Securitas AB Interim Report January–September 2014
Tuesday, November 04, 2014
· Total sales MSEK 18 003 (16 605)
· Organic sales growth 4 percent (1)
· Operating income before amortization MSEK 962 (892)
· Operating margin 5.3 percent (5.4)
· Earnings per share SEK 1.57 (1.42)
· Total sales MSEK 51 234 (48 975)
· Organic sales growth 3 percent (1)
· Operating income before amortization MSEK 2 488 (2 450)
· Operating margin 4.9 percent (5.0)
· Earnings per share SEK 3.93 (3.72)
· Free cash flow/net debt 0.16 (0.26)
COMMENTS FROM THE PRESIDENT AND CEO
Organic sales growth continued to show a positive trend driven by successful sales efforts and by our strategy of security solutions and technology offerings to our customers. All business segments improved compared to last year and the organic sales growth reached 4 percent in the third quarter.
Earnings per share improved
In real terms earnings per share improved with 4 percent in the first nine months. The operating income improved in the quarter as well as in the first nine months compared to last year, even though burdened by difficult market conditions in Spain. A re-organization will be implemented in Spain during the fourth quarter, reallocating resources from traditional guarding operations to security solutions and technology sales efforts and also adapting the structure to the reduced volumes. These actions will likely require a one-off restructuring cost not exceeding MEUR 2, which will be recognized in the fourth quarter.
Sales of security solutions and technology gradually increasing
In 2012, sales of security solutions and technology represented approximately 6 percent of Group sales. We have set a target to triple this share of sales by the end of 2015. We continue to invest in resources within security solutions and technology and the share of sales run rate in the third quarter 2014 was 9.5 percent.
Affordable Care Act (ACA)
The ACA will come into full force as of January 1, 2015. By mid-October, for approximately 80 percent of the US total portfolio, either agreements have been made effective as of January 1, 2015 or the contracts are already compliant with the US healthcare reform (ACA). For the remaining portfolio, the final months of the year will be crucial to determine to what extent the customers will accept the price increase or decide for a security solution and technology alternative.
We estimate that the previously expected cost increase of 8–10 percent for the non-compliant contracts will be more in the range of 4–5 percent because of lower wage compensation, which will result in lower guard participation rate than anticipated. Consequently, by mid-October more customers than expected have opted for the price increase rather than security solutions and technology alternatives. We estimate the net organic sales growth effect in Security Services North America coming from the ACA implementation to be approximately 1 percent in 2015.
President and Chief Executive Officer
PRESENTATION OF THE INTERIM REPORT
Analysts and media are invited to participate in a telephone conference on November 4, 2014 at 09:30 a.m. (CET) where Securitas CEO Alf Göransson will present the report and answer questions. The telephone conference will also be audio cast live via Securitas web. No information meeting will take place at Securitas headquarters at Lindhagensplan in Stockholm. To participate in the telephone conference, please dial in five minutes prior to the start of the conference call:
The United States: + 1 855 269 2605
Sweden: + 46 (0) 8 519 993 55
United Kingdom: + 44 (0) 203 194 0550
To follow the audio cast of the telephone conference via the web, please follow the link
www.securitas.com/webcasts. A recorded version of the audio cast will be available
at www.securitas.com/webcasts after the telephone conference.
For further information, please contact:
Micaela Sjökvist, Head of Investor Relations, + 46 10 470 3013
Gisela Lindstrand, Senior Vice President, Corporate Communications and Public Affairs, + 46 10 470 3011
Securitas is a global knowledge leader in security. From a broad range of services of specialized guarding, technology solutions and consulting and investigations, we customize offerings that are suited to the individual customer’s needs, in order to deliver the most effective security solutions. Everywhere from small stores to airports, our 310,000 employees are making a difference.
Securitas AB discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 08.00 a.m. (CET) on Tuesday, November 4, 2014.