Home Guarding “Strong organic sales growth” of 7% highlighted in Securitas’ Interim Report for January-June

“Strong organic sales growth” of 7% highlighted in Securitas’ Interim Report for January-June

by Brian Sims
Magnus Ahlqvist

Magnus Ahlqvist

For the period April to June 2018, total sales at Securitas were MSEK 25,466 (23,031), with organic sales growth standing at an impressive 7%. Operating income before amortisation was MSEK 1,286 (1,137). Operating margin for the period was 5%, with earnings per share at SEK 2.28. From January to June, total sales were MSEK 48,822 (45,522). Organic sales growth for this half-year period was also 7%. Operating income before amortisation is reported at MSEK 2,377 (2,193) on an operating margin of 4.9%. Earnings per share stood at SEK 4.17, while free cash flow/net debt is at 0.07.

Magnus Ahlqvist, president and CEO of the business, commented: “At 7%, organic sales growth was strong in the first half of the year with strong market momentum throughout the Group. We’ve benefited from successful commercial activities in combination with excellent client retention rates. The operating conditions in the second quarter have been similar to the first quarter with favourable macroeconomic conditions in our main markets. We estimate that we grew faster than the security market in general. Our ability to deliver complete security solutions is undoubtedly a market advantage.”

Ahlqvist continued: “The operating margin improved to 4.9%, 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%. This growth is based on our strong commercial development and further impacted from the US tax reform from December last year.”

Looking back on the last six months, Ahlqvist stated: “In the first half of this year, we had a keen 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 as an option that can mitigate higher wage inflation. Security solutions and electronic security sales grew by 20% compared with the first half of 2017 and represented 20% of total sales. During the second quarter, we finalised the acquisition of Kratos Public Safety and Security, a Top 10 systems integrator in the United States. We’re excited to welcome the team from Kratos and, indeed, the teams from the previously announced acquisitions of Automatic Alarm and Alphatron. Already, they’re greatly enhancing our technical capability in these markets.”

Cost savings programme for Security Services Europe

Securitas has initiated a cost savings programme in Security Services Europe that will be executed in the second half of 2018. “We’re not satisfied with the operating margin of this business segment and we’ve identified a number of improvement areas that will contribute towards its operating result,” urged Ahlqvist. “The restructuring costs for the programme are estimated to be in the range of MSEK 200-250 and will be recognised in the third quarter of 2018 as an item affecting comparability. The payback period is about two years. The planned savings will start to come into fruition during the fourth quarter of 2018, but mostly during 2019.”

This is Ahlqvist’s first full quarter as president and CEO, so how does he see matters playing out to date? “Securitas is on a positive and exciting journey. 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 occupies a strong position in the market. Our customers believe in the direction that we’re taking and we’re in a good position to drive profitable growth. We have a solid foundation upon which to build and will speed up the pace of transformation. We will continue to invest and restructure in order to drive digitisation and modernise our information systems and capabilities. With intelligent security, we’ll be able to enhance the value for our customers through better security solutions. These are important themes as we go forward.”

In conclusion, Ahlqvist stated: “We have good growth and momentum across the business. I’m looking forward to continuing to work with the great people in our company and, of course, our myriad customers as we continue to lead the transformation of the global security industry.”

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