GLOBAL SECURITY solutions provider Securitas has issued its Interim Report for the period January-September 2022. Total sales stand at MSEK 95 146 (79 651), with an organic sales growth of 6% (4). Operating income before amortisation is MSEK 5 542 (4 332) and the operating margin is 5.8% (5.4).
Earnings per share are reported at SEK 6.70 (5.44), with earnings per share before items affecting comparability standing at SEK 8.15 (6.29). Reported net debt/EBITDA is 5.8 (2.1), with adjusted net debt/EBITDA ratio 4.0. Cash flow from operating activities is at 66% (79).
“Strong performance in the new Securitas”
“The third quarter 2022 marks a major milestone,” urged president and CEO Mgnus Ahlqvist, “as it’s the first time we’ve reported as one company together with STANLEY Security. The most transformative acquisition in Securitas’ history is now concluded, with STANLEY Security consolidated into Securitas as of 22 July this year.”
Ahlqvist continued: “We are facing a global environment with increasing uncertainty and we are, as always, continuously working to ensure preparedness and strength in more challenging times.”
Development in the third quarter has shown continued strong demand. Organic sales growth was 7% (4), with growth in all business segments supported by good momentum within technology and solutions sales and also by high price increases.
As expected, Security Services North America returned to positive organic sales growth and reported a total of 3%. STANLEY Security realised mid-single digit estimated organic sales growth in the third quarter.
Investments in a stronger client offer are generating results with good commercial traction. “We recently renewed a significant global contract with an expanded scope of services,” observed Ahlqvist, “duly reaffirming our position as the leading security solutions partner to many of the most well-known brands on the global stage.”
Technology and solutions sales
Technology and solutions sales in the third quarter represented 30% (22) of Group sales, while real sales growth (excluding STANLEY Security) is described as “solid” with double-digit growth throughout the business.
The operating result for the Group, adjusted for changes in exchange rates, increased by 30% in the third quarter with material contribution from the STANLEY Security acquisition and good development in the legacy business.
The operating margin improved to 6.5% (5.9). “Compared to the first half of 2022,” noted Ahlqvist, “the operating margin in the acquired STANLEY Security business improved as a result of pricing recovery, cost control and leverage, so too initial execution on the value creation plan.”
Operations in North America delivered margin improvement, as did those in Ibero-America, thereby continuing the positive trend from previous quarters. Europe improved with support from STANLEY Security, despite continued pressure from costs related to labour shortage and sickness.
“We have successfully managed a positive price and wage balance in the Group,” enthused Ahlqvist. “A continued and dynamic price increase approach is key for ensuring quality delivery to our clients.”
The Group operating cash flow was 122% of operating result in the quarter and will continue to be an important focus area for reducing the leverage position subsequent to the STANLEY Security acquisition.
Creating the future Securitas
The business is now “accelerating” its journey with STANLEY Security and has begun to execute on its value creation plan. The business remains in line with its plan in terms of synergy execution in the third quarter.
“Bringing together our two great companies gives us a leading position in the industry,” affirmed Ahlqvist. “Combining our talent and expertise sets us up for stronger growth thanks to an outstanding client offer. We expect significant margin enhancement opportunities going forward. Together, we have great potential to provide tech-enabled security solutions that create long-term value for our clients and shareholders.”
The transformation programme in North America, which was finalised in 2021, is delivering value in the day-to-day operations and is an important enabler of the positive operating margin development. “We are executing the business transformation programme in Europe, although temporarily at a lower pace, as we are currently calibrating the programme with the STANLEY Security integration plan to ensure we maximise the cost and benefit realisation.”
After the STANLEY Security acquisition, Securitas announced new financial targets at the Investor Update held in August in order to reflect its ambition to ‘build the new Securitas’ and achieve an 8% operating margin by the end of 2025. “Our strong performance in the third quarter gives us confidence that we are on the right track,” concluded Ahlqvist.
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