Securitas AB Interim Report Q1 2023 | January–March 2023
January–March 2023
- Total sales MSEK 37 751 (28 598)
- Organic sales growth 12 percent (4)
- Operating income before amortization MSEK 2 180 (1 452)
- Operating margin 5.8 percent (5.1)
- Items affecting comparability (IAC) MSEK –281 (–134), relating to the previously announced trans-formation programs and the acquisition of STANLEY Security
- Earnings per share before and after dilution SEK 1.66 (1.91)*
- Earnings per share before and after dilution, before IAC, SEK 2.03 (2.14)*
- Reported net debt/EBITDA 3.8 (2.0), adjusted net debt/EBITDA ratio 3.6 **
- Cash flow from operating activities 9 percent (–9)
* Number of shares outstanding has been adjusted for the rights issue completed on October 11, 2022.
For further information refer to Data per share on page 19.
** Includes STANLEY Security’s 12 months adjusted estimated EBITDA.
Comments from the President and CEO
“Strong momentum in technology and solutions”
We are in the process of shaping a security solutions company at the fore-front with world-leading technology and expertise, and began the year with 12 percent (4) organic sales growth and continued strong margin momentum together with STANLEY Security. Our high-margin technology and solutions business grew strongly at 13 percent, excluding STANLEY Security, demonstrating that we are on track to become the most attractive security solutions partner for our clients.
North America recorded accelerated growth in the business unit Guarding as a significant client contract has been renewed and expanded with the effect impacting the first quarter of 2023. For the Group, organic sales growth in the security services business line was primarily supported by Aviation and solid price increases, keeping the price and wage balance intact in the first quarter.
Our operating margin improved to 5.8 percent (5.1), which is the strongest operating margin so far in a first quarter. The development was driven by the technology and solutions business supported by healthy margins in the STANLEY Security acquisition. Our integration and value creation processes with STANLEY Security are progressing well. We have realized strong cost benefits and results in our Technology business primarily in North America. We see significant client interest in our strengthened offering leading to good commercial opportunities ahead.
Within our security services business we maintain our sharp focus on quality and actively managing lower profitability contracts and we continue to realize operating margin benefits from the transformation program in North America. In Europe, our performance is below expectations due to increased costs related to labor shortage, contract start-up costs in Aviation and negative cost leverage.
The Group’s operating cash flow improved to 9 percent (–9) of the operating result. The first quarter is normally weaker from a cash flow perspective, but we remain confident regarding our cash generation ability.
EXECUTING ON OUR STRATEGY
Leadership in technology and solutions and digital capabilities are top priorities in our strategic execution. Together with STANLEY Security we are now number two in the global security technology market and we have a unique solutions offering. The transformation programs we have implemented in North America and are implementing in Europe and Ibero-America fundamentally shift our digital capabilities as a company, digitalizing our client, people, operational and financial processes end-to-end. This creates major opportunities to develop and commercialize innovative solutions to our clients, supporting our ambition to become a 10 percent operating margin company over time.
The transformation program in North America has now become an integral part of the day-to-day operations with good margin improvements as a result. In Europe we continue to execute the corresponding program although with some delay as mentioned earlier as we calibrate our efforts with the STANLEY Security integration program to optimize costs and benefits. The parallel program in Ibero-America is on track.
The macroeconomic environment remains uncertain, but I am confident that we are well prepared to continue delivering high-value services even during more challenging times. Our unique offering and client value proposition have strengthened, enabling higher growth within technology and solutions as well as significant operating margin enhancement opportunities going forward. As part of our strategy, we will continue to assess our business mix and presence to further sharpen our performance and position as the leading technology and solutions company in the market.
Magnus Ahlqvist
President and CEO
PRESENTATION OF THE INTERIM REPORT
Analysts and media are invited to participate in a telephone conference on May 3, 2023, at 2.30 p.m. (CEST) where President and CEO Magnus Ahlqvist and CFO Andreas Lindback will present the report and answer questions. The telephone conference will also be audio cast live via Securitas’ website www.securitas.com
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, Vice President, Investor Relations + 46 76 116 7443
ABOUT SECURITAS
Securitas has a leading global and local market presence with operations in 45 markets. Our operations are organized in three business segments: Securitas North America, Securitas Europe and Securitas Ibero-America. We also have operations in Africa, the Middle East, Asia and Australia, which form the AMEA division. Securi-tas 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, te-chnology and solutions, fire and safety, and corporate risk management. We adapt our security solutions ba-sed 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 a security solutions partner with world-leading technology and expertise, we are focusing on four areas: Taking the lead within technology, quality guarding services focused on profitability, creating a global security solutions partner, leveraging a global platform to drive innovation.
Group financial targets
Securitas has four financial targets:
- 8–10 percent technology and solutions annual average real sales growth
- 8 percent Group operating margin by year-end 2025, with a >10 percent long-term operating margin ambit-ion
- A net debt to EBITDA ratio below 3.0x
- An operating cash flow of 70–80 percent of operating income before amortization
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 Wednesday, May 3, 2023.