Securitas “continuing to show resilience” during global pandemic
04 February 2021
ACCORDING TO the set of 2020 financials just issued by Securitas, the business has “continued to show resilience” in the face of the ongoing corona pandemic, duly ending a “challenging year” by posting positive organic sales growth of 1% in the fourth quarter, driven largely by its Security Services operation in North America.
However, the negative impact of the COVID-19 pandemic on the airport security business “remains significant” (primarily in Security Services Europe). That said, increased extra sales and a focus on helping clients with their security needs related to the Coronavirus outbreak have offset some of the COVID-related sales reductions in the contract portfolio.
Security solutions and electronic security sales represented 22% of total Group sales in Q4. The installation business within electronic security was “negatively impacted” by the Coronavirus pandemic throughout the year.
The Group’s operating margin in the fourth quarter was on par with the preceding year at 5.3%. For the full year, the operating margin was 4.5%, negatively impacted by the pandemic and the related increased provisioning to reflect the enhanced risk in the business environment.
The negative impact was partly offset by cost-saving actions and Government grants mostly as a compensation for temporary unemployment costs. The price and wage balance was on par in the year.
Adjusted for changes in exchange rates, the operating result increased by 4% in the fourth quarter, while it declined by 10% over the full year. The Group delivered a “strong cash flow” during the year, even when excluding the effects of COVID-related Government support measures.
Supported by the Group’s improving financial performance and solid financial position, the Board of Directors decided to reinstate the dividend proposal for 2019 of SEK 4.80 per share which was resolved by an EGM in December.
Securitas president and CEO Magnus Ahlqvist commented: “At the beginning of the pandemic, we set an ambition to come out of this challenging period stronger and more focused. The COVID-19 pandemic presented all of us with an unprecedented challenge in 2020, but the Securitas team faced this demanding situation with great resilience and agility. During 2020, we executed on our transformation programmes and took several actions to improve our focus and profitability.”
Ahlqvist continued: “In 2020, we initiated a cost-saving programme in the Group, addressing profitability in parts of our business impacted by the pandemic. We previously estimated a range of restructuring costs of MSEK 350-500 with a payback period of two years. The first savings began to have an impact in the fourth quarter and will gradually increase going forward. The final amount of restructuring will largely depend on changes related to Government grants and the performance of the airport security business. We expect to finalise the programme at the end of the second quarter of 2021.”
The business transformation in North America and the global IS/IT transformation initiated in 2019 are, according to Ahlqvist, progressing well and are expected to be finalised according to plan by the end of 2021, in line with achieving the financial benefits of the programmes by 2022.
“We are now taking the next major step by launching a business transformation programme in our two other segments, namely Europe and Ibero-America. These activities represent significant investments in the execution of our strategy and we expect to see important benefits as a result. We will enhance the value proposition to our clients and our people and be able to benefit more from our scale and from common ways of working. These programmes are driven by our strong ambition to change the business mix and improve our margins.”
During 2020, Securitas acquired electronic security companies in eight focus markets. “The integration of the five companies acquired from Stanley is progressing well,” observed Ahlqvist, “and in December we announced the acquisition of the high-quality FE Moran business in the US. These acquisitions will greatly enhance our offer to our clients and contribute towards our ambition of doubling our security solutions and electronic security business.”
Securitas has decided to vacate 11 smaller countries where the company deems both current and future business opportunities to be limited. The company has already exited (or is close to exiting) nine countries and expects this process to be finalised by the middle of the year.
“While we continue to face high levels of uncertainty related to the Coronavirus pandemic at the beginning of 2021,” concluded Ahlqvist, “we enter the year stronger and more focused and with a clear agenda for pursuing the next steps of our transformation.”
Financials in full
*Total sales: MSEK 26,477
*Organic sales growth: 1%
*Operating income before amortisation: MSEK 1,404
*Operating margin: 5.3%
*Earnings per share: SEK 1.45
*Cash flow from operating activities: 109%
*Total sales: MSEK 107,954
*Organic sales growth: 0%
*Operating income before amortisation: MSEK 4,892
*Operating margin: 4.5%
*Earnings per share: SEK 6.63
*Net debt/EBITDA: 2.1
*Cash flow from operating activities: 147%
*Proposed dividend for 2020: SEK 4.00 per share