Securitas AB Interim Report January-September 2020 and reinstated dividend proposal
JULY–SEPTEMBER 2020
- Total sales MSEK 26 501 (28 214)
- Organic sales growth 0 percent (4)
- Operating income before amortization MSEK 1 327 (1 574)
- Operating margin 5.0 percent (5.6)
- Items affecting comparability (IAC) MSEK –112 (–60), relating to IS/IT transformation programs and the cost savings program in the Group
- Earnings per share SEK 2.08 (2.56)
- Earnings per share, before IAC, SEK 2.31 (2.68)
- Cash flow from operating activities 199 percent (138)
- Reinstated dividend proposal SEK 4.80 (4.40) per share to be resolved at an EGM in December
JANUARY–SEPTEMBER 2020
- Total sales MSEK 81 477 (82 642)
- Organic sales growth 0 percent (5)
- Operating income before amortization MSEK 3 488 (4 241)
- Operating margin 4.3 percent (5.1)
- Items affecting comparability (IAC) MSEK –218 (–126), relating to IS/IT transformation programs and the cost savings program in the Group
- Earnings per share SEK 5.18 (6.82)
- Earnings per share, before IAC, SEK 5.63 (7.07)
- Net debt/EBITDA 1.9 (2.5)
- Cash flow from operating activities 163 percent (72)
- Significant impact and uncertainty related to the corona pandemic
Comments from the President and CEO
The corona pandemic continued to have negative impact on the Group’s operations in the third quarter, but the overall business situation improved compared to the second quarter. The Group’s organic sales growth was 0 percent (4) in the quarter and 0 percent (5) for the first nine months, with all business segments improving during the quarter. The airport security business is still heavily impacted by the corona pandemic, with the largest negative impact in Security Services Europe. We have been able to offset some of the portfolio reductions with increased extra sales, helping our clients with their security needs related to the corona pandemic.
Security solutions and electronic security sales was 22 percent (21) of total Group sales. The installation business within electronic security is negatively impacted by the corona pandemic, but improved in the third quarter compared to the second quarter.
The Group’s operating margin was 5.0 percent (5.6) in the third quarter and 4.3 percent (5.1) in the first nine months, with all business segments behind last year mainly due to the corona pandemic. The operating margin was supported by cost saving actions and government grants but hampered by increased provisioning. The price and wage balance was on par in the first nine months.
The operating result, adjusted for changes in exchange rates, declined by 8 percent in the third quarter and by 15 percent in the first nine months. Earnings per share, before items affecting comparability, amounted to SEK 5.63 (7.07).
The Group delivered a strong cash flow in the first nine months, also when excluding the effects from corona-related government support measures. We have re-initiated acquisition activities and in the third quarter we announced the strategically important acquisition of STANLEY Security’s electronic security businesses in five countries. The acquisition was closed on November 2.
In light of the improving financial performance and the solid financial position under a continued prudent approach, the Board of Directors has decided to reinstate the dividend proposal of SEK 4.80 (4.40) per share earlier withdrawn on April 28.
Preparing for a strong future
Although we experienced improvements in the general business environment in the third quarter compared to the second quarter, much uncertainty remains regarding the duration and long-term implications of the pandemic. We maintain focus on our four main priorities to handle the corona pandemic: the health and safety of our employees, delivery of our services to our clients and supporting their new needs, managing cash flow and cost.
In the second quarter we announced a cost savings program in the Group, addressing the profitability in parts of our business due to the corona pandemic. We have started to implement this program in the third quarter and restructuring costs of MSEK 59 were recognized as items affecting comparability. The first savings will start impacting in the fourth quarter and gradually increase thereafter. We earlier estimated a range of restructuring costs of MSEK 350–500 with a payback period of 2 years. The final amount of restructuring will largely depend on changes related to government grants and the development of the airport security business. We expect to finalize the program at the end of the second quarter 2021.
Despite the challenging situation with the corona pandemic we maintain high focus on our transformation programs: the business transformation in Security Services North America and the global IS/IT transformation. During the third quarter, we implemented an important part of the business transformation program in Security Services North America. The Securitas team has shown great strength and commitment throughout these difficult times with a strong focus on adapting to our clients’ needs. Our resilience, combined with our strong offering of protective services and solutions, gives us a competitive advantage also in turbulent times.
Magnus Ahlqvist
President and CEO
PRESENTATION OF THE INTERIM REPORT
Analysts and media are invited to participate in a telephone conference on November 3, 2020, 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 761167443
FINANCIAL INFORMATION CALENDAR
February 4, 2021, 8.00 a.m. (CET) Full Year Report January–December 2020
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 1:00 p.m. (CET) on Tuesday, November 3, 2020.
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