Securitas has issued its Full-Year financial results for 2019. Total sales are MSEK 110 899 (101 467), with an organic sales growth of 4% (6). Operating income before amortisation stands at MSEK 5 738 (5 304). Operating margin is reported at 5.2% (5.2). Earnings per share are EK 9.20 (8.26). Free cash flow/net debt stands at 0.19 (0.13), with the proposed dividend being SEK 4.80 (4.40).
For October to December 2019, total sales were recorded at MSEK 28 257 (26 824). Organic sales growth for this period was 2% (5). Operating income before amortisation is MSEK 1 497 (1 475), with an operating margin of 5.3% (5.5). Earnings per share were SEK 2.38 (2.02).
Commenting on these figures, Magnus Ahlqvist (president and CEO) stated: “Organic sales growth in the Group was 2% (5) in the fourth quarter. Organic sales growth declined temporarily in North America and was also hampered by the previously communicated contracts losses in Europe. Extra sales were generally lower compared to the fourth quarter of 2018. New sales in the Group were strong across all business segments.”
Ahlqvist continued: “Full-year organic sales growth was 4% (6), representing a decline on a strong comparative, but also reflected the slowdown in some key markets during the second half of 2019. We grew faster than the security market in general and we have the strongest offering of protective services, including security solutions and electronic security, which grew by 10% in 2019 to represent 21% of total Group sales. We recently acquired two strategically important electronic security companies, namely Fredon Security in Australia and Techco Security in Spain, the latter making Spain the second largest electronic security business in the Group.”
As stated, the operating margin in the fourth quarter was 5.3% (5.5) and primarily hampered by North America. The full-year operating margin was on a par with last year. The price and wage balance improved in the fourth quarter and, according to Ahlqvist, will remain a key focus area going into 2020.
Strong focus on cash management
The operating result, adjusted for changes in exchange rates, grew by 3% in 2019. Earnings per share, before items affecting comparability, amounted to SEK 9.61 (9.17).
“We achieved the highest operating and free cash flow ever in 2019,” said Ahlqvist. “Our strong focus on cash management remains a key priority across all business segments.”
The company had reported on an investigation in Argentina. The findings revealed that certain individuals engaged in local business activities in violation of the Securitas Values and Ethics Code. During the investigation the business has taken decisive actions, including terminations, and worked to improve on its internal controls in Argentina as well as globally.
“As a result of the findings,” observed Ahlqvist, “we have proactively contacted the appropriate authorities to ensure that we fulfil all of our obligations as a responsible company. We assess that this will not have any material effect on our financial position.”
Further, Ahlqvist commented: “Our success has been built based on good values and we have zero tolerance of misconduct of any type. I’m extremely disappointed by the breach of trust displayed by certain individuals and am reinforcing our compliance programme to prevent a similar situation from arising again in the future.”
The business continues to execute its plans for two major transformation programmes that will bring increased digitalisation and efficiency as well as a platform for innovation. The implementation of these two programmes is progressing according to plan and the company expects positive impacts starting in 2021 and gradually increasing during 2022.
“We’ve presented our new management team and launched our strategy to become the Intelligent Protective Services Partner of choice,” enthused Ahlqvist. “We focus on the areas of client engagement, protective services leadership and innovation and efficiency as well as our people. Offering solutions to our clients is a core part of our strategy. We continue to build a stronger capability within electronic security to enable further growth. Our ambition is to double the sales of security solutions and electronic security to BSEK 40 by 2023.”
In conclusion, Ahlqvist explained: “We have a strong team and we’ve been pursuing extensive transformation over the last 12 months. We’re making good progress towards an even stronger Securitas for the longer term.”