Securitas AB Interim Report January-June 2018
• Total sales MSEK 25 466 (23 031)
• Organic sales growth 7 percent (3)
• Operating income before amortization MSEK 1 286 (1 137)
• Operating margin 5.0 percent (4.9)
• Earnings per share SEK 2.28 (1.89)
• Initiated cost savings program in Security Services Europe
• Total sales MSEK 48 822 (45 522)
• Organic sales growth 7 percent (3)
• Operating income before amortization MSEK 2 377 (2 193)
• Operating margin 4.9 percent (4.8)
• Earnings per share SEK 4.17 (3.62)
• Free cash flow/net debt 0.07 (0.13)
COMMENTS FROM THE PRESIDENT AND CEO
Organic sales growth was strong at 7 percent (3) in the first half year with strong market momentum throughout the Group. We benefit from successful commercial activities in combination with excellent client retention. The operating conditions in the second quarter are similar to the first quarter with favorable macroeconomic conditions in our main markets. We estimate that we grew faster than the security market in general, and our ability to deliver complete security solutions is a market advantage.
The operating margin improved to 4.9 percent, supported by North America and Ibero-America while there was a slight decline in Europe. Earnings per share, adjusted for changes in exchange rates, improved by 15 percent. This growth is based on our strong commercial development and further impacted from the US tax reform from December 2017.
In the first half year we had a strong focus on the price and wage equation and we managed to balance wage cost increases with price increases. We continue to drive our strategy of offering security solutions using technology to our customers also as an option to mitigate higher wage inflation. Security solutions and electronic security sales grew by 20 percent compared with the first half year 2017 and represented 20 percent of total sales. During the second quarter we finalized the acquisition of Kratos Public Safety and Security, a top 10 system integrator in the United States. We are excited to welcome the team from Kratos and the teams from the previously announced acquisitions of Automatic Alarm and Alphatron and greatly enhancing our technical capability in these markets.
We have initiated a cost savings program in Security Services Europe that will be executed in the second half of 2018. We are not satisfied with the operating margin of the business segment and we have identified a number of improvement areas that will contribute to the operating result of the business segment. The restructuring costs for the program is estimated to be in the range of MSEK 200–250 and will be recognized in the third quarter 2018 as an item affecting comparability. The payback period is about 2 years and the savings will start to come in during the fourth quarter 2018 and mostly during 2019.
This is my first full quarter as the President and CEO. Securitas is on a positive and exciting journey and I have continued to meet with our teams and customers in our regions to discuss our position and the short and long term opportunities we have together. Securitas has a strong position in the market, our customers believe in our direction and we are in a good position to drive profitable growth. We have a solid foundation and will speed up the pace of transformation. We will continue to invest and restructure in order to drive the digitization and modernize our information systems and capabilities. With intelligent security we will be able to enhance the value for our customers through better security solutions. These are important themes as we go forward.
We have good growth and momentum across the business and I am looking forward to continue to work with the great Securitas people and our customers as we continue to lead the transformation of the global security industry.
President and Chief Executive Officer
PRESENTATION OF THE INTERIM REPORT
Analysts and media are invited to participate in a telephone conference on July 27, 2018 at 2:30 p.m. (CET) where CEO Magnus Ahlqvist and CFO Bart Adam will present the report and answer questions. The telephone conference will also be audio cast live via Securitas website. To participate in the telephone conference, please dial in five minutes prior to the start of the conference call:
US: + 1 855 269 2605
Sweden: + 46 8 519 993 55
UK: + 44 203 194 0550
To follow the audio cast of the telephone conference via the web, please follow the link
www.securitas.com/investors/webcasts. A recorded version of the audio cast will be available at www.securitas.com/investors/webcasts after the telephone conference.
FOR FURTHER INFORMATION. PLEASE CONTACT:
Micaela Sjökvist, Head of Investor Relations.
+ 46 761167443
Securitas is a knowledge leader in security and offers protective services in North America, Europe, Latin America, Africa, the Middle East, Asia and Australia. The organization is flat and decentralized with three business segments: Security Services North America, Security Services Europe and Security Services Ibero-America. Securitas serves a wide range of customers of all sizes in a variety of industries and customer segments. Security solutions based on customer-specific needs are built through different combinations of on-site, mobile and remote guarding, electronic security, fire and safety, and corporate risk management. Securitas can respond to the unique and specific security challenges facing its customers, and tailor its offering according to their specific industry demands. Securitas employs more than 345 000 people in 56 markets. Securitas is listed in the Large Cap segment at Nasdaq Stockholm.
This is information that Securitas AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 1.00 p.m. (CET) on Friday, July 27, 2018.
Securitas AB (publ.) P.O. Box 12307, S-102 28 Stockholm, Sweden Corp. ID no: 556302–7241 Visiting address: Lindhagensplan 70 Telephone: +46 (0) 10 470 30 00