building systems. This commercial market is fragmented. You normally have a specific application with a dedicated lock and a dedicated piece of software for each application. Now we're able to bring together multiple applications with an ecosystem we call Incedo. Incedo is an ecosystem that will enable us to have multiple hardware types under one control system. We expect this part of our business to grow in a big way over the coming years. Incedo gives us a unified access control security ecosystem, integrating our own intelligent hardware devices, but also enabling third-party integrations to provide the widest choice for our end users. We have used the group scale to develop this in collaboration with HID, using their Origo platform, which has really enhanced our capability and given our specific market needs. Let's take a look at a video so you can understand more about Incedo and also hear direct from one of our customers as to why they chose the ecosystem. Please play the video. In a world that never stands still, businesses are more complex and global than ever. People, data, goods are always on the move. How do you keep your business secure in a world of constant change with fewer boundaries? Introducing Incedo Business, the flexible access management solution which keeps your premises secure today and helps you to meet any future challenges. This powerful new platform combines all ASSA ABLOY's expertise in access control to solve your daily security demands in one single environment. Incedo has the flexibility to adapt. It can be scaled up or down whenever you need, cost effectively and with minimum effort. Are you managing multiple people who move in and out at all hours? Protecting your IT investment or safeguarding priceless company information? With Incedo, you can choose which system management option fits best to flexibly and conveniently administer access rights with one system. To match your security needs, Incedo offers a growing choice of hardware, including ASSA ABLOY's award-winning locks, readers, and the broadest range of secure credentials or third-party integrations as they become available. Incedo Business works for any building, big or small, and when your security requirements change, Incedo moves with you to ensure your employees, customers, and goods are where they need to be. The access control you demand with the flexibility you need, Incedo Business, moving people together. Classic Sign Security is a security systems integrator. We wanted a system that was user-friendly but also easy to install and program. We secure systems such as access control, CCTV, intruder alarm, fire alarm, and many more. We chose Incedo from ASSA ABLOY because we felt that it was very easy to install. The control panels are very user-friendly and installer-friendly and can accommodate more than just two or four doors. Installation was very easy. The panels were very easily noticed, with the markings being very broad and very easy to see. The best feature for me is the user tracking and how easy it is to program the doors and actually locate doors within the system. As you can see, this is a very exciting opportunity, and to support it, we've built a pan-European product team, as well as dedicated sales organizations in every country, which we are rapidly expanding at pace. This is our clear direction of travel and an important value proposition for our commercial businesses. Our third and final growth driver is all about emerging markets. We have a fantastic opportunity in a number of emerging markets, and we have seen terrific growth development in our business in the Middle East, particularly with projects supported by our specification drive. Using tools we've developed in Europe, such as BIM and Openings Studio, our project specification system, we have made strong steps in the Middle East, and now we are taking that same methodology and the learnings and are driving it into Africa and India. Our specification capabilities now include over 250 people working in specification with end users and architects. That's a great platform for expansion in our emerging markets. It's not just about major projects. Addressing local market needs and having specific local product is really important. The transition from mechanical to digital will happen quite quickly once it's established in emerging markets. We have built the foundations in every one of our emerging markets. The transfer of India and the SAARC countries to our division earlier this year certainly gives us a massive opportunity. We have over 1 billion new potential customers in India, which is great for us. Within our own growth drivers, we have identified a number of focus areas, but it's not just about growth and growth drivers. It's about the enablers in the business. Strong R&D and platform development, driving efficiency in our manufacturing and logistics, developing new channels and new skills in our business, like e-business, for example, driving our acquisition portfolio, and tools around commercial excellence. All will play a crucial role in delivering our strategy. We believe that EMEIA has strong growth potential and the ability to reach the group corridor of 16%-17% ROS. Thank you very much for listening, and I look forward to answering any questions that you may have later. Now, let's go back to the studio. Thanks. Thank you, Neil. Excellent. The technology worked. Well, before we move over to the final Q&A, I would like to ask you, Nico, if you have any comments in relation to what we just heard? Personally, to repeat what Christiane said, I think Neil Vann is indeed a good example of what we mean with a lifelong career within the ASSA ABLOY Group. I think EMEIA is also a very good example if we say about the complexity in our market. Only in Europe, Neil Vann has more than 20 different lock platforms he has to support for the different local markets. Adding a lot of complexity, but obviously we like complexity because if you can manage complexity, it gives you a competitive advantage. Then, like Neil said to you, I think a lot of very good opportunities still within the division. Very excited also here for the future. Thanks, Nico. Well, it means now that it's time to round up this session and start our next Q&A. I would also like to welcome Christopher Norbye from Entrance Systems, Christophe Sut from Global Solutions, and Neil Vann from EMEIA, who are now, as you can see, in their respective location. Christiane and Holger, have we received any questions? Thank you, Björn. We have received questions. Holger, who is first in queue? Thank you, Christiane. First in the queue line, it will be Gael de-Bray from Deutsche Bank. Please go ahead, Gael, and unmute yourself. Yes. Good afternoon, everybody. Thanks for taking the questions today. The first question I have is. You demoed some pretty interesting products earlier that appear to be suitable to the pandemic, I was actually wondering if you've really seen some material structural changes due to the pandemic in what the customers demand in terms of being able to in and out of the building without touching things, and if you expect to see some changes in terms of regulations in favor of these sort of solutions touch-free or contactless access solutions. This is question number one. The second question is, I'm actually trying to understand what sort of pent-up demand is ahead of the group. Clearly there's been a number of retrofit and repair projects that have been pushed out because of the pandemic that have been postponed to a later stage. I was wondering how the pipeline for these projects look like currently. If there was any way you could help us understand the sort of recovery one could anticipate once the mobility restrictions are fully lifted in a given country? Is it some kind of really strong catch-up you expect to see or is it more a gradual improvement that you are seeing in those geographies that have already started to open up? I think this is for you, Nico. Perhaps we can ask Neil to comment on EMEIA because I think what Neil will say on EMEIA is, I guess we can extrapolate for the rest of the world, and then I can add on to what Neil says. Okay, thanks Nico. I'll talk a little bit about the second part of the question, which is about the pent-up demand. I think what we actually see is a steady and progressive improvement in demand at the moment. Where we really see a backlog, it's in new construction projects. Many of the new construction sites across Europe, particularly in Eastern Europe, but also in the Middle East have a lot of demand restrictions there, capacity restrictions there because of workforce constraints, people coming back, outbreaks of COVID-19 on site, which has really slowed the construction cycle down. I do see some pent-up demand there for sure. We definitely have bigger backlogs than we've had for some time. I see the project specification backlog is also starting to increase in a good way as well. Yeah, it's steady progressive improvement, and there is a bigger pent-up demand, particularly in new construction for sure. Perhaps if I add on the first question, of course, if you take for instance, all these COVID-19 products that you can open a door hands-free and so on, what you see immediately is the smaller sales. Somebody wants to upgrade one door or two doors, that business we have started generating already during the pandemic. I would say if you really want to move the needle, it really has to come from speccing that in new projects or in refurbishment projects or in upgrade projects. There it's too early to see that result. Yes, we see that there is more demand in our spec business for electromechanical in general, for sustainable products in particular. That sales will obviously only come later because those cycles are between 12 and 24 months. Of course, if you can do a complete project in a hands-free way, in a electromechanical way, in a green way, you can make more significant difference on the top line. Thank you, Neil, Nico, and Gael. We'll move to the next person in line. The next person in line is Lars Brorson from Barclays. Lars, please unmute yourself and go ahead. Thank you. Good afternoon, all, and thank you for the presentations. Maybe I can start with Entrance Systems, perhaps one to Christopher. To Nico, thank you for providing your targets. I was curious to get a little more color both around the growth target, the 10% growth target, and also around the margin target. On the growth targets first, can you help us a little bit with that 10% growth target, how you see that be split between organic and inorganic? You've been highlighting this phenomenal growth story in Entrance Systems over the past decade in particular, which is true. Of course, all of that largely has been inorganic. The organic growth pre-COVID-19 for 10 years was 2.5%, so well below where the group has been sitting over the same period of time. Help us understand whether you see a shift in the organic growth profile in Entrance Systems, if so, where that is coming. I'll come back and ask specifically to your service business within that. I'll start with that. Thanks. Christopher? Sure. I'll add some flavor to it, and then of course, Nico can continue and add to it. Yes, you're correct there. I won't get into detail on the split organic or acquisition. I mean, we work with the same total on half of it coming from organic and the rest on acquisition. Of course, acquisition goes a little bit up and down, but it's more of a business cycle that Ambition is continuing to drive the acquisition side of growth. To address the organic one, a little bit of a shift that's done over the last couple of years from Entrance Systems is to invest more in building the organic capabilities and not focus solely on acquisitions. We can see that, as Nico talked about on the service side, we have invested much more in the backbone of service on the commercial side of sales and service techs ahead of the game. We could see that coming through before the pandemic, now we can see it coming through as well. We expect the high growth driving from the service side, which is now almost 30% of the business. That will make a difference in organic growth going forward. We also see some of our verticals where we have invested both on the product side, acquisition organically and in docking, as you can expect, will grow at a much faster pace than the 5%, and we can see already and it will continue. Also too, on the pedestrian side, where we see better organic growth, also the addition of agta record in our own business and doing the cross-selling, we can see make a difference. I think those key parts of the business is supporting that growth rate going forward. We'll continue to work on OC North America, continue to do well for us. I think the last part, but that will take longer time to affect the growth rate, is the emerging markets. As it's only 6% of our growth, that's a more long-term play to improve the growth rates long term. I don't know, Nico, do you want to add something to that? Yeah. Perhaps I can try to add some flavor if I start with what Christopher said on emerging markets. It's clear that from all the divisions, Entrance Systems is most probably the one that is the most underrepresented when it comes to emerging markets, and therefore also has still the biggest opportunity going forward. As a matter of fact, we are investing in an important way in many emerging markets for Entrance Systems. If you look a bit at the different segments and add to what Christopher said, if you take pedestrian, you have, of course, the retail food, which is a very good business to be in today, definitely also during the pandemic. We are perhaps one of the few people that are also still excited about non-retail, because what we see is that, the H&M stores, the Zara stores of the world, there will be perhaps less of these stores, but the stores that will be there will be of a higher quality level. They don't want to have a manual door. They want to have a high-end quality door. That's a good business opportunity for us, and that's also what we see in our numbers. By the acquisition of record, we have, of course, received many additional product ranges, hermetic doors, which is a global opportunity, and then security systems, which is also a global opportunity. On the investor side, Christopher already mentioned logistics. As we all want in-home deliveries, the Amazons of the world and so on will continue to build warehouses and fulfillment centers like mushrooms. Very good business for our loading dock in the first place, but also for sectional doors and sometimes high-speed doors. I think on the other two, and definitely on perimeter security in particular, our focus really having a vertical focus and coming with dedicated specific solutions, but also dedicated sales approaches for the different verticals like data centers, like logistics and so on, really pays off and show, therefore, the very nice growth that we now see since many quarters in that segment. Okay. Sorry, can I just clarify? I think Christopher, in his presentation, talked about some upside to record within that margin target that you've established 16%, i.e., 200 basis point up from current level. I didn't hear the specifics of what that upside related to. No. It's because I probably didn't say it, but what we're saying is that, of course, we went into this acquisition with some expectations of the integration and the synergies. I think it's too early to sit here and commit to any other targets that were put in place. I think it's more relating to what we're seeing right now when we're doing our synergies, both from the cost and sales perspective, that we see opportunities to further accelerate the development of the plan and the targets. A little bit also, it's early days in that, but it looks like we have other possibilities that we didn't have as part of our integration case. We've always said agta is today 50 basis points dilutive from group level. Within three years, we have the ambition to bring agta EBIT margins on the levels of historical Entrance Systems EBIT levels. We are even more confident today than before we bought agta record, that we will be able to do so. The second thing what you said is for Entrance Systems, like Christopher also mentioned in the presentation, is that we have the ambition over a longer period and over more midterm to bring Entrance Systems also closer to that 16%-17% bandwidth. That has to come from many things, but an important driver there is faster growth in service versus equipment. Thank you. Can I ask a second question and just clarify? You talked about Software as a Service. I think you said it was 3% of group, so SEK 2.5 billion figure or so. Can I just be clear how you define that, assuming that's your software subscription contribution, so it excludes all readers and anything hardware related? Where is that recorded? Can you also talk a little about how the business model is shifting for you, if at all, Nico. Should we say access control as a service model. A bit less than that, seven, eight years ago, we saw you roll out, particularly in hospitality, but see us more of a full package solution, I guess, from ASSA ABLOY. More recently, you've been working quite actively with Apple, where I presume the bigger opportunity for you perhaps is on the hardware side. Can you talk a little about how you see the business model in the early adoption around particular hospitality versus what you see today in areas around particularly commercial applications? Perhaps we can start with the hotel business as an example, and Christophe can definitely add more flavor to it. If you have today the possibility to check into your hotel room with a digital credential on your phone, that is of course a recurring revenue model for us, and there is different models. Either you pay per room, you can pay per access, you can create per key. There's different models to get that recurring revenue. Of course, the ambition is once you have that relation for Software as a Service with the customer to then build your ecosystem around that specific solution for that customer, add other services to it, and therefore generate higher recurring revenue on a daily or monthly, on a yearly basis. I I would say very similar like software companies are doing with us on our computers. I would say it's not very different if you take access control more in general on the commercial side. When Neil talks about Incedo, our software platform that brings all our access control hardware together on the same platform. There also you will have different levels, a light, medium, high version, and depending on the service you will get, you will pay more or less recurring revenue for that service. There also, Neil, then has the ambition to, once you have a relation, build out that ecosystem, deliver more services to the customer, creating more customer value, and in return, get more recurring revenue. I don't know, Christophe, if you want to add on your division, because I think you are the father when it comes to recurring revenue. I think maybe to add a little bit on hospitality, what is interesting is that to enable those services, we deliver quite significant piece of software to connect. There is a lot of connectivity with, in the case of the hotel, the PMS system, the customer management systems. We have a piece of software we deliver to bring the added value. What looks like a very simple service, it's actually a quite complex ecosystem. That's what allows us to generate those revenues, to make them quite sticky with the customer because you don't get it running in one day, but once it works, it's very stable and very good things for the customers. It's a quite interesting movement we are in the industry from that perspective. Getting very close to the customer and also really delivering added value because of the integration which we have with the ecosystem of the client. That we see in all the business we are operating into, and that allows us to create real recurring revenue based on software licenses. Before I ask Neil to comment perhaps a bit more on his business, we have also always said that we see more opportunities for recurring revenue on the commercial side than on the residential side. I have, like I explained to you, Linus lock. I have an app on my phone. I will, of course, never pay for service to open and close my lock. Perhaps one day, if it's really sophisticated, I might consider something for in-home delivery. Whereas of course, if you go to the commercial side, the return on the service that we offer for that customer is much more visible. It's really about tangible money that he can save, and he is much more willing to pay back part of that saving to a recurring revenue model. Perhaps Neil you can add some flavor there. Absolutely. I think you described it in a very good way, Nico. It is about an evolution of services provided. If you look at perhaps the audience today's office space in banks and things, there will be very much a value-added package there, typically in an access control management system. Where we see this evolving, particularly when we are converting our installed mechanical base, is that you typically start with a much more simple system, what we call an on-premise system, with very basic functionality and very limited sort of services and therefore a lower level of recurring revenue. As the people get used to using it and then want to advance their capability, the platform that we've developed with Incedo gives us the opportunity then to upgrade different functionality as the customer evolves and as the system that they operate with develops and their needs develop, we can evolve that Software as a Service provision. I think that's where we see things really step by step, really evolving over time. I think it gives us a very good opportunity because the penetration into the market for that type of recurring revenue model is fairly low still. It's still very new in most commercial segments. It's a good opportunity in the long term for sure. Thank you, Lars. I think we need to move over to the next person in line. The next person is Johan Sjöberg, Danske Bank. Johan, please go ahead. Thank you. Thank you very much for a very interesting day, first of all. I would like to ask a couple of questions for you, Neil, if that's possible. First of all, Nico talked at the Q1 comp call about the improving trends throughout the Q1, and listening to your earlier answer to a question, I interpret it as this trend has continued throughout Q2 as well. I just want to double-check that with you. My second question is upon your M&A strategy also in EMEIA. When I look at your targets, it's 5% through M&A, but when I look at your historical structural growth, it has been much lower than so, and it's actually been quite two or three years ago since we actually saw a meaningful acquisition. Do you see a pent-up demand or pent-up pipeline for M&A targets? Thank you. Neil, over to you. Thank you. Thanks for the questions. From a trend point of view, I think we see the emergence after the pandemic step-by-step improvement each month. Month on month, we're seeing a definite improvement for sure. Hopefully, that continues. There are obviously still some hot spots across the world, particularly in India representing a relatively small proportion of our business. I think step-by-step, we see the improvement. We see the markets opening. We see the construction sites coming back. We see the renovation projects coming back step-by-step. I hope to see a continuing evolution of that step-by-step improvement. When it comes to M&A, I think we have a very clear strategic intent when it comes to M&A. In every one of our market regions, we have a clear list of targets. We have a clear list of priorities in what we want to achieve. I think we've been a little slower, for sure, during the pandemic period. Most deals, as you would probably know, tend to start at a fairly high level and as a reaching of concepts and minds of the owners and the management teams, either locally or centrally. That slowed us down a little for sure, but our list is clear, our pipeline is good, and I think it's about ensuring that we get our targets to the table, and of course, it takes two to dance when you get there. I'm optimistic, but we're clear in what we want to achieve, and we're clear on our lists. As Nico said, there's close to 1,000 targets globally, and we have a good proportion of those targets on the EMEIA list. Great. Thank you. Thank you. Well, the next question will actually be Mattias Holmberg, who we had technical problems with at our previous Q&A session. There are technical issues on his side, he has sent us the question in writing, Holger, you have the question. Can you read it out? Yes, I can do so. It's a question for you, Nico. In the first session, you said that you aim to grow higher than 10% in emerging markets. Is this including acquisitions? Is this ambition different from your growth target in developed markets? Well, if you should look historically, we have shown that we historically only grew, I think it was 4%, a bit more than 4% in emerging markets. We definitely have the ambition to accelerate that in an important way, and when we talk about double-digit growth, we talk about an ambition on organic level. Thank you. Well, let's move over then to the next person in line, and that is Andre Kukhnin at Credit Suisse. Andre, please go ahead with your question. Yes, good afternoon. Thank you very much for taking my questions. Can I just clarify something first, and I have a question, one for EMEIA, one for Entrance. Did you say that the ambition to get into the 16%-17% range ex agta remains for 2021 despite raw materials? We have said that the ambition remains. We haven't said that the ambition remains for 2021 because obviously we don't give guidance. It's clear that our ambition is to come as soon as possible back within the 16%-17% bandwidth. Indeed, excluding a 50 basis point dilution from agta. What we have said is that if you look in Q4 and in Q1 and look at the underlying margins that we were back at margin levels prior to COVID-19. Of course, we know that we have the material headwind, which will become worse before it gets better. I think a very important factor, like I mentioned earlier, is the whole mix, geographical mix, residential commercial mix between divisions. More growth in Americas, more growth in Global Technologies means easier to reach the 16%. More growth in APAC and in China in particular means longer time to get to the 16%. Andre, did you have any follow-up there? Thank you. Thank you for clarifying. The question I have really for Entrance is on that service growth dynamics. I'd love to find out more about how that business works in terms of how many doors you have under maintenance, what are the annual installations that add to that. Is there an attrition to competition or retirements? Can we just talk about that? The question for me I have is on electrical/mechanical locks pricing. You gave a very interesting data point on Yale Doorman L3 versus Yale Doorman L2. Could you give any idea of a broader el mech pricing trends in EMEIA on the products that are like for like? Do prices stay where they are? Do they trend down over time or up? I think, Christopher, you start there. Yeah. I guess I would service, I know that's been discussed in the other capital market days well from an entrance point of view. I'll just add on more to that type of discussion is, I think a little bit that we alluded to before with Nico is that entrance comes from a history of being an equipment company with service as an add-on. The direction we started to change some years back is that driving service also has a core business, which means that in the way of getting the conversion rate, attrition rates on our install base and et cetera has accelerated over the last couple of years on getting the contracts in place, getting the commercial salespeople in place, getting the process in place to make sure that every single door that we sell comes under our service contracts. I would answer it in this way that our portfolio of chasing or whatever word you want to use on our own install base is still very high, which means that there's still a very good base for us to grow on our existing install base. That's one part of the growth where it's coming from. The second part, of course, now is also that we make sure and the focus on converting every equipment sales into a service contract and service business. Of course, it's like everything else. It's an investment over time. As you sell a new product, you still have warranty periods, then you went to maintenance, then you went to service, and then you went to replacement. It's a two-way of addressing effect where we can see, and that's why we can say that our ambition and what we've seen over the last quarter before the pandemic and as we picking up again, is that we have this base to drive the organic growth on the high single digits. We feel comfortable with that target the way the service business now is evolving. I would also add that the target is perhaps not in the first place defined by the potential, like Christopher said. It's more also our capability to ramp up because if you want to grow high single digits, we have more than 3,000 service technicians. That means that, okay, let's say that you want to grow 10%, you have to add a little bit of efficiency, but close to 300 technicians on top of the natural attrition that you have on technicians, people retiring and perhaps some people leaving. It's a lot of technicians you have to hire every year, train, bring up to speed, and the same is true on the sales side because obviously you also have to further grow your sales organization if you want to have this type of high growth figures. I think the second part of the question was for Neil then, so you can go ahead, Neil. Okay. Thanks for the question. I think when it comes to the pricing trends on digital, let's split it into two parts. Let's talk about the residential side of things, first of all. The residential digital change is so new, there is no pricing trend that you can make a comparison with. It's a very new part of the market, what we see is that it's very much a feature-driven pricing process. Entry-level product will command a much lower level price, and then you add features and functionality, and then you can build the pricing positions in the market. We see that the product development is a very important factor, and scalable product development, which gives you the opportunity to develop the pricing structures on a feature-based process, is a very good opportunity. When it comes to the more mature, let's say, although it's not a matured market, it's slightly more advanced in the commercial space. Again, it's very, very similar. It's very much about feature-based pricing. That's where you get the benefit. It's more about providing solutions that give payback to the customer. Typically, that's a more interesting part of the sell. What can we save you in terms of your daily activity? What we save you, we can give you additional features to do that, we can manage pricing in that way. It's a very similar scenario. I see it as an evolutionary pricing opportunity, very much feature-driven, the more features, the better the pricing opportunity we have in the market. Yeah, it's a good space if you've got scalable platform-based development and R&D. Thank you, Neil. Well, let's move over then to the next person in line, and that's James Moore from Redburn. James, please go ahead. James, you are muted it looks like. Well, can you hear me now? Yes. Hi, everyone. Hi, Nico. It's James from Redburn. Thanks for the presentation today. I've got one on service and then one on China. Service, I think you said 7% of GT and 25% ES is service revenue, but I don't think you said what the percentage of revenue is for EMEIA, Americas, and APAC. If you could just remind us of what that is and talk to us a little bit about where the profitability of service materially differs between the five divisions. Nico, really a question for you. If you do this high single-digit top line, can you quantify the potential profitability uplift across the businesses from service? That's my first one on service. Let's start with that and I'll come back to China. Yeah. Just for you to know, you're also standing or laying horizontally with your camera. Sorry, gentlemen. If you can turn it 90 degrees. Then Neil can feel free to add on EMEIA or Christopher on Entrance Systems. When we say that our ambition midterm is to go closer to the 16% for Entrance Systems, and to be clear, when we said that we want to grow service high single digit, that is only for Entrance Systems. If we say that we want to go to that 16%, that is for an important way, thanks to the faster growth that we then will see in service than in equipment. Of course, in a normal world once the pandemic is over, we will not grow high single digits, whatever, 9% in equipment. We will grow faster in service than equipment, and we make better margin on service than on equipment. How much difference? We don't want to quantify, but let's say that it's an important reason why we then can bring the margin to 16%. When we talk about service, we use it in different worlds because we use it in Christopher, in Entrance Systems, really for the man in the van, the man going on site and doing preventive maintenance and repairs on industrial doors, sliding doors, a little bit like they do service on compressors or pumps or elevators. Whereas we sometimes also talk about service in more general terms. We talk about Software as a Service, or we talk about just aftermarket in general, and the wider definition is aftermarket. We say that two-thirds of our business is aftermarket business. In that two-third, we also then define aftermarket as the door handle breaks down, and we replace the door handle. That we also call aftermarket. It's a bit difficult to be specific with the answer. If you take the three geographical divisions, they also obviously sell doors, and doors through which people go. We have also a smaller service business in EMEIA, a business that we are also investing in and also are developing in. I would say in a similar way like that we do with Entrance Systems. In the other two divisions in APAC and in the Americas, that man in the van service business is very small because our business model is a much more indirect business model. I don't know, Neil, if you want to add something on the EMEIA side. I think you summed it up very well. When it comes to our fire door service activity, it's a new part of our approach. It's a new element. It's about making sure that fire doors remain compliant to standards and helping our customers ensure that they meet building codes, et cetera. That's an area of the market that we're interested to develop. I think it's of growing importance, but still a relatively small part, nowhere near the dimensions that Christopher has in the Entrance Systems business. Of course, that other piece that you mentioned, Nico, the replacement product market, that's a very important part of our business for us. Typically that market is serviced by our partners in the field. Equally, it's important. The practical people in the van type approach on services is a much smaller part of our business. It's an evolving part, a part that we're investing in, and really actually taking the Together we mentality and looking at some of the systems, the tools that Entrance Systems have developed in a very professional way, and adapting them to our market space and our door presence as well. The second part, Software as a Service, we said that it's around 3% of group sales, and that sits today mainly in Global Technologies and Global Solutions and in HID. There we see very good opportunities to grow and to continue to grow that very high double digit, I would say, in all divisions. Definitely also the geographical divisions with Incedo platform as an example now with Neil in EMEIA. Even in Entrance Systems, as we get more and more doors connected and loading docks connect, we see also good recurring revenue potential for those connected doors and connected loading docks. Thanks. Great answer. The second one's on China. I just wanted to understand the margin story there from 5% to 10%. You've got your three brands, PANPAN, ASSA, and Yale. Is the profitability story today, without being precise about the numbers, are they all roughly similar in profitability? Or is the move from 5% to 10% predominantly driven by PANPAN or something else? What we have always said is that historically, we were wrongly positioned in China in the sense that we were almost exclusively in new builds, and we did not capture the aftermarket. We all know that we make better margins in aftermarket than in new build. We also said that we were very skewed towards residential, and we were very small on the commercial side. We also know that we make better margins on the commercial side than on the residential side. We are working very hard. PANPAN is a very good example where we are really shifting away from that new build and make that relatively much less important in the total business and grasping much more on that aftermarket retail business, which helps in a very good way from a margin perspective. Of course, we are investing heavily on the commercial side to become a more important player on the commercial side. That obviously in the first place has to come from new projects, but then once you have the new projects installed, you can of course start to work also on the aftermarket, that will then again help with the margins. That's very much in line with the strategy that we are executing on as we speak. Right, just so I understand, would it be fair to say PANPAN is the bigger driver or is it all three brands together really? It's really a combination of what I just said, more commercial mix and more aftermarket mix, also being obviously much more efficient internally. I think we have not grown in recent times also because we have been much more selective on which type of deals we want to take. Obviously, we want to do business means that you take orders where you make a margin in line with your ambition, where you have a very good chance of being paid in an acceptable time. That means, of course, that part of the business for us in China is not accessible, we don't focus on. If you look at the remaining part of the business in China, it's still a very good opportunity, great potential for us going forward. James, we will need to round up the Q&A session now. We have tried to let as many as possible ask questions, but I know that there are a couple left, and please feel free to contact us at Investor Relations for any follow-ups. That means that it's next time actually to wrap up this CMD. Now we come to the end of this CMD. Before we finish, I would like to ask Nico and Erik for your final comments, and let's start with you, Erik. First, thanks, everybody, for the attention and interest that we've had during the day. This time we are focused very much on re-accelerating the growth. I just wanted to reassure you that we will keep a very close control of our cost. We have shown you in 2020 where we were actually able to reduce our fixed cost with roughly SEK 2 billion, and that we will continue to have the Manufacturing Footprint Program and the day-to-day operational efficiencies that we have. Today we didn't have any chance to talk about what I've sort of said in every of the quarterly calls, the highlight, the operational cash flow. I hope next time that we will have a chance to come back to that the next Capital Market Days. Let's do that. Nico, your final comments. I can also comment on the day, but perhaps I should start with indeed also thanking all of you for listening in, taking the time for us. The time we don't have to look in this camera, this gives me also the opportunity to thank the whole camera crew and the whole team behind the screen, which has done a very good job, so thank you. Of course, all the people that contributed to making this day a great success. Thanks. If I summarize the day, obviously, again, we are in a good market, a market with strong positive market drivers. In that market, we have a strong market leading position. We have a proven strategy, a strategy that has delivered very good results for 26 years. We will evolve that strategy, no revolution, but evolution. We will continue to deliver strong results with that proven strategy. Now as we move out of the COVID-19 pandemic, it's time for us to focus on re-acceleration of our profitable growth. Of course, growth through acquisitions, definitely as a focus point also how can we re-accelerate our organic growth? Like we've always said, 1% more organic growth in a sustainable way is the difference between a good company and a great company. Obviously, we have the ambition to be a great company. To do that, we have defined different growth projects. We highlighted the most important ones today, growth in emerging markets. The shift from mechanical to electromechanical on the residential and the commercial side. Growth in aftermarket, as well as servicemen in the van as Software as a Service. Then, of course, also the growth in sustainable buildings. We also highlighted some of the enablers that will enable that and support that growth. We talked about culture and people. Perhaps that gives me another opportunity to thank another person. Holger Lembrér has been with us in Investor Relations for the last, I think, three years. He's also a good example now of an internal promotion. He will become responsible financial director. That's the right word for our senior care business in Global Solutions. Good example of internal promotion. Culture and people are most important asset. Innovation. Innovation is really in everything, what we do in our DNA. Then last enabler, like Erik mentioned, the whole focus on cost efficiency. We have said that if we can deliver on our results and we do the math, it should be possible to become a SEK 15 billion top-line company by 2026, and then deliver around SEK 25 billion operating profit. Also from my side, thank you again. Thank you, Nico. With that, we have really come to the end of our CMD. Just a little bit of practicalities at this point. The presentation that we have shown today will or should now be available on our website under Investor Relations in a PDF format. Also the full Capital Markets Day in an on-demand version will be available as soon as our technicians have converted it into the right format. I also want to note a few upcoming dates. We are presenting our 2021 half year report on July 19, and we are also planning to have a physical Capital Markets Day next year in 2022, November 16. We have already booked a venue in London, where we look forward to see you. Even though being in a virtual format is great, we look forward to see you then. We certainly look forward to seeing you face-to-face next time at our next CMD. It's time to wrap up finally now. We hope that you have a better understanding now of how we will access all of the growth opportunities that are around, so we can accelerate the profitable growth in line with our financial targets. On behalf of the ASSA ABLOY team, we would like to thank you for all, for the interest and that you spent your afternoon with us here today. Thanks for a good question as well. To our internal viewers and contributors, thank you for your hard work. Without you, today would obviously not have been possible, so keep doing your great job. To all, take care of yourselves now and stay safe, and thanks everyone. Thank you. Thank you.