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Ladies and gentlemen, I see we have many people coming today so and I understand why because we have a good quarter. The fourth-quarter report is a very warm welcome. And if you can sit down there in the corner then we will concentrate on the presentation. So a quarter over which I feel very proud. Looking then to the evolution, we saw organic growth in all divisions, very strong growth in Global Tech and strong growth in EMEA, continued strong growth in Americas and consistency in APAC. And APAC, as you know, has been a problematic for us but also there we saw a revival in China, just what we said was last quarter that we saw an improvement there. We saw strong development also for our electromechanical lock solutions. So a very positive evolution, which of course is fueling our growth across the board. The profit was -- continue to be strong, and also the cash flow was very good as it usually is in Q4. And our new CEO, Nico Delvaux has been appointed and he will succeed me in -- of the 15th of March.Let's have a look to the numbers. Sales improved by 3% net to SEK 20.1 billion on the back of 5% organic, 3% acquired and 5% negative currency. EBIT improved also to SEK 3.3 billion by 5%. So a good 5%, and here we saw then a slight expansion of margin. What we also have seen is currency effect in the quarter minus SEK 130 million, and amortizationof -- we spoke last time that we're going to take some amortization of goodwill and this is due to that we have bought August, Arjo and Mercury in the quarter, and this will continue for quite a while. So, therefore we decided, as we said last quarter, to show you really the EBITA, it was SEK 87 million depreciation in the quarter and if you see then to the margin, the operating margin, EBIT improved to 16.7%, but the EBITA improved to 17.1%, 0.4% improvement over EBIT, as such. An improvement in margin was 65% to 67%, and earnings per share improved by whole 14% to SEK 2.15, a new record.For the full year, similar evolution, 7% growth altogether, 4% organic, 2% acquired, and 1% currency. And here we should remember also we have sold a few companies. So which has then made the acquired growth to be a couple of percent negative during the year. Operating margin amounted to 16.2%, the same as last year, despite that we had quite problematic situation with China during the year, and here you see the EBITA margin is [ 0.3% ] better than last year -- and over EBIT. Earnings per share improved by 10% to SEK 7.77.Turning now over to the sales in the world. Mature markets continued good in the quarter. As such, America, has grown since the beginning of the year by 5%, EMEA 4%, and Pacific 7%. So you can see the mature markets contrary to what we have seen in many years back, it has been growing faster, stronger, than emerging markets. But in this quarter, if you look only to the quarter itself, the emerging markets started to accelerate. China was growing by 2% in the quarter, Brazil that has been negative also grew in the quarter with a couple of percent and also the Middle East came to a revival. So we saw a clear improvement apart from all the other markets in the emerging markets that have been growing all the time, a clear improvement of the 3 problematic markets we have had since a while back. So 2% organic growth altogether in South America, 4% in Africa, and 1% in Asia. And in Asia, China, since the beginning of the year, is minus 5%, but in the quarter itself, plus 2% for the group.On the market side, a lot of exciting things, as usual, very difficult to choose. I've taken out a few pieces now, Cliq, where we have launched Cliq Web Manager and Cliq-go, both are cloud softwares where Cliq-go was just launched, Cliq Web Manager has been in the market for a while, and we see a very strong upsurge on [ quote ] but also on orders that we have received. So a very good evolution. And Medeco has also been upgraded with cloud operability. There you -- is mainly from vending machines, it's an American solution vending machines, and also for parking meters, and they're doing also very well. What is really driving the customer is that you can operate it [indiscernible] and what we see also is that customers are very intrigued by the Bluetooth keys that they can update the key with the help of the mobile phone, and that works quite well in the sense that customers that --especially those that have big service fleets, they used Bluetooth key really to upgrade and send daily working orders day after day and that has -- we have seen a very good evolution of.Another thing that I spoke about last time, but is now really coming into market is what we call the pulse, which is a [ greenish still under ] where there is no battery or maintenance, whatsoever, where there is a small dynamo inside, which is enough to power the whole solution. So we think this will also be another boost of turnover going forward.On the smart door lock side, we continue to have a very nice progress both on the basic locks, but also that Amazon decided then to join forces with us, and the same with Google Nest, which we have been waiting for a while. They had some software problems. Now, they seemed to be solved and they're launching now in Q1. So we will continue to see good demand situation when it comes to smart door locks and also that we acquired August Home as you know to complement our range in the U.S. market, a very positive evolution.On the [ e-gov ] side, we had another [ loss ] quarter. I shared with you that we have -- now we can say it, it was Tanzania that ordered the full system a to z with natural [indiscernible] passport system. Now we have another country that we cannot disclose today, but a similar size in South America that has decided to go for our solutions as well. So very good and positive evolution. Thanks to the -- all the new things that we have launched within the gov side in recent years.Turning now to sales growth. You can see then the blue and the dark blue and your light blue combination of organic and acquired growth. The acquired growth was 3% in the quarter, and organic was 5%, but you can see net, we were growing 8% altogether, and if you could take a little bit 5 year cumulative situation, the growth is more than 50%. So it's very, very powerful, this continuous growth and we -- an growth that is in excess of 8% in recent years, despite than that we have been a little bit careful to make large acquisition simply because the multiples right now have been a bit exaggerated.On the operating margin, continue on the 16.2% level, very steady evolution, I will say, despite then that they've had dilution from China, 0.3% in the quarter and 0.2% since the beginning of the year. And as you probably -- which we have seen the numbers also that China now is leveling out on -- level around 10% EBIT and we think we will see improvement going forward as well, since we do lot of changes in a positive sense. And this doesn't look so much. This is flat. But of course with the growth we saw now decide [ on the other ] slide and we turn in on -- into profitability. You can see that the profit has improved by 65% in the last 5 years, and we had a record level SEK 12.3 billion in the quarter so up from SEK 11.5 billion last year, a 7% improvement. So quite a steady and continuous improvement as we move forward.And one of the secrets I always share with you is the manufacturing footprint. I mentioned last time, that we are launching or working on manufacturing footprint [ program #7 ], and that is what we intend to launch in the New Year, and will -- only be launched Q4 in this year, but we are preparing then for new round of [ practice ]. We acquired more than 30 companies since [ last ]. So there are more need for structural changes. So that will come as we progress into this year. We have still on the old program SEK 944 million in the balance sheet and another 11 factories took on the closure. So there is a lot of reshuffling inside ASSA ABLOY and primarily within Entrance Systems, but also here under EMEA, and in APAC. So continuous good improvements and Carolina will share with you also that there are quite some savings coming out of those programs going forward, into this year and next year.1,400 people almost will leave the company, as a result of the [ MFP 6 program ] that is actually right now running, and as I said, then the [ MFP 7 ] will come during this year.On the acquisition side, pipeline continue to be full of opportunities for us. A lot of activity. We had only 2 acquisitions in this quarter. So we are up to 19 in the last year, and we have added the [ SEK 3.2 billion ], a little bit less than they normally do, simply because many of those acquisitions were of bolt-on characters. So -- but still a very good number, 4% added turnover, and this is of course also due to the divestment of AdvanIDe with SEK 1 billion, that had a turnover of SEK 1.250 billion. But you will see from the accretion, from acquisitions, that it was not so bad to let them go to someone else.On Phoniro, we acquired elderly care, is something that comes globally, and we have acquired a company only in Sweden here, which is focused only on this specific segment, and here, smart door locks are used in order for -- to manage the door over some other assistance in their home from people coming on a regular basis. And also that also monitors the time and attendance. So this company specialized in this with a turnover of SEK 175 million, very nice profitability and it's equated to earnings per share. A lot of this is recurring revenue because what you do sell is apart from the lock itself, you do sell a service in the sales time and attendance service and also virtual keying services. So this is an interesting segment that just opens up in the marketplace where we are entering now with specialized focus. This entity will be part of hospitality business is similar to the hospitality business and it's a global thing, so that's the reason why it's put into the hospitality segment. And then we have one more of this bolt-on no-brainer type of acquisitions. We're very happy to have the Dale & Excel Hardware to join us. It will be bolted on to our U.K. operations and I'm sure they will be very additional or [ both ] positive the[ way we do ]. They are market leader in a few segments in the U.K. market and we are pretty much the leader in many other of those segments. So together we will force -- create even bigger force in the U.K. and they also with the UNION brand will also be introduced into the Middle East area where we have a strong position with the parts that complement us, and is very accretive to earnings per share. So this is again a very positive evolution -- acquisition to the group.Turning now to the divisions. EMEA did very well in the quarter. Strong growth in pretty much everywhere except perhaps you remember I said on in Scandinavia that it is we have been growing strong, strong, strong and now we're still growing, but to a lesser extent simply because the market has boosted so much. So that was in a few percent growth, while the rest of Europe is coming to life more and more. So we have seen already last year, Italy and Spain, and few other markets have come to life. And also now France has started to order or to come much more into life, which is very positive. And also here I mentioned earlier EMEA, Africa and Middle East. We had a destocking situation 1 year back. That's over now. And now, we start to grow again on a very strong basis in the Middle East. And you can see from the oil prices that they are right now that there is a lot more activity on construction taking place, so this looks quite good going forward as well. Margin expanded by 0.5% to 17.3% up from 16.8% 1 year back. And here we have very strong leverage from volume growth simply.In Americas, we grew 4%. A good situation in the marketplace, strong growth in most parts of the market while Perimeter Protection which is more industrial oriented was a little bit weaker in the quarter, but still growing. And security doors and for namely also Brazil, but Brazil as you'll probably remember, has been declining before now started to grow, so it feels as if the recession is not over, but it's more now coming towards the end of the bad cycle that we have seen there. Margin dropped by 1% in the quarter, and this is due to the August acquisitions. We had quite some transactional cost to acquire that company and also they were -- the invoice to the Christmas sale on October, November, and they only now numbers for 1 month, which was pretty much clean month when it comes to invoicing and it's difficult to make money then. So therefore we had 1.3% dilution and this will continue not 1.3% but it will continue during the year as we said previously with about 0.8% to 1% dilution over the year, but it's a very positive addition nevertheless to the company. So a good investment. On Asia-Pacific, we grew 3% everywhere, South Korea, South Asia Pacific and China locks, architectural hardware. That's the smart door locks combined also with distribution. More and more Chinese customers do replace the locks that they have on the door, quality is not always top, so we see more and more distribution sales and that's one of the reason why we see architectural hardware in China growing while the door still are a little bit depressed and this is mainly as we have said before, we have this coverage to mainly towards the northern part of China that is not doing all that well. Personnel adjustment continued on a high level. 8% continued reduction during the year, and as I mentioned then a very nice smart door lock sales inside of China, but also in the rest of Asia Pacific as such. Margin was more or less stable at 9.7%. Last year, we had 10.4%, but we also had some turbulence. As you probably remember there we took a one-off last year of SEK 300 million. We did not have it this year. On the other side, we continue to be very cautious of receivables and take very conservative stance on what we have in our books and that I meant also in the 9.7% we have continued to write down receivables where we are not 100% sure that we get paid. So -- but underlying, the business is doing quite well to be honest.Global Tech. Fantastic evolution, very exciting. And here, it's access control doing fantastic. It is Secure Issuance doing fantastic, Citizen ID and IDT. So pretty much every part is doing very well. There is only one element, Identity & Access management, where we launched lot of new products, but we lose a few old contracts with the government [ which one ] replaced but not at the high -- the same level, but all the new products are catching on, orders, quotations are very high. So it looks pretty good, but all the part [ share ] is very much driven by the new virtual size -- virtual word, very positive evolution. On the hospitality side also the same thing. Hotels are investing heavily into virtual keys and we had a comment here with one of the larger hotel groups in Scandinavia 3,000 people [ all were ] equipped with their virtual keys, flawless operation, very positive. It was Clarion Hotel. Clarion -- I'm asking you now. Choice Clarion Hotel. So a very positive evolution also there, and we see good continued demand in this field. Profit was as a consequence of good demand situation going up to 21.5% up from 86% 1 year back. And here, as I mentioned to you, we sold off AdvanIDe that had very low margin. We replaced it with Arjo and Mercury, and therefore you can see the accretion was quite high from acquisitions 1.8% in the quarter. Worth to mention also is that it was a high seasonality, Q4 is always very strong in Global Tech. But this is every year, so underlying business is growing at a very strong pace.On Entrance Systems, growth of 3%, a little bit less than we usually see. Order situation was very good. We didn't get it out all in December. So it looks also reasonably good. And strong growth in pedestrian doors, door componentry, industrial doors and highspeed doors, so pretty much across the board a very strong growth. And then also good growth in residential doors that always has been a little bit weaker. We see so in the U.S., but I think that is more seasonality in the sense we have -- and that was the only part negative which was logistics and warehousing solutions has gone fantastically there, all these investments in Internet trading and as we see it will continue just in this quarter, it's a bit lumpy because normally you get big logistics centers, you get big invoicing, less big invoicing and this is the way it works but very positive. And also despite and only 3% organic growth, our attrition continued on margin 59%, up from 54% and for the year, if I remember right, we were 43% now. So it's not far away from the 15% we said a few years back, that [ we ] would be able to achieve this business. And I can say, we are by far more profitable than anyone in this industry if you look to the size of the business and operation we have. So I'm very pleased, I must say with the evolution in this part and only in few years timing on from [ SEK 2.6 billion ] in turnover to more than SEK 22 billion right now. So a very fantastic evolution. That concludes my overview and I'll open up now for Carolina for financial overview.
Thank you, Johan. I will then start with the financial overview. And it's a nice financial overview. Another year already ending, 2017. And in the fourth quarter, I will start with the most important part which was very positive in this quarter, the organic growth. We had a full 5% organic growth in the quarter. On roughly the same working day for the group and we estimate the price effect to be plus 2% and the volume to be 3%. So we've continued to see during '17 good price increases to of course partly then to the raw material increases. So that brings the full year to 4% organic growth. Next one then acquired growth. I would say, net 3% because we actually acquired for 5% in the quarter, but we then divested 2%, so we have a net of 3% in the quarter. For full year then on 2% and that again would have been gross 3% and is then net 2%. Currency then, while it turned sour or rather I should say, the dollar, big [ turns ] in the dollar. And since we translate everything to [ Kronos ], we got a big effect from that, so a full negative 5% on currency on the top line for the group in the fourth quarter, while the full year is still slightly positive with plus 1%.So overall, 3% top line growth in the quarter and the margin also improved little bit. We went from well 20 basis point improvement here and we -- I would say that there are couple of things working in different direction here. We have the raw material which has been tough. On the other hand, we have the price increases as well as the savings from the restructuring and the volume growth in most places. Then we have the -- as expected the weaker margin on APAC and I will talk more about that later. And then, between the EBIT and the earnings per share, we had a good financial net slightly lower than a year ago with continued low interest rates. And then we have the tax and I just want to make a comment on the tax because we have seen that there is a big tax reform in the U.S. that actually came into place. So for us, for the full year, the underlying tax rate has been 26.8%, so almost 27% and then the effect on us is one-off from the U.S. reform of roughly 1%, in already in [ '17 ] which means we end on 26%, and therefore also going forward with the new -- assuming the same mix and regulation also with the new regulatory there we will stay on 26% as tax rate. And with that, we finally come to the earnings per share. It is a strong improvement then of 14%, but it's then being compared to the Q4 last year where we had one-offs in APAC. Last but not least, cash flow continue to see a strong cash flow in the fourth quarter, as we usually do, so an improvement of 6% on the cash as well. [ If we ] deep dive then into the P&L bridge analysis and really separating the like-for-like business with the -- from the currency, and also from the acquisitions. And here, I would say that we see really good result on the organic growth side. We have taking the different divisions, of course we have Global Tech with very strong organic growth of 9%, had a very good drop through, full 90 basis point improvement than on the organic side. So very good there. But also EMEA and Americas with strong growth with 5% and 4% organic growth also had a really nice drop through with 40 basis points both of them here, combination of the growth, as well as restructuring here. Entrance Systems not as high growth but on the other hand, as Johan mentioned, really good results from there, efficiency savings and consolidation. So also a strong improvement here on the drop through.And then we have APAC. As expected, lower margin this year, which dilutes in the quarter around 10 basis points for the whole group and for the full year between 10 basis points and 20 basis points here, but overall good drop through everywhere and in China bit lower as expected. Currency, since it's mainly a translation difference, you see that the top line basically translates to the same bottom line margin, so we have a small dilution on the FX, which is 10 basis points. The bit odd one here would be on the acquisition side. Again here we have 5% acquired and 2% divested, and here it's a bit different. You can see that Americas and Entrance Systems are different in the sense that Entrance Systems has the typical dilution from the typical acquisitions, well Americas has a bit of a larger dilution from acquisitions, as Johan also mentioned with them coming in very late in the year from August. On the other hand side, we have then Global Tech, we acquired not only capital [ or related companies ] with good margin but also divested AdvanIDe which was very low margin business. So had a -- actually big margin improvement from acquisitions. So overall, the mix of that actually ends up flat for the group, so no dilution in the quarter from acquisitions.Taking a look at the P&L from a different perspective, components of sales. And this is the full-year view. And here, I would also say that it has continued the way we seen through the year. And I guess there are 2 big things here. The first one is of course that we have managed to get through the price increase of 2% for the full year and that has helped offset quite a lot of the raw material, but we still [ see ] that the raw material as part of direct material then has gone up, and we have 40 basis points then -- 60 basis points increase from direct material. And here, it’s clearly show that the divisions with the bigger door exposure by definition have more raw material, and I would say that Entrance Systems has fully compensated, EMEA doesn't have much doors, Global Tech -- basically not so relevant on the raw material. For Americas, we have increased prices and we have seen sort of an improvement, but we're not fully there yet but we continue to work on increasing prices and catching up on that one. The part which is really tough as Johan also mentioned is still in Asia Pacific or in China specifically, where we have a lot of doors and where competition is not increasing prices enough. We have also increased prices, but also not enough to offset fully on the material side here.On the other hand side, we continue to see really good savings both on the restructuring programs, the manufacturing footprints, but also on the other efficiency programs. So we improved on the -- that part on with 40 basis points, so the margin is almost the same as the year ago. On the other hand, on the SG&A side, we have had savings on -- you can say on the automation of our processes with Seamless Flow and on the other hand, we've continued to invest both in R&D engineers, as well as in salespeople and specifiers. And with that mix, we still managed to decrease the SG&A with 30 basis points. So overall for the full year, like-for-like, we have an improvement of 10 basis points, and then we have for us a rather smaller dilution from acquisitions also 10 basis points. And then the margin stays flat year-over-year.From the P&L then to the real cash and this is the picture of the cash flow and one thing I think that sticks out is that the seasonality continues to be strong, first quarter very weak, second and third are good, and the fourth quarter very strong. And this fourth quarter was no exception. It continued to a very strong quarter on the cash flow, 6%, up year-over-year. And here, I think it's important to put it into relation with our size and how we are -- how we are growing, so we always look at it combined with working capital and the efficiency KPIs on working capital. And here, we can see on the DSO, we are on 52 days, so it's 2 days worse than a year ago. But basically in a good situation and I'd say also with China stabilizing, if not clear but it is stabilizing and with significantly higher provisions for bad debts. We also see on the DPO or the payables that they have increased to [ 64% ], so a good number as well on the payables. And also inventory, a lot of inventory has left the building, so we are now down to 92 days for the whole group which is 3 days better than a year ago, and overall, a pretty good number.CapEx is a bit up compared to a year ago, and here we see a shift in what kind of investments we do. It's more in automation and in different sort of digital solutions. So more on the IT sides compared to the big green machines that we had a couple of years ago. But overall, a very good performance on the cash flow. And then with the good cash flow, this is what we see on the debt side. And here I would say 2 main things to look at, one thing is that the gearing is now on [ 50% ] , which it has been for a while. It's actually even slightly gone down. So we continue to be on a good level there. Another thing that continues to be important is net debt EBITDA, which also is on [ 1.8% ], which also is on a similar level to which it has been for the last couple of years. So I would say on the questions on acquisitions, it's not really the balance sheet that is holding us back, but it's rather as Johan commented on the price tag that we are working on. One thing to say here is that we bought a lot of companies during the year, but we paid most of them towards the end of the year. So we had quite a big acquisition spend towards the end of the year and that's where we end the net debt with SEK 25 billion. So it's a little bit higher sort of going out of the year and therefore also with the financial net consisting of both long-term interest rates going up and quite lot being in U.S. dollars, the financial net will then be a bit higher next year. But overall, good situation here on the balance sheet. And then finally, most important, the earnings per share slide. And here you can see a really nice trend and we are up 67% in the last 5 years. We have also a proposed dividend that increases with 10%, which is the same amount as earnings per share for the full year has increased compared to 2016. So [ SEK 3.30 ] for proposed dividend. And with that, I give back to you, Johan, for conclusions.
Thank you, Carolina. So conclusions are as usual rather short. We had gross or net sales increased by 8% excluding the currency, quite a good evolution in the quarter itself. We saw a very strong growth in Global Tech and EMEA was also growing strongly and continued growth in all the other parts of the group. And I think in this quarter very important, China, Brazil, and also the Middle East all came back online and started to grow again, which is very encouraging for 2018. And also that our electromechanical lock solutions continue to have very good progress in the various markets. And as Carolina said profit continue to develop well and cash flow as well. So altogether a very pleasing evolution. So with those words, I open up for Q&A. And I would like to invite our -- Holger here that will help us I think to manage the whole Q&A session.
Thank, Johan. Thank you, Carolina. Good morning, everyone. My name Holger Lembrér and I'm the Investor Relations Officer at ASSA ABLOY and I will facilitate the Q&A session here today. [Operator Instructions] I will start by asking one question each to Johan and Carolina. And first to you Johan. Organic growth was quite strong in the end of the year, do you see this positive trend continuing into 2018?
You're always destroying the question from the floor. But what we saw in Q4 it was a good evolution. And as I mentioned a number of markets that have not been very strong in recent year have started to come back again. And we saw good basic demand in Europe and good order situation. We had little bit weaker on Entrance Systems. So but that was more timing than anything else because order situation was quite good. So altogether, I'm more optimistic than I am usually I am. It's not because I am leaving, but it is because we saw good evolution in Q4. So yes, and also January has started quite well. So it's altogether a positive outlook even though we don't give forecast.
Thank you, Johan. And now to you Carolina. How much was the impact from U.S. tax reform for ASSA ABLOY and what can we expect going forward from it.
Yes we move from top line to tax. Well, we had estimated the year to be due to the country mix to be on 26% tax rate but we ended almost 27% as an underlying. With the U.S. tax reform, first, we have a one-off in Q4 in '17 which brings the tax rate then down to 26% in '17 and if we look at what it seems like going forward now with the tax reform, it would be roughly 1% improvement from the U.S. tax reform. And if the underlying mix stays the same, which is almost 27% then we should end on 26% also for '18.
Thank you, Carolina. So let's please start with the question from audience here in Stockholm.
Peder Frölén, Handelsbanken. On growth then, you mentioned Johan the strong growth for electromechanical/digital maybe to shed some light on the actual number there. And the follow-up would be then you usually say that you sell around 2 million digital locks broadly and what portion of that is in the U.S. today and what type of growth did you actually see in the fourth quarter on that specific part.
Smart door locks in the U.S. we used to have AT&T and then Amazon came into the picture. Amazon had some starting up problems so there we haven't seen much action from them. So the traction -- the part of the U.S.A. is still rather small as such. But of course you have now August in the New Year, which was only in for 1 month and we have Amazon, we have Google and we have a few other customers starting up together with us. So we expect to see good growth and strong growth this year. APAC is the biggest for smart door locks. China, Korea are converting at the high rate, China and Korea since long. China in recent time and also South Asia is doing quite well on that part. And then you have in Europe, the Scandinavian region doing quite well especially Sweden and also a number of markets then like the U.K. now also coming into life. So altogether, very positive evolution. The thing is, why does it take so much time? The thing is that you need to introduce locks that fits to the local market and that take some time. And then you need to teach the users that this is a really good feature for them and that will of course gradually grow faster and faster. And we see for instance as I mentioned then the Scandinavian market, we've seen in the Swedish market, how, when people start to learn and understand how good it is and how versatile it is to have such a thing on the door that they really start to invest. And of course [ we are very helped those ] by forward incumbents like Amazon and others that now start to promote this locking feature because they need it in order to get into the house. So it's still SEK 2 billion, which was the forecast -- we said 2 million locks but around SEK 2 billion. But I think, we can trust that in the next decade is going to come very strong.
Another question from the floor.
[indiscernible] from [ ABG ] Just a question on acquisitions and acquisition prices, as you mentioned, you did spend bit more than SEK 4 billion in the quarter I think August must have been a meaningful part of that, of course, that kind of acquisition to go deeper into the technology. Is that -- can you talk a little bit more about the prices for those kind of assets and whether or not you need to do that basically to keep ahead in the developed markets, both the U.S. and Europe.
Start-up companies are always very expensive because there is no profit to calculate on. So it's always a horrendous price. On the other side, that's something you do in order to get this, in this case a complementary products and that we [ did back ] in the U.S. We have entry system in Europe, which is a clutch drive. We didn't have it in the U.S. so August gave us that opportunity and also gave us a number of outlets in the U.S. market for retail so that was an interesting acquisition. But you're assuming that there was always [ costs us ] so much money but it's not fully right because we also brought Arjo and Mercury. And Mercury and Arjo were in fact the majority of that money. So in our opinion, the prospects of growth is really worthwhile to invest in those 3 companies. All 3 are technology, not leaders but technology complementary to what we do, very complementary to what we do. But we don't disclose exactly what we paid for [ them ].
Thank you. And I think before we kick off the telephone conference. Operator, will you please remind how to ask questions.
[Operator Instructions] Our first question comes from the line of Lars Brorson from Barclay.
Johan, this is your last of -- it must be some 50 quarterly calls or so. Well done. You have created a lot of shareholder value over that time. I had a couple of very quick questions, I want to just throw at you. I think I heard you say China currently at 10% operating margins. I think we hit low single digits over the course of 2017 or mid '17 as well as pretty solid improvement. Should we assume now you're done with the heavy lifting here in terms of reorganization management change et cetera and we can continue to see some improvement on the basis that the market remains stable or even grows a bit.
If I said that, I probably need not say the right thing. What I meant was APAC as in operating margin around 10%. So you've probably misunderstood me or I said the word -- used a wrong wording. China is still on a low, very low level. But the rest of Asia Pacific is doing quite well and China is coming more and more to life, so therefore I think we can expect us to see an improvement but it's not so that China is at 10% today.
Alright, okay, understood. My mistake. Secondly, just on Entrance Systems. I heard you say order is good, but you didn't get them out in the quarter. Why not? And what was the level of order growth did you saw specifically on the industrial door side of the business in Q4?
On the industrial door side, if I remember right, it was in the strong books, so strong growth. So that means that is more than 5%. That's normally what we disclose. Then we had logistic doors in the U.S.A. which is part of the industrial, which was lower but that has more to do with the timing of invoicing of various projects. Normally, you get the rather large logistical projects coming in. And I can at least tell you that we have invoiced those in January. So this was more a timing issue. It was quite cold in some parts of the U.S. as well in Q4 so and even in January as well but still we were able to invoice those things.
But I mean, just to be clear, your U.S. warehouse logistics business is about 10% of Entrance Systems and even if it’s that down double-digit or so that's shaving 1% or so of growth. I mean, 3% organic is still at least relative to my view a little bit disappointing in the quarter. Again, I was wondering whether you could help us understand what sort of growth you're seeing in bookings or orders to give us a sense of what we might see as we enter 2018.
Well logistic [ if seen ], if you talk about the U.S. side of the business not 10% of the business, it's rather small probably 6%, 7%, 8%, something like that. So it's not. But anyhow. We don't want to go into all details, but it is quite, I think you can trust us that it is quite good. The situation is good in [ all ] parts, including logistics even though we've had a tremendous upsurge there, partly due to Amazon that's investing heavily into this field. And we are one of the main providers of those solutions. And it's not coming regularly. It's coming -- it comes in chunks. But the chunks have come but it's not being invoiced. That is pretty much what I can say about it. I'm not worried.
Our next question comes from the line of Andre Kukhnin from Credit Suisse. To the line of Andre Kukhnin. Can you please unmute your phone? Since we are not getting a response, I am going to move to Andreas Willi from JP Morgan
I have a question on your 5% organic sales growth target that you've had for some time, but the economy largely kind of prevented you from reaching that. Given that, we have now a pretty global synchronized recovery for the first time in many years. Is the 5% what [ we ] should expect ASSA ABLOY to be able to deliver or what could prevent that target from being reached in 2018, given that you have now some tailwind in the economy, no more big [ drags ] geographically, and good growth in the OMX side.
It certainly looks good. I must say first quarter will not look fantastic in part because you have a short quarter in the sense that Easter changes quarter and goes into the Q2. But first half year then certainly looks good. I cannot stand here and say, it's going to be 5%. We don't give forecasts, but it looks better than the -- that we have behind our back, at least the first half that we can oversee. So it's a positive evolution, as I also mentioned, but I know, I have been too long in this industry to say -- stand here and say, because we all need orders every day to bear with invoice to say that this is going to be exceed 5% or be something like it. It looks certainly good, and last year, I think, I said 2% to 4%, and we came to 4%. This year, it's better than 2% to 4%, slightly better than 2% to 4%, as an outlook. But it doesn't worth -- it isn't that much. But the business in globally is looking better than it did 1 year back.
Our next question comes from the line of Gael de-Bray from Deutsche Bank.
My question is about China, with sales now kind of flat in Q4, and with the new management team in place for quite some time. I guess, you probably have a better visibility on the sort of profitability you can generate in China and obviously in Asia Pac overall in the mid-term. So do you think it is achievable to get back to the 14% type of margin you had a few years ago in the region taking into account the [ grand ] volume and pricing outlook in China, and the productivity gains that are probably still to be achieved.
It would be easy for me to stand here and say, yes and then I leave. But I think it's going to be a tough battle, but we know, we have a recipe to become more efficient. So I'm sure that we will continue to improve our position relative to where we are right now. Whether or not, we will reach 14%, I think long-term, I'm convinced because the market is just like in other places in China, like in other places in Asia Pac, is converting more and more into distribution in the sense you have a recurring revenue. And when that happens, you don't get orders anymore for sort of 10,000 apartments, you get orders for one lock here, 10 locks there, 50 locks there. And then the margins have a tendency to move up quite a bit because no one has purchasing power. So I think we have to be patience with emerging markets like China, like Brazil, like a number of others, but most of the market is still consisting of new construction. In recurring market, the step we have in Western world are the most beneficial to the company. So I think it will take a few years before we really see a strong revival. Thinking about that we have 10% average -- now China is quite an important element of APAC, and not making much money at all. I think you can count on that, many [ odd ] other parts of APAC is indeed making very high margin. So we are doing quite well because there, we haven't had this instability test continue to sort of have a steady demand, while China is falling back. But I'm convinced that China is a very good investment for the group long-term. So I'm very bullish long-term, I'm cautious short-term.
Next question comes from the line of Lucie Carrier from Morgan Stanley.
I want to go back to Global Tech, if I can. When you look at the pipeline, how confident are you that the momentum we feel in 2017, both, I would say, on the organic growth, but also the margin you delivered in the fourth quarter. How would you think this can continue into '18, and I'm just wondering if we could think of a margin above 20% could become the new normal in Global Tech?
Well with 9% growth. Yes. With more moderate growth, it's a struggle. Tech companies are always very tough and is very much project-related as well. But it certainly looks good, very solid demand picture. We have rationalized and rationalized and rationalized again. We are very efficient as a company, and we sell more and more virtual things. So I'm rather optimistic, but I will not stand here and say, it's going to be 20% or more. But I'm optimistic that we can continue to see accretion of the margin in that part of the company.
Next question comes from the line of Andreas Koski from Nordea.
So I have a question on your statement, in the report, Johan. You are saying that you are confident that the majority of all private residences will be converted to smart door locks in the next decade. [ So a large ] part of your residential sales, smart door to-date and could you talk about [indiscernible] mechanical and smart door locks [ today ] and how you think prices will evolve over this decade?
It was very hard to hear what you said. I think, you asked, If I can tell about what is mechanical contrary to smart door locks. If you think about it, today, about 51% of what ASSA ABLOY sales turnover wise is electronic content, that has grown for a rather small percent in 12 years’ time to more than 50%. Within electronics, we get a more recurring element, even though it's not that big on the residential but the large time goes now and dramatically on the door lock and the price per unit goes up as well. So if you only think, today, we sell 2 million of those units in the world and we sell probably some 50 million mechanical locks of similar kind ourselves. But the market is so much bigger because most of those are serviced by low-end type of locks. If you must assume a piece of this like Amazon say, they're going to convert 38 million doors, only a piece of that would be very beneficial as turnover ASSA ABLOY. Each smart door lock that goes in replaces the mechanical lock and that has meant that we have a cannibalization going on, both on the non-res side, and the residential side, that makes the mechanical stable, perhaps growing 1%, 2%, not much more, while the electronic one is the one that takes off. So this is a situation that probably will continue for a foreseeable future, and certainly if you have this replacement going on for say smart door locks, but when I say, every door, we must think -- if you think about your own home, you may probably have some 5, 6 cylinders in your home, while you perhaps only have one main door, most likely you have only one main door and you're not going to put an electronic lock to every door opening. So, therefore I think we -- it's realistic to think that smart door locks will be there to facilitate the leverage in your home environment, but it's not going to be all 5, it's going to be 1 or perhaps 2 in some houses. I have 2 in my houses. But it's going to be a major boost to turnover if this happens. And I think, it will happen because all [ forwarders ] are pushing now to see this happen. They will like to get into their private home and deliver. And I think, the user also will like that one. I hope it was an answer to your question.
[indiscernible] but I just ask the portion today of your residential sales, much of that is smart door locks.
It's SEK 2 billion out of the residential sales, there's about 20%, 25%. This is a [ greystone, very big greystone ] between -- multi-housing is the residential, non-residential, what kind of category is it. So it's not clear-cut exactly, but between 20% and 25% of our SEK 76 billion is residential applications.
And then you put the SEK 2 billion in relation to that and then you have [indiscernible].
Our next question comes from the line of Markus Almerud from Kepler Cheuvreux.
I'd like to continue on this smart lock side. So 2 new collaborations in the quarter with Google and then Walmart. Could you give us little bit more details on that? The Google Nest, you said, how many suppliers are they going to use et cetera, does they have any similar targets as Amazon had and then the Walmart, is it similar to the Swedish ones you had like [ BigMux ] and et cetera, so what kind is that and do you have any initial feedback on Amazon key?
Well, as I mentioned, Amazon key, they had some start-up problems which they are addressing now, so they haven't really started [ around ] with volumes, but they have 38 million targeted customers, which are then eligible for home deliveries. And you mentioned Walmart. And yes, indeed, we have signed up also with them even though they haven't to my knowledge started very much yet, but they will. And then when it comes to Nest, they have more than 50 million [ Thermostats ] installed that they intend to promote and together with smart door lock. So how this will take off is difficult to tell. So say, it depends a little bit how much they're investing behind themselves. But here clear is that they all have chosen that to have our type of locking solutions which are quite advanced as such and then as their prime type of installation. We are not the only one delivering but we have a prime position in the sense that our locks are the most common and most elaborated look solutions that there are in the market.
Thank you, Markus. Going back to the audience here in Stockholm with the last question.
Mattias Holmberg from DNB. During the presentation, I think you mentioned an additional cost savings program to be rolled out this year. I was just wondering if you would care to elaborate a bit on that.
Perhaps Carolina would you like to say something now.
Yes since I have to do it. Well -- no what we are doing is that we are summing up lot of different and really good projects from the divisions. So we will package all of that and go through it with the auditors and by year-end '18 that's the plan. We will then launch it. Judging from what we have bought and roughly where we are it could probably be in the same size that the last one was roughly of [ SEK 1.5 billion ]. So that's the main plan so far.
Thank you, everyone. The clock is showing 11, so I'm handing back to Johan for some final conclusion.
Okay, thank you very much. Thanks for all the confidence I have had. I'm very happy to stand here to say, good growth in the quarter, good profit, good cash flow and good prospect for the company. So I thank you all for the 12 good years we had together or little bit more than 12 years. And thank you for coming today as well. And I'm going to follow ASSA ABLOY and continue to be a shareholder and because I bought quite some shares and I think it's a very good investment. So thank you very much for all your support during these years.