Good morning everyone, and welcome to the presentation of ASSA ABLOY's third interim report in 2022. My name is Björn Tibell. I'm heading Investor Relations, and joining me here in the studio is our CEO, Nico Delvaux. Erik Pieder, our CFO, he is unwell and not here today. As usual, we will now start this conference with a presentation and summary of the report before we open up for your questions. With that, over to you, Nico. Thanks, Björn, and also good morning from my side. Our Q3 results, a very strong performance in the quarter with an organic sales growth of 14%. With again, Entrance Systems and Americas contributing in a very strong way. Perhaps also the difference this quarter, also Global Technologies contributing in an important way to the top line. Also good sales growth in EMEA and a sales decline in APAC. Strong EBIT margin improvement at 15.6%, 60 basis points better than the comparable figure a year ago. Very active on the acquisition side, growth through acquisitions of 3% net and six acquisitions signed in the quarter. As said earlier and predicted earlier, strong cash flow with a 95% cash conversion in the quarter. If you look in the numbers, sales of almost SEK 32 billion, 33% up, 14% organic, 3% net acquisition, and then helped also by currency 16%. An EBITDA margin of 16.2% within that bandwidth we aim for, and then an EBIT margin of 15.6% versus 15% corrected for the Certego investment last year in the quarter. An EBIT of almost SEK 5 billion, 39% up, and earnings per share 3.2 SEK per share. If we comment a little bit on the different regions, a very strong continued North America with a 22% organic growth, where we saw strong growth as well on the residential side as on the commercial side. Slightly higher on the commercial side than on the residential side, despite, I would say, difficult comparison with Q3 last year. We still see good momentum, good market dynamics in the market today. Again, as well on the residential side as on the commercial side. Our spec business was up in the quarter, high double-digit. Also very good South America with a 12% organic growth. Also here, despite a very strong quarter a year ago. Also here still, we still see good market dynamics. Africa +22%. Also here strong quarter. Europe +6%. Europe, we have seen a little bit more mixed picture. I would say in general, still very strong market dynamics also here on the commercial side and on the residential side. Also in Europe, our spec business was up double-digit. There are some markets where for some channels to market, on the residential side and on the more direct consumer related side, I would say we have seen some weaknesses. That's for France, for the U.K., and for the Benelux, where the DIY channel has been weaker and where our channel partners, our distributors have also done some destocking activities in the quarter. Overall, still good momentum also in Europe with +6%. Australia, Oceania, strong quarter +12%. Also here, still strong momentum on the commercial and the residential side. Also here, perhaps if you want to notice a weakness, it's also more on the DIY channel. Something we see a little bit in general in the Home Depot in the U.S., in the Bauhaus in Europe and in the Bunnings in Oceania. If we then take Asia -1%, it takes a very different picture between Greater China and the rest of Asia. The rest of Asia has shown very nice positive high growth. Then in Greater China, we have seen a significant double-digit negative growth. In Greater China, we continue to suffer from the construction crisis and then are also not helped by the continued zero tolerance when it comes to COVID in that country. Overall, I think still a very positive picture. If we look at some of the market highlights in the quarter, also this quarter, nice big project wins. A leading U.S. retail chain upgrading their loading dock equipment in 20 of their distribution centers. We secured a public transport ticketing system in Australia, including more than 7 million contactless cards. A big win for a resort in South Korea with delivery of more than 9,000 lock sets, door closers and cylinders. A nice senior care project in North America. As you know, every quarter we launch more than 100 new products. We just picked a couple of them this quarter. The launch of the Yale Assure Lock, our newest U.S. flagship for smart locks in the U.S. Very excited about that new product launch. We have here in Sweden signed a partnership with DHL for e-commerce in-home delivery. Launch of a new innovative SMARTair wireless electronic lock, and then the extension of our software solution around ABLOY BEAT for critical infrastructure in Global Solutions. A strong accelerated organic growth in the quarter. That's now again seven consecutive quarters with strong positive organic growth. A margin that is slightly slowly improving back towards the 16%-17% bandwidth. We are now on a 12-month moving trend at 15.3%. An accelerated top-line with a better margin means also a strong acceleration of our operating profit on a record level and 61% higher compared to the same quarter five years ago. The acquisitions, we continue to be very active. Six acquisitions signed in the quarter. 11 acquisitions closed year to date, representing sales of around SEK 3.3 billion, adding almost 3.5% to the bottom line. We have four additional acquisitions that we closed now in the beginning of Q4. If we zoom in on two of them in a bit more in detail. DoorBird, a German manufacturer of high quality IP door intercom. Very excited about this acquisition for our EMEA division. They represent the sales of around SEK 220 million last year. Control ID in Brazil, which will be integrated in the Americas division. Developer of hardware and software for access control and time and attendance, reinforcing our current access control and biometric offering. Very nice company. Very excited about this one as well. They had the sales of SEK 250 million last year. You have seen, of course, that DOJ has tried to block our HHI acquisition. We, together with Spectrum Brands, are now contesting that DOJ position in court. We will have our case in court sometime second quarter next year. As a result of the concerns DOJ had on the acquisition, we have also initiated a sales process to divest our Emtek business in the U.S. and our Smart Residential business in the U.S. and Canada. Together they represent sales of around $350 million last year. It's very nice businesses. It's unfortunate we have to divest them, of course, conditioned on approval by the judge of our HHI acquisition. Also with that divestment, we still are very convinced on the HHI acquisition and the strategic rationale behind it, and we reconfirm the $100 million EBIT synergies in year five after the acquisition. That figure remains valid also after the potential divestment of these businesses. If we then go into the different divisions a little bit more in detail, starting with EMEA, an organic sales of 4%. We have very strong sales growth in Scandinavia, Middle East, Africa, India. Also good sales growth in East Europe. Like I mentioned, a bit weaker U.K., France and Benelux on the residential side with the distributor channel and DIY channel. In those three markets for those channels to market, we have initiated some contingency actions to protect the bottom line. An operating margin of 14.3% versus 11.3% last year. Of course last year we booked a capital loss related to the CERTEGO divestment. The comparable figure is slightly above 15%. We saw good operating leverage, 40 base points in the quarter, and I would say despite continued significant higher inflation, continued material inflation, labor inflation, logistic inflation, energy cost inflation and general inflation. FX was strongly dilutive, 110 base points. That is because of the weaker SEK obviously. Then the M&A, 370 base point accretive link to the CERTEGO capital loss booked last year. Americas, another very strong quarter with an organic sales of 17% and all countries and all business areas contributing in a very strong way. Good performance on the residential side as well as on the commercial side. An operating margin of 20.9% versus 20.6% a year ago. Very strong operating leverage, 170 basis points up. Very strong operational execution and good strong price realization. FX dilutive 30 basis points and M&A dilutive 110 basis points. That is mainly or only acquisition related costs for HHI, which amounted to around 80 million SEK in the quarter. Go to APAC, an organic sales decline of 2% and a very mixed or different picture between Greater China and the rest of Asia Pacific. The rest of Asia Pacific showed very strong sales growth, is performing on a good level as well in Southeast Asia, South Korea specifically, and then a strong double-digit sales decline in China, like I mentioned, because of the weak construction market and the continued zero tolerance when it comes to COVID. An operating margin of 4.5% versus 5.8% a year ago. Also here you should make a difference between the rest of APAC, where we see strong operating leverage, good margins, and good execution. We see a loss in Greater China with a strong negative operating leverage for the division of 200 basis points due to, I would say, subdued volumes in Greater China. FX accretive 60 basis points, M&A accretive 10 basis points where we consolidated the Qualtrics acquisition in Australia in the quarter. If we go to the global division, starting with Global Technologies, a very strong quarter with an organic sales growth of 19% with all business areas in HID and all business areas in Global Solutions contributing in a strong way to the top line. What I think is different this quarter to previous quarters is that PACS, our Physical Access Control business came back and we were able to invoice part of the backlog that we build up because of shortages in the past on chips for our readers and our controllers. You might remember that we redesigned some of our readers and our controllers to be able to use chips that were more readily available. That production started at the end of Q2 and now full speed Q3, giving a good recovery of the PACS business, which is important top-line wise and also bottom-line wise because it's also an important margin contributor. With the second difference is in Global Solutions, where we saw a good hospitality business, which is also a good citizen ID business, by the way. The travel-related sectors coming back from a low level. That hospitality recovery is obviously also important bottom-line wise, and therefore we can show a strong operating margin of 17.3% versus 15.8% a year ago. We have a good operating leverage of 50 basis points. FX helped 120 basis points because of the stronger US dollar, and then M&A dilutive 20 basis points. Then last but not least, Entrance Systems, another very strong quarter, organic sales up 20% with all four segments contributing in a strong way, and as well on the equipment side as on the service side showing nice growth. Service had good double-digit growth in the quarter. Very good operating margin of 15.7% versus 14.8% a year ago. Very strong operating leverage of 110 basis points, FX neutral, and then M&A dilutive 20 basis points. If we then go a bit more into detail on the financial numbers, I already talked about the 14% organic growth, about the 3% net acquisition growth, and the 16% growth because of currency. An EBITDA margin of 16.2%, 140 basis points up. The EBIT margin, sorry, 15.6 versus reported 14.2 a quarter ago. Corrected for CERTEGO, 15%, 60 basis points improvement. EPS 3.2, 48% up. Operating cash flow, very strong, 25% up compared to a strong quarter a year ago. A cash conversion, like I mentioned, of 95%. The ROCE on a 12-month moving trend at 16.8%, 220 basis points better than the same quarter a year ago. We also give you the run rate effects for Q4 now on FX and acquisitions. For FX, 17% accretive and then M&A 3%. If we then look a bit at the bridge, 14% organic growth where we have, I would say, high 5% price and then an 8% volume. A very strong volume leverage of 23%, giving us 100 basis points accretion, 30 basis points positive currency, and 10 basis points positive acquisition. It's the net between on one side the CERTEGO comparison with last year and then the SEK 80 million we had to book for HHI-related costs in the quarter, giving us the 15.6 EBIT in this quarter. If you look at the cost breakdown, good progress on the direct material side, where we continue to compensate through price increases for the higher inflationary cost. We have still 110 basis points dilution. That is partly because of the negative mix, 70 basis points, and then the higher material cost, 40 basis points. You might remember that in Q2 that was 80 basis points, so we are really bridging that gap. We are confident that that will continue now, price versus cost. Somewhere towards the end of the year, we should then be able to get tailwind from price versus cost and work away that 40 basis points dilution. Good operational efficiencies seen on the conversion cost, 150 basis points. We continue to execute on our MFP program, where we had the saving of around SEK 130 million in the quarter. We estimate to do around SEK 500 million for the full year, and I believe we have around SEK 300 million still to go with the existing programs for next year. We will then launch, like we mentioned earlier, the MFP9 program now in Q1 next year. We are still further consolidating all the different projects. will be a similar project than the earlier ones, most probably a little bit lower in total amount, but a little bit better probably in payback. On the conversion cost, of course, we have also seen very good efficiency gains in our operations through VA/VE activities and further negotiations in the supply chain. As G&A, also here good operating leverage on the sales and admin side at 90 basis points gain compared to the same quarter a year ago. Operating cash flow, like I mentioned, 95% cash conversion on the 12-month trend now 76%. We see that recovery from a weaker Q1 into a good Q2 and a very good Q3, and we are confident that that cash flow recovery will now continue going into Q4. Gearing, a net debt equity ratio of 35% coming from 38% a year ago. Net debt versus EBITDA 1.4 versus 1.5 a year ago. Strong balance sheet that we can continue to execute on our acquisition strategy. Last but not least, earnings per share significantly up in the quarter on a very high level. As a conclusion, it was a good quarter. Very strong sales growth. Organic sales up 14%, complemented with growth through acquisitions of 3%. A strong EBIT margin improvement from 15% to 15.6% comparable. Our operating profit up 47%. If we correct for the CERTEGO divestment, up 39%. Strong cash flow with a cash conversion of 95%. Overall, I think very good financial result. It's clear that we live in an uncertain economic climate. Again, in general, we still see good momentum in our markets, apart from some slight weakness in some markets in Europe on the residential side in some channels. Overall, still good momentum as well on the commercial side as on the residential side. It's clear that we are not immune to what's happening around us, and therefore, we have to make sure that we are agile and stay alert, and that we can react fast, if and when the market goes down. That's what we do. We have updated contingency plans. We are ready to push the button if needed. The fact that we are very decentralized in our setup is, we believe, also a very strong advantage because if a downturn comes, obviously it will not hit us everywhere at the same extent. Therefore, being able to take those decisions locally in the different local markets is a strong, I would say, competitive advantage. Then last but not least, just to remind you that we have our Capital Markets Day now on November the sixteenth in London, and we look forward to meet many of you there again, face to face. With that, I want to give the word back to Björn for Q&A. Thank you, Nico. Well, we'll start the Q&A now. Just a quick reminder before there are more than 10 people who are in the queue, so please limit yourself to one question, then one follow-up, so we can allow as many as possible to ask questions. With that, operator, we're ready to kick off the Q&A session. Please go ahead. We will now begin the Q&A session. Anyone who has a question, may press star then one at this time. The first question comes from Daniela Costa from Goldman Sachs. Please go ahead. Hi, good morning. This is actually Daniela here, and I have two questions, please. I wanted to ask you regarding sort of how you're seeing the balance of the carryover on pricing versus cost as we kind of start looking into the end of the year in 2023. I think in the past you have commented sort of about balance around Q4. I wonder sort of whether that's a bit more positive now and whether it can get you into the 16%-17% corridor soon. That's the first question. The second question, assuming obviously, we don't know regarding the HHI, but if the case doesn't go through and you can't complete the deal, can you tell us a little bit about what's your strategy for the U.S. in terms of resi? Will you pursue more aggressive organic investments? Are there other similar opportunities on the inorganic side? Sort of how should we think about the resi positioning in the U.S. if the deal doesn't go through? Thank you. Yeah. Thanks, Daniela. On the price, like I mentioned, we had a dilution still of 40 basis points. Cost versus price in Q3. There was 80 basis points in Q2, so we are making good progress. We continue to increase prices, I would say, for most of our products and most of our markets and most of our businesses. Where it becomes a bit more difficult, I would say even impossible to further increase prices is on those products that have a very high steel content like residential doors, like fences and perhaps also steel security doors. There we so far can keep the prices and of course our ambition is there to keep that price also going forward, even if steel is declining again from a material cost perspective. All the rest, as we continue to see, material prices for other products like copper, zinc, nickel, aluminum, still on a high level as we continue to see labor inflation, general inflation, logistics inflation. We have an ambition to further increase prices. We are confident that we'll be able to bridge that gap, cost versus price now, somewhere towards the end of the year. Then if indexes stay where they are, that would give us accretion as of 2023, and that 40 basis point dilution should go away. When it comes to HHI, we remain convinced that we will be able to convince the judge that this is a very good deal for the American consumer and that this deal will go through. As you know, we are very small on the residential side in the U.S. and, you know, acquiring HHI is a, I would say, once in a lifetime opportunity for us to become also a leader on the residential side, which is something that is very, very difficult to do organically. HHI has a nice installed base, has nice channel to market that we, you know, miss today on the residential side in the U.S. We still go, I would say, for plan A, which is the acquisition of HHI. We expect a decision of the judge somewhere Q2 next year and yeah, if what we don't believe, but if we would have a negative decision, then you know, at that moment we will go for plan B and continue our organic journey like we are doing today. Thanks, Nico. I'll actually squeeze in a question that we received via email from Vivek at Citi Research. It's related to HHI. The question reads like this: Setting aside the antitrust process for HHI, since the announcement of the deal last year, we have seen some quite large changes in interest rates and other factors. Should the deal go through as planned, how do you see the pro forma earnings accretion from the deal? What we have said is that the moment that we close HHI, the first 12 months, HHI will be dilutive around 70-80 basis points. We have said that we have seen clear synergies of around $100 million bottom line that we aim to realize within a five-year period once we own HHI. We can reconfirm that $100 million now also even with the divestment of the Emtek business and the Smart Residential business in the U.S. and Canada, those synergies remain intact. It's clear that interest rates are indeed more expensive today, or interest cost is more expensive today than a year ago. Yeah, we bought HHI a year ago. We are not negotiating today. Thank you. Operator, we can continue with the next question. The next question comes from Mattias Holmberg from DNB. Please go ahead. Hi, thank you. Could you please help us a bit with the catch-up effect in Global Technologies from the increased deliveries in HID, please? First of all, should we think of this as sort of a one-off in this quarter, or is this something that could also spill over into Q4 and 2023? The question was on the cash or on? On HID and Global Tech. From the improved production that you mentioned from the end of- Okay. The production side. Yeah. On the sales side. Mm-hmm. As you remember in Q1, we had mentioned that we lost around SEK 300 million for PACS business because we didn't have the chips to produce and therefore invoice. We mentioned a similar figure for Q2. We estimate that today we were able to recover around one-fourth of that backlog, perhaps a little bit more than one-fourth. There is still quite some backlog that we further have to invoice now in the coming quarters. We have now secured chip availability for that backlog for the coming quarters. We are confident that recovery will continue now in the coming quarters. Thank you. Perhaps an add-on rather than a follow-up. Could you quantify or tell us anything more about the initiative cost reduction actions in Europe, please? Yeah, like I mentioned, it's still very limited. It's only in France, U.K., and the Benelux. Even in those markets, if you look for instance on the commercial side, we still see good momentum, good sales development. It's really on the residential side and then specifically on the DIY channel that is weaker in general in the world, I would say. Then specifically also in a distributor channel in France with the Quincailliers, where we have seen the channel destocking, because of the uncertainty in the market. I would say the cost measures are not significant yet. It's just to adapt and to protect the bottom line. It's, I would say, a dynamic moving target, depending on how those markets will fRrther evolve now going forward. Thank you very much. Next question, please. The next question comes from Lars Brorson from Barclays. Please go ahead. Yeah. Hi, good morning, Nico. It's Lars Brorson from Barclays. Thank you. One question on Europe and one question, please, on HHI follow-up. On Europe, Nico, I wonder whether you could help us with the magnitude of the decline in the Resi businesses in these markets and the trend as you exited the quarters. My assumption is that these markets, U.K., France, Benelux, were down, call it mid-single digit in volume terms, in the quarter, with Non-Resi still good, as you just said. Should we think of the Resi segment down in the sort of low double digits in these regions? Did that accelerate through the quarter? And related to that, if I can, you're obviously now actioning some contingency plans. Some others that have called out DIY and distributor destocking have seemed to have implied that is largely behind us. I presume that's not what you're seeing, given the initiations of cost-out action? Thank you. Perhaps a little bit different picture between U.K. and then France and Benelux. I think U.K. has been challenging throughout the year. It has shown a rather flat development, I would say, since the beginning of the year. I think U.K. as a country has bigger challenges. We haven't seen a bigger decline, if that's the question, in September or now beginning of October. The decline has been similar throughout Q3 and now also in the first weeks of October. It's somewhere at that mid single digit negative growth, which is the same for France and Benelux. Also here, we don't see that it improves or it goes down in September or now in the first weeks of October. It's a rather similar lower level than in Q1 and in Q2. It's around that mid-single-digit% decline. Understood. If I can please allow a follow-up on the HHI deal and the remedies, and you're proposing $350 million of sales to be divested from Emtek and Smart Residential. I mean, that's more than half of your current U.S. residential business. I understand that the Smart Residential piece includes both Yale and August Home. I wonder whether you can explain the logic behind that, specifically on August Home. I'm a little bit surprised. That was the key strategic acquisition five years ago in the U.S. smart lock market. You've been globalizing that business, rolling out the software and applications from August globally. What are the implications on your non-North American business from having to divest that asset base? Yeah. The divestment only concerns U.S. and Canada, and it's indeed the Yale Smart Residential and the August Smart Residential business. It has no effect whatsoever on the rest of the world. Our Yale business in South America or in Europe or in Asia remains intact. It's true that we divest two nice Smart Residential businesses, the Yale and the August in U.S. and Canada. On the other hand, we get a much bigger, very interesting residential business under the Kwikset brand with HHI. We have a strong installed base and a strong channel to market that we believe we can leverage on. Through our R&D efforts, new product development, we can further lift that business in an important way once we are the owner of that business. No impact from utilizing the IP from August Home outside of North America going forward? No, that is correct. Thank you. Next question, please. The next question comes from Guillermo Peigneux Lojo from UBS. Please go ahead. Hi, good morning, Nico. Good morning, Björn, and speedy recovery to Erik. It's a follow-up actually on the last question. So how do we think about the technology patents that, you know, will be seized on your company now, but you're probably selling on the remedies to that you will deal with on the U.S. and Canada smart businesses. Is that something that is transferred as well, or do you keep the patents to yourself? Basically the strategy here is you have the technology, you own the patents, and as soon as you own, you know, Kwikset, then you roll over that technology into the installed base of Kwikset and therefore basically incorporate that at a fast speed. Well, we don't want to go too much in the details on the technical side, but you can say that the software platform that we have today in the rest of the world, excluding the U.S. and Canada, remains intact. We will continue to develop that platform, which to a certain extent is also already different, I would say, from the U.S. and Canada because we have much more additional features like alarm camera in Europe that we don't use in the U.S. and Canada because the U.S. and Canada is more just the sale of the digital door lock. In the U.S. and Canada we will use the HHI, the Kwikset technology to further build on. There will be two different directions, one for the U.S. and Canada and then one for the rest of the world. Thank you. Can I confirm that Kwikset has a very limited, if negligible actually exposure to smart locks? No, that is wrong. I think Kwikset has also good business on digital door locks today. A business that we believe that we with our technology clearly can further accelerate and build upon. It's not so that it's negligible. It's a good part of their business today already. Thank you. Next question, please. The next question comes from Andre Kukhnin from Credit Suisse. Please go ahead. Hi. Good morning. Thank you for taking my question and follow-up. Can I just go back to Europe and could you quantify the size of that destock in the quarter, please, for us? Just on the margin side related to that, is that really all volume driven or is there anything else in the quarter that drove that kind of negative operational gearing? On the first question, like I mentioned earlier, in those markets, France, U.K., Benelux, if you combine them together, you should think about a mid-single digit negative growth in the quarter. That is a combination of, you know, a weaker DIY channel and destocking. It's very difficult, you know, to break them up, but I would say it's not something radical. It's just a slowdown. I think on the second one, I don't understand the question because I think we have very good operating leverage in the EMEA division. We have a good margin. So perhaps you should explain a bit better what you mean with your second point. Maybe I'll double-check, but I think you'd reported 14.3% margin on 4% organic growth. We wanna take out the acquired and currency contributions just on our kind of simple- Yes. Drop-through calculation suggests it was near zero. No, I think that is wrong. You should look at the bridge which is included in the deck, and I think you will see a good strong operating leverage. Out of my head, I think it's around about 25% or so. The big difference is the big dilution because of FX, because we had obviously a weak SEK and a very strong SEK in the quarter. Strong SEK, strong SEK gives us strong dilution on the FX. I think it was around 150 base- A bit more than 100 basis points. Yeah. Yeah. Basis point dilution. You can see it in the bridge. The operating leverage I think was good on the growth. I think, yeah, maybe the FX we've overestimated. Yeah. If I may, just a really quick one on M&A, not HHI related, but you're obviously showing quite a trend of acceleration of closing deals. Is that something that we can think of as a trend, or is it just kind of usual kind of durations and cadence of M&A? No, we are very happy with the pipeline we have today. We are very active. We can only be happy once the pending deals are closed, but we are confident that we will see some more deals closing going forward. Yes. Great. Thank you. Thank you, Andre. The next question comes from Andrew Wilson from JP Morgan. Please go ahead. Hi. Good morning. Thanks for taking my questions. I've got two. They're, I guess, slightly broader. I just wanted to come back on conversations we had on previous quarters with regards to market share. It feels like we spoke, I guess earlier in the year about you taking market share. Looking at these numbers, it looks like that has continued. Can you give us a sense of whether that's a fair comment, but also I guess your confidence in retaining some of those shares? I know some of your competitors have maybe had more challenges in terms of ramping up with volumes than you did earlier in the year. I'll start there. Yeah, of course. I've I guess if you ask all our colleagues, the market will be 120% or 130%. Everybody will say that they grow market share. I can only say that I think we are happy with our development. I think we have done good work in general. I mean, if you look in some markets, of course, most probably our market, our growth has been higher than the market. Perhaps if you look at markets like North America and South America, that is most probably the case. I think we have invested a lot in feet on the street in this market. We have also continued to invest heavily on new product development throughout COVID-19 crisis, and not only in those markets, in general. I think that is bearing fruits now that we come out of that COVID-19 crisis. Maybe as a follow-up, just I guess, Jason, on the supply chain, you've kinda made a number of comments on today's call around some of the improvements you've seen, obviously most tangibly in terms of Global Technologies. Can you just try and help us understand, is that all being driven by Assa-specific actions? You talked about the redesigns on the chips, for example. Or is it you're actually seeing, I guess, a broader easing of some of the challenges we saw earlier in the year? I think if you go back to the beginning of the year, we said that there was a challenge with component shortages in general. I would say that today is over. Today, that's perhaps still an excuse, but not a real reason anymore. What is still a challenge today is semiconductor component shortages. There we must say that we have seen a slight improvement in the last weeks, perhaps the last month. It remains a very fragile situation in the sense that, yes, we see easing up for some shipments and then other shipments still have a problem or have a bigger problem. I would say that we are not out of the woods yet when it comes to semiconductor shortages. Definitely in the last couple of weeks, an improvement, not because there is more capacity coming on board or not because people change their irrational behavior, but more, I guess, because there is less demand in the market on the consumer side, and therefore more capacity available to buy. I would say with specifically HHI-HID, the PACS business, it is mainly because of our redesign on the reader and on the controller side through which we could now invoice an important part of that backlog that we built up in Q1 and in Q2. Thank you. Thank you. The next question comes from Gaël de-Bray from Deutsche Bank. Please go ahead. Oh, thank you. Good morning, everybody. Nico, in your experience from prior cycles, do you think that Europe will lead the U.S. in this cycle? I mean, is the slowdown that has been visible in Southern Europe this quarter a warning signal about what is yet to come in the U.S., in your view? I don't think there is a real correlation. It's not that in previous crises the same thing happened. I don't think we can take that as a sign that tomorrow the U.S. is gonna go down. No, I don't think so. I guess what we should not forget is that we are late in the cycle, so perhaps we should look more at, I don't know, the cement guys that put foundation into the soil. When you know, when we start building new buildings, you know, we often do projects that you know, started a year ago, a year and a half ago. I don't think there is that correlation between, you know, U.S. lagging Europe. No. Okay. Understood. Maybe I missed that, but did you quantify the impact of the destocking at the distributor level in Europe in Q3? No, I said that it was in those markets, destocking and the DIY channel, you could say the direct consumer channel, also the sales online or directly to the consumer. Together, it was mid-single digit negative growth in those markets. It's very difficult to then split it up between destocking and other reasons. Do you think the destocking process is completed now, or is it still yet to continue into Q4? I can only say that in the first two weeks or the first three weeks of October now, we have seen a similar trend for those markets. Of course, you can, as a dealer, only destock so much. At a certain moment, you have no stock left. It's not something that will go on, obviously. Okay. Thanks very much. The next question comes from James Moore from Redburn. Please go ahead. Yeah, thanks. Good morning, everyone. Nico, could I go back to HHI and ask a couple on that, please? One, just to follow up on the synergies. Can you explain how you still get $100 million of synergies despite selling Emtek and Smart Locks? My main question really is on the antitrust. I'm led to believe that the DOJ has indicated to Assa Abloy and Spectrum that selling Emtek and Smart Locks to private equity is insufficient to satisfy their concerns, as they believe private equity doesn't replicate competition, it underinvests. Is that correct? Does it mean that you need to dispose those remedy assets to an industrialist that has no lock revenues? I think on the first one, the synergies. We have, of course, sales synergies. We see HHI and Kwikset as a very interesting platform to accelerate our digital journey. They own to a big extent the hardware in the house, so you know, a place where we are not at all today. We believe we will also see a digitalization of not only the front door, but a lot of other hardware, yeah, in the house. Therefore, HHI and Kwikset is a good platform with a good installed base and a good channel to market to start from. We believe also through our innovation, new product development. We can one further lift the brand equity of Kwikset and offer wider and more solutions to the American consumer. Two, HHI is of course a very competitive operational footprint with you know nice factories in Mexico and in Asia that we can then further leverage for more business. I would say that is the main components of those synergies, and that's also why the $100 million remains intact even if we have to divest the businesses I mentioned earlier. When your question specifically on the thrust around Smart Residential, we are very convinced DOJ is completely wrong, and it's an irrational behavior even of DOJ. Definitely now with the divestment, I would argue that nothing will change in the competitive landscape because we will, you know, acquire a bigger business from Kwikset, and we will divest a successful business, our business, to a new owner. From a market dynamic perspective, in the global market in U.S. and Canada, nothing will change. That's why we are also confident or very confident that this divestment proposal will solve, I would say, more hypothetical concerns that DOJ has. Thank you. Thank you, Nico. Next question, please. The next question comes from Rizk Maidi from Jefferies. Please go ahead. Yes, good morning. Thanks for taking the questions. So I'll start with the still follow-up on HHI please. Can you just help us with, you know, the cost analysis that perhaps you've done on separating Emtek and the Smart Residential business in North America? How separate is the manufacturing footprint of those businesses versus the rest of ASSA? You're looking for an outcome by the second quarter of next year. How do you make sure HHI is well run? I think we've had a long enough sort of period where, you know, while you're trying to conclude on this deal and how do you make sure that business is still well run? Thanks. Yeah. I'm not sure I understood completely the first part, but I will start to answer and then, Björn, if I answered wrong, you correct me. It's around $10 million-$50 million business that we will divest and the margin is slightly below Americas' margin. That gives you an indication of top line and bottom line. It's a rather straightforward carve-out that we can do. We will divest, you know, the whole value chain from supply, production, sales after sales to the new potential owner. That was the first part of the question. Yeah. The second one was? HHI, how it's run. Oh, yeah. I mean, the HHI has a very mature, seasoned management team that is very excited to become part of the ASSA ABLOY group. HHI was and is run in a rather independent way within the Spectrum Brands organization. As that whole management team will come over, they of course do you know all the right things to keep business up and running in a good profitable way. I know that they are doing cost measures to adapt also their cost structure to the reality. I mean, you have seen their figures, I believe, in the first half of the year. As they are of course much more exposed to DIY than us. They have seen that weakness on the DIY side more than us. If your question is, yeah, but why would they do big restructuring paybacks? If the payback is very long, why would Spectrum do that? I think the advantage is of course that we are in the U.S., we are not in some countries like in Europe, where it's more difficult perhaps to adapt cost, personnel cost to new reality. It's much easier in a country like the U.S., and therefore, we are very confident that they are doing the right thing to run that business in the best possible way in the transition phase. I can tell you everyone is frustrated that this acquisition didn't go through yet. I think it's a shame for, you know, the ASSA ABLOY people, for the Spectrum people, and definitely for the HHI people that are left in a vacuum for too long. I think it's also a shame for the American consumer because we will bring a lot of innovation and a lot of good things to that American consumer. I would argue that even it's a shame for the American taxpayer because somebody of course pays for this whole investigation. Therefore, we are hoping and we are confident that soon this whole project will be behind us and we can embrace the HHI organization, the HHI people in the ASSA ABLOY family. Okay. Thank you. Nico Delvaux, very quickly, where would you assess the risk of destocking on the Non-residential side given the supply chain constraint that we've seen the last two years? Is there any risk that you see similar trend on Non-Resi as well there from your channel partners destocking on the non-res side? I guess this is a question more in general, not specific to one country. Like I mentioned, in the call, we still see very good strong momentum on the commercial side. Our business is up high double digit in the U.S., up double digit in Europe, up double digit in Oceania. We don't see any slowdown yet on the commercial business. Of course, I cannot look in the future more than you. I can only see what we see today, and we continue on the strong momentum. Okay, thank you. The next question comes from Denise Molina from Morningstar. Please go ahead. Hi, yeah, thanks for taking my question. I won't ask you a CFO question since you figured it out. I'm sure you could answer it, but I have more of a strategy question for you. Just thinking about going into, you know, the next period when you're talking about in the press release about really trying to accelerate the electromechanical conversion. Can you just maybe let us know, are you doing anything differently in terms of putting more money behind it, hiring different roles? Or what's kind of the meat behind the strategy? Is there a change in what you were doing before that's significant that you expect to accelerate the markets? And have you seen any wins so far from that strategy? Well, first of all, I think the market is going in that direction. If COVID-19 already changed something, then it's definitely the further acceleration of the move from mechanical to electromechanical and digital, as well on the residential side as on the commercial side. Because it's clear that with an electromechanical solution, you can do so much more in a building than in a pure mechanical solution. You can much better control flows on a floor, access to a building, access to a meeting room and so on. We see that acceleration of the market. We see that in our spec business. We see that in our numbers. We grow much faster on the electromechanical side than on the mechanical side. I think if you look over the last five years, perhaps our mechanical business was growing around 2%, while our electromechanical business was growing double-digit. It's no different this quarter. Also this quarter, our electromechanical business was growing faster than the group 14%. What are we doing? We are investing in an important way in R&D for new products, new solutions, new software platforms. Our Incedo platform in EMEA that we also use in other parts of the world is a good example. It's a software platform where you hook up all the electromechanical hardware on one and the same platform and then can offer a total solution to the channel partners, to end customers in the market. We are investing on specific verticals in the U.S., for instance, around electromechanical. A lot of investment on R&D. Also a lot of investment on feet on the street because it's clear often you need a different type of person with different qualification to sell electromechanical solutions than mechanical products. That's something we have been doing since quite some time, and we continue to do as we speak. Thank you. Can we move to maybe one last question, operator? The next question is from Alexander Virgo from Bank of America. Please go ahead. Thanks very much. Morning, everyone, and thanks very much for squeezing me in at the end. It was just a quick one really to ask if you can give us any commentary around the continued strength of the Entrance Systems business, particularly given what we've heard from other sources around the CapEx going into warehouses. I just wondered if you could give us a little bit of a regional commentary maybe, and whether or not you've seen any signs of any sort of meaningful slowdown there. That would be great. Thanks very much. Yeah. I think we have four businesses in Entrance Systems. First, what I said about the Americas, that the comparison now going into Q4 becomes more challenging because we grew Americas 17% in Q4 organically last year. I think we grew 14% last year in Entrance Systems. Also for Entrance Systems, the comparison is more challenging, and therefore, we should perhaps expect a more leveling out of that high growth number. If you look at the four businesses, Perimeter Security is a U.S.-only business. I think we have done a very good job there in segmenting the market and having specific solutions for different verticals like data centers, warehouses, and so on. They have shown very high double-digit growth on top of high double digit growth. Of course, there we see a leveling out now because it's clear that you can't continue double-digit growth on double-digit growth on double-digit growth. Again, that's only US market. If you take our residential garage door business, it's mainly a U.S. or North American business today. There we see still good momentum on that residential market. We don't see too much weakening yet. If you go to pedestrian, I would say it's driven by different things. Definitely our service business, which is a growth accelerator through the acquisition of the Record business. We got also access to a wider product portfolio that we can cross-synergize among the Assa Abloy brand and the agta record brand. We see still good momentum in different verticals. If you take food retail, if you take what do you call it medical hospitals and so on sector. We still see good momentum on the pedestrian side. If you take industrial so that loading docks was an important and is an important contributor to the sales growth. It's true that, you know, Amazon has announced that, you know, they are slowing down their investments, but obviously it's not only Amazon that invests on the warehousing side. There is many other players. We still see good activity from those other players. With loading dock business, we also have the highest backlog because it's the longest delivery cycle in Entrance Systems, so we are confident that we will be able to continue good business on the loading side for quite some time. Another contributor on the industrial side is all our high-speed doors that we also use in automotive and other applications. What is important for us in automotive is that, you know, people change models and build new assembly lines 'cause then the assembly lines tier one, tier two, tier three has to adapt and buy new high-speed doors, and that's what we see. Service is of course also in on the industrial side, an important contributor. Price as Entrance Systems has a lot of steel, the price component for Entrance Systems has been higher than the average, the high 5% I mentioned for the group. I would say are the main items. Thank you. Great. Thank you very much. Alex and everyone, we need to round up now, so thank you for your interest. If there are any outstanding questions, feel welcome to contact us at Investor Relations after this call. For now, thank you for showing your interest, and we look forward to speaking to you in the coming weeks. Thank you.