Home News Securitas AB publishes Interim Report for January-September 2014

Securitas AB publishes Interim Report for January-September 2014

by Brian Sims

Global security solutions provider Securitas AB has published its Interim Report for the period January-September 2014. Organic sales growth has continued to show a positive trend. July-September 2014 ‘¢ Total sales: MSEK 18 003 (16 605) ‘¢ Organic sales growth: 4%(1) ‘¢ Operating income before amortisation: MSEK 962 (892) ‘¢ Operating margin: 5.3% (5.4) ‘¢ Earnings per share: SEK 1.57 (1.42) January-September 2014 ‘¢ Total sales: MSEK 51 234 (48 975) ‘¢ Organic sales growth: 3%(1) ‘¢ Operating income before amortisation: MSEK 2 488 (2 450) ‘¢ Operating margin: 4.9% (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, our security solutions strategy and technology offerings developed for our customers,” explained Alf Göransson, president and CEO.” All business segments improved compared to last year, with the organic sales growth reaching 4% in the third quarter.” Göransson continued:” In real terms, earnings per share improved with 4% in the first nine months. The operating income improved in the quarter and during the first nine months compared to last year, even though burdened by difficult market conditions in Spain. A re-organisation will be implemented in Spain during the fourth quarter, re-allocating 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 recognised in the fourth quarter.” Sales of security solutions and technology gradually increasing ” In 2012, sales of security solutions and technology represented approximately 6% of Group sales. We’ve 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. The share of sales run rate in the third quarter 2014 was 9.5%.” Affordable Care Act 2015 Göransson added:” The Affordable Care Act will come into full force as of 1 January 2015. By mid-October, for approximately 80% of the total US portfolio, either agreements have been made effective as of 1 January 2015 or the contracts are already compliant with the US’ healthcare reform programme. For the remaining portfolio, the final months of the year will be crucial in determining to what extent our customers will accept the price increase or decide for a security solution and technology alternative.” In conclusion, Securitas’ president and CEO explained:” We estimate that the previously expected cost increase of 8%-10% for the non-compliant contracts will be more in the range of 4%-5% because of lower wage compensation, which will result in lower security officer participation rates 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 Affordable Care Act implementation to be approximately 1% in 2015.”

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