Securitas AB Full Year Report January-December 2020

OCTOBER–DECEMBER 2020

• Total sales MSEK 26 477 (28 257)
• Organic sales growth 1 percent (2)
• Operating income before amortization MSEK 1 404 (1 497)
• Operating margin 5.3 percent (5.3)
• Items affecting comparability (IAC) MSEK –422 (–83), relating to transformation programs and the cost- 
• savings program in the Group
• Earnings per share SEK 1.45 (2.38)
• Earnings per share, before IAC, SEK 2.38 (2.54)
• Cash flow from operating activities 109 percent (124)

JANUARY–DECEMBER 2020

• Total sales MSEK 107 954 (110 899)
• Organic sales growth 0 percent (4)
• Operating income before amortization MSEK 4 892 (5 738)
• Operating margin 4.5 percent (5.2)
• Items affecting comparability (IAC) MSEK –640 (–209), relating to ­transformation programs and the cost-savings program in the Group
• Earnings per share SEK 6.63 (9.20)
• Earnings per share, before IAC, SEK 8.02 (9.61)
• Net debt/EBITDA 2.1 (2.2)
• Cash flow from operating activities 147 percent (85)
• Proposed dividend for 2020 of SEK 4.00 (4.80) per share
• Launch of business transformation program in Europe and Ibero-America

Comments from the President and CEO
The Group continued to show resilience in the face of the ongoing corona pandemic and ended this challenging year with positive organic sales growth of 1 percent (2) in the fourth quarter, driven by Security Services North America. The negative impact of the corona pandemic on the airport security business remains to be significant, primarily in Security Services Europe. Increased extra sales, focus on helping our clients with their security needs related to the ­corona pandemic, have offset some of the corona-related sales reductions in the contract portfolio. Organic sales growth for the full year was 0 percent (4).

Security solutions and electronic security sales was 22 percent (22) of total Group sales in the fourth quarter. The installation business within electronic security was negatively impacted by the corona pandemic throughout the year.

The Group’s operating margin in the fourth quarter was on par with the preceding year at 5.3 percent (5.3). For the full year the ­operating margin was 4.5 percent (5.2), negatively impacted by the corona pandemic and the related increased provisioning to reflect the enhanced risk in the business environment. The ­negative impact was partly offset by cost-saving actions and govern­ment grants mostly as a compen­sation for temporary unemployment costs. The price and wage balance was on par in the year.

The operating result, adjusted for changes in exchange rates, increased by 4 percent in the fourth quarter while it declined by 10 percent over the full year. 

The Group delivered a strong cash flow during the year, even when ­excluding the ­effects of corona-related govern­ment support measures. Supported by the Group’s improving financial performance and solid financial position, the Board of Directors decided to reinstate the dividend proposal for 2019 of SEK 4.80 (4.40) per share which was resolved by an EGM in December. 

Taking the next steps 
At the beginning of the pandemic, we set an ambition to come out of this challenging period stronger and more focused. The corona pandemic presented all of us with an unprece­dented challenge in 2020, but the Securitas team faced this demanding situation with great resilience and agility. During 2020, we executed on our transformation programs and took several actions to improve our focus and profitability. 

In 2020 we initiated a cost-savings program in the Group, addressing profitability in parts of our business impacted by the corona pandemic. We previously estimated a range of restructuring costs of MSEK 350–500 with a payback period of two years. The first savings began to have an impact in the fourth quarter and will gradually increase going forward. The final amount of restructuring will largely depend on changes related to government grants and the perform­ance of the airport security business. We expect to finalize the program at the end of the second quarter of 2021. 

The business transformation in North America and the global IS/IT transformation initiated in 2019 are progressing well and are expected to be finalized according to plan by the end of 2021, in line with achieving the financial benefits of the programs by 2022. We are now taking the next major step by launching a business transformation program in our two other segments – Europe and Ibero-America. These activities represent significant investments in the execution of our strategy, and we expect to see important benefits as a result. We will enhance the value proposition to our clients and our people. We will be able to benefit more from our scale and from common ways of working. These programs are driven by our strong ambition to change the business mix and to improve our margins. 

During 2020, we acquired electronic security companies in eight focus markets. The integration of the five companies acquired from Stanley is progressing well and in December we announced the acquisition of the high-quality FE Moran business in the US. These acquisitions will greatly enhance our offering to our clients and contribute to our ambition to double our security solutions and electronic security business. 

We have decided to leave 11 smaller countries where we deem the current and future business opportunities to be limited. We have by now already exited or are close to exiting from nine countries and expect this to be finalized by mid 2021.While we continue to face high-level of un­certainty related to the corona pandemic at the beginning of 2021, we enter the year stronger and more ­focused and with a clear agenda for pursuing the next steps of our transformation. 

Magnus Ahlqvist
President and CEO

PRESENTATION OF THE FULL YEAR REPORT
Analysts and media are invited to participate in a telephone conference on February 4, 2021, at 9:30 a.m. (CET) where President and 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:    + 1 631 913 1422
Sweden:    + 46 8 566 426 51
UK:    + 44 333 3000 804

Please use the following pin code for the telephone ­conference: 621 490 78#
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

FINANCIAL INFORMATION CALENDAR
May 5, 2021, app. 1.00 p.m. (CET)    Interim Report January–March 2021
May 5, 2021    Annual General Meeting 2021
July 29, 2021, app. 1.00 p.m. (CET)    Interim Report January–June 2021
October 29, 2021, app. 1.00 p.m. (CET)    Interim Report January–September 2021

For further information regarding Securitas IR activities, refer to 
www.securitas.com/investors/financial-calendar

ABOUT SECURITAS
Securitas has a leading global and local market presence with operations in 56 countries. Our operations are organized in three business segments: Security Services North America, Security Services Europe and Security Services Ibero-America. We also have operations in Africa, the Middle East and Asia, which form the AMEA division. Securitas serves a wide range of clients of all sizes in a ­variety of industries and segments. Security solutions based on client-specific needs are built through different combinations of on-site, mobile and remote guarding, ­electronic security, fire and safety, and corporate risk management. Securitas clients’ are found in all different industries and they are of all sizes. We adapt our security solutions based on the risks and needs of each client through increased client engagement and continuously enhanced knowledge. Securitas is listed in the Large Cap segment at Nasdaq Stockholm.

Group strategy
At Securitas, we are leading the transformation of the security industry by putting our clients at the heart of our business. We solve our clients’ security needs by offering qualified and engaged people, in-depth expertise and innovation within each of our protective services, the ability to combine services into solutions and by using data to add further intelligence. To execute on our strategy to become the intelligent protective services partner, we are focusing on four areas: empowering our people, client engagement, protective services leadership and innovation, and efficiency.

Group financial targets
Securitas has three financial targets:

An annual average increase in earnings per share of 10 percent
Net debt to EBITDA ratio of on average 2.5
An operating cash flow of 70 to 80 percent of operating income before amortization

Securitas has also set a strategic transformation ambition – to double our security solutions and electronic security sales by 2023, compared with 2018.

This is information that Securitas AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. (CET) on Thursday, February 4, 2021.

Securitas AB (publ.)
P.O. Box 12307, SE-102 28 Stockholm, Sweden
Visiting address: Lindhagensplan 70
Telephone: +46 10 470 30 00. Fax: +46 10 470 31 22
Corporate registration number: 556302–7241
www.securitas.com