Assa Abloy Enters 2023 With Pricing Offering Margin Tailwinds; 2022 Results In Line

Assa Abloy's full-year results of 12% organic revenue growth and 15.3% EBIT margin were line with our expectations. The company's price increases during 2022, combined with a likely downward slope in cost per unit during 2023, should be supportive of margin expansion in 2023. The company raised pricing through 2022, meanwhile metals prices have been coming down. This gives us confidence in our 20-basis-point operating income margin expansion forecast to 15.5% in 2023. We forecast organic revenue growth slowing to a more normalized pace in 2023 to roughly 4%. Reported revenue will likely see negative effects from a likely reversal of 2022 currency tailwinds but conversely a positive contribution from acquisitions, particularly if the HHI acquisition finally receives regulatory approval. We note the company's appeal on the initial rejection will be heard in court in April. We maintain our wide moat rating and SEK 300 fair value estimate.