Securitas AB Interim Report January–June 2021
APRIL-JUNE 2021
- Total sales MSEK 26 499 (26 556)
- Organic sales growth 8 percent (–4)
- Operating income before amortization MSEK 1 471 (1 075)
- Operating margin 5.6 percent (4.0)
- Items affecting comparability (IAC) MSEK –259 (–61), relating to the previously announced transformation programs and the cost-savings program in the Group
- Earnings per share SEK 2.09 (1.50)
- Earnings per share, before IAC, SEK 2.64 (1.62)
- Cash flow from operating activities 63 percent (248)
JANUARY–JUNE 2021
- Total sales MSEK 52 313 (54 976)
- Organic sales growth 4 percent (–1)
- Operating income before amortization MSEK 2 727 (2 161)
- Operating margin 5.2 percent (3.9)
- Items affecting comparability (IAC) MSEK –395 (–106), relating to the previously announced transformation programs and the cost-savings program in the Group
- Earnings per share SEK 3.95 (3.11)
- Earnings per share, before IAC, SEK 4.75 (3.32)
- Net debt/EBITDA 2.2 (2.1)
- Cash flow from operating activities 81 percent (141)
Comments from the President and CEO
“A strong quarter throughout the Group”
THE IMPLEMENTATION OF THE STRATEGY PAYS OFF, WHILE WE CONTINUE TO MANAGE EFFECTS FROM COVID
- The performance of the Group proves that our strategy is paying off. We continue to execute on our strategy and transform the company:We have sharpened the business over the last year through focus on profitability and cost management to create healthy margins in the overall business, including aviation.
- The transformation programs are being implemented according to plan and we are now seeing benefits in practice.
- We are seeing positive developments in our solutions and electronic security business, and it is a clear focus area to further accelerate the growth momentum.
PROFITABLE GROWTH IN FOCUS
The Group’s organic sales growth in the second quarter was strong at 8 percent (–4), with all business segments showing 8 percent organic sales growth. Our performance in the second quarter of 2021 was solid across the Group. Commercial activity and sales momentum is picking up in all of our business segments as lock-downs and restrictions are easing.
The airport security business is gradually recovering and we continue to improve profitability by carefully reviewing every contract. Sales of security solutions and electronic security represented 22 percent (21) of total sales in the second quarter, with a real sales growth of 11 percent (0).
The operating result for the Group, adjusted for changes in exchange rates, increased by 50 percent in the second quarter and the operating margin was 5.6 percent (4.0). The positive effects from our strategy and the gradually improved business environment strengthened all our business segments, also supported by normal cost levels of provisioning for potential bad debt compared to the high levels last year and by the cost-savings program initiated during 2020.
Total price adjustments in the Group were on par with wage cost increases in the second quarter, in spite of a challenging labor situation particularly in the US, with shortage of labor and wage pressure. Support from government grants relating mostly to employees on temporary unemployment continued, but on a lower level in line with the development of the corona pandemic.
In the past 12 months we have sharpened our business by increased focus on contract profitability. We are reviewing the contract portfolio in all business segments. Further, we reduced complexity through the exit of 11 countries, of which 10 exits now are completed.
The Group delivered a good cash flow in the second quarter, supported by a strong focus on accounts receivable.
POSITIONED FOR CONTINUED COVID UNCERTAINTIES
The corona pandemic continues to be in focus in our day-to-day operations as we close the second quarter of 2021. While uncertainty remains regarding the long-term consequences of the pandemic, we are coming out stronger thanks to having taken action early. Together with solid finances we have strength to tackle further challenges and execute on our strategy.
COMMITTED TO TRANSFORMATION TARGETS
We are beginning to reap the benefits of our transformation program in North America initiated in 2019, with some positive contribution to the operating margin development in the business segment in the second quarter. In addition, the business transformation programs in Europe and Ibero-America are progressing according to plan. We are confident that with these programs we will continue to change the business mix and we are fully committed to achieve the margin targets related to the programs.
Today we announced the acquisition of Protection One, a market leading solutions and electronic security company in Germany. During 2020, we acquired electronic security companies in eight focus markets. These acquisitions and their integration develop well and contribute to our ambition of doubling our security solutions and electronic security business. We continue to actively explore further acquisition opportunities.
We have delivered a strong performance in the Group in the first six months of 2021. The Securitas team has continued to show great resilience in a challenging situation, and the strength of the team and the progress of our business transformation confirms the direction and ambition for the years ahead.
Magnus Ahlqvist
President and CEO
FINANCIAL INFORMATION CALENDAR
October 29, 2021, app. 1.00 p.m. (CET)
Interim Report January–September 2021
February 8, 2022, app. 8.00 a.m. (CET)
Full Year Report January–December 2021
For further information regarding Securitas IR activities, refer to
www.securitas.com/investors/financial-calendar
PRESENTATION OF THE INTERIM REPORT
Analysts and media are invited to participate in a telephone conference on July 29, 2021, at 2:30 p.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 76 116 7443
ABOUT SECURITAS
Securitas has a leading global and local market presence with operations in 47 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, Asia and Australia, 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. 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.
Securitas AB (publ.)
P. O. Box 12307, SE-102 28 Stockholm, Sweden
Visiting address:
Lindhagensplan 70
Telephone: + 46 10 470 30 00
Corporate registration number: 556302–7241
www.securitas.com
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 1:00 p.m. (CET) on Thursday, July 29, 2021.