COMMENTS FROM THE PRESIDENT AND CEO
The organic sales growth was weak at 0 percent in the second quarter. Slow organic sales growth in North America, severe market conditions in Spain and Portugal and our determination to manage the price and wage balance in France are the main reasons.
For the first half year, we have achieved price increases on par with wage cost increases, and I remain confident that this will be the case also for the full year of 2012. The operating margin in the second quarter was 0.5 percent behind previous year. The two main reasons were difficult market conditions in Spain and the margin decline in the US operations. In the federal government business in North America lower extra sales has, in combination with an integration process more difficult than planned, resulted in a decline of the operating margin.
The free cash flow improved significantly compared to the first six months last year, but we will continue to be restrictive on acquisitions until we have restored the financial target of free cash flow to net debt of 0.20.
Market conditions in primarily Spain are deteriorating more rapidly than expected and we leave contracts due to uncertainty of customers’ ability to pay for the security services. In addition, the Spanish government has decided, as of August 1, 2012, to withdraw important subsidies on payroll taxes for certain categories of employees which will further increase our labor costs, and we are investigating what actions could be taken to mitigate the imposed cost increases. Thanks to the strengthened position in technology security solutions we are well equipped to face the harsh market environment in Spain and Portugal.
President and Chief Executive Officer
Presentation of the interim report
Analysts and media are invited to participate in a telephone conference on August 8, 2012 at 09:30 a.m. (CET) where Securitas CEO Alf Göransson will present the report and answer questions. The telephone conference will also be webcasted 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: + 1 866 458 4087
Sweden: + 46 (0) 8 505 598 53
United Kingdom: + 44 (0) 203 043 2436
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 300 000 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 Wednesday, August 8, 2012.