· Total sales MSEK 26 556 (27 684)
· Organic sales growth -4 percent (5)
· Operating income before amortization MSEK 1 075 (1 377)
· Operating margin 4.0 percent (5.0)
· Items affecting comparability (IAC) MSEK -61 (-46), relating to IS/IT transformation programs
· Earnings per share SEK 1.50 (2.18)
· Earnings per share, before IAC, SEK 1.62 (2.27)
· Cash flow from operating activities 248 percent (69)
· Cost savings program initiated in the Group
· Total sales MSEK 54 976 (54 428)
· Organic sales growth -1 percent (6)
· Operating income before amortization MSEK 2 161 (2 667)
· Operating margin 3.9 percent (4.9)
· Items affecting comparability (IAC) MSEK -106 (-66), relating to IS/IT transformation programs
· Earnings per share SEK 3.11 (4.25)
· Earnings per share, before IAC, SEK 3.32 (4.39)
· Net debt/EBITDA 2.1 (2.9)
· Cash flow from operating activities 141 percent (33)
· Significant impact and uncertainty related to the corona pandemic
Comments from the President and CEO
We had significant negative impact from the corona pandemic in the second quarter. The Group's organic sales growth was -4 percent (5) in the quarter and -1 percent (6) for the first six months. The extraordinary situation of the corona pandemic was reflected in all business segments, with the largest negative impact in Security Services Europe mainly from the rapid decline in the aviation business.
Security solutions and electronic security sales was flat in the second quarter to represent 21 percent of total Group sales, with the installation business within electronic security negatively impacted by the corona pandemic.
The Group's operating margin was 4.0 percent (5.0) in the second quarter and 3.9 percent (4.9) in the first six months. The decline derived from all business segments, predominantly due to the corona pandemic. The operating margin was supported by cost saving actions and government grants during the quarter, but hampered by increased provisioning. The price and wage balance was on par in the first six months.
The operating result, adjusted for changes in exchange rates, declined by 19 percent in the second quarter as well as in the first six months. Earnings per share, before items affecting comparability, amounted to SEK 3.32 (4.39).
The Group delivered a strong cash flow in the first six months, also when excluding the effects from the withdrawn dividend and corona-related government support measures. Our focus on cash management remains a key priority across all business segments.
Preparing for a strong future
Since the start of the corona pandemic, we have focused on four priorities: the health and safety of our employees, maintaining delivery of our services to our clients, cash flow and cost.
While we entered the second quarter at a turbulent moment for the world, we have seen some encouraging signs during the last few months as restrictions and closures eased. However, much uncertainty remains about the duration and long-term implications of the pandemic.
In light of the corona pandemic and uncertainty regarding the profitability of parts of the business, we have initiated a cost savings program. Assessing all parts of the business, we have identified improvement areas that will contribute to the operating result of the business and will enable us to strengthen and accelerate the strategy execution throughout the Group. The program is expected to be executed over the next 12 months and based on our current assessment, the restructuring costs are estimated to be in the range of MSEK 350-500 and will be recognized over the course of the next 4 quarters as items affecting comparability. The payback period is about 2 years and the savings will have a positive impact starting in the fourth quarter 2020.
This has been a very challenging period for our clients and our people but our leaders and teams have been working relentlessly and the Securitas team has shown incredible resilience. All Securitas team members deserve strong recognition for their leadership and professionalism during these challenging times.
We remain focused on winning in the security services industry with our strong offering of protective services and solutions, while we keep investing in our strategic transformation to emerge as an even stronger company tomorrow.
Chief Executive Officer
PRESENTATION OF THE INTERIM REPORT
Analysts and media are invited to participate in a telephone conference on July 29, 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
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
November 3, 2020, app. 1.00 p.m. (CET) Interim Report January-September 2020
February 4, 2021, 8.00 a.m. (CET) Full Year Report January-December 2020
For further information regarding Securitas IR activities, refer to
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.
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
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 Wednesday, July 29, 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
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