May 4, 2011
January – March 2011
Alf Göransson, President and CEO Interim Report January-March 2011
Highlights Q1
•
The positive organic sales trend from Q4 2010 continued in Q1 2011
• •
The security market in North America recovering well. In Europe, the price pressure is high and contract losses exceptional
• •
Organic sales growth 3% (-1), real sales growth including acquisitions 10%
Operating margin 4.8% (5.5)
8 major acquisitions in 2011, adding approximately MSEK 2,700 in sales and 14,500 employees
Interim Report January-March 2011
Financial Highlights
MSEK
Q1 2011
Sales
14,775
14,870
3
-1
1
10
1
5
Operating income before amortization
712
818
Operating margin, %
4.8
5.5
6.1
-3
5
6
527
643
-9
1
Net income
370
450
-18
2,081
-2
Earnings per share (SEK)
1.01
1.24
-19
5.71
-2
Organic sales growth, % Real sales growth, incl. acq. %
Real change, % Income before taxes Real change, %
Interim Report January-March 2011
Q1 Total 2010 change % -1
-13
-18
FY Total 2010 change % 61,340
3,724
2,968
-2
-1
-2
5
3
Security Services North America – Sales Development Q1 •
Improved organic sales growth 4% (-5)
•
The sales of specialized solutions as percentage of total sales has increased in the quarter
Interim Report January-March 2011
4
Security Services North America – Income Development Q1 •
The operating margin 5.3% (5.4)
•
The operating margin in the core business flat
•
The consolidation of Paragon Systems had a diluting impact of -0.1 percent in the quarter The real change improvement was 8% in the first quarter
Interim Report January-March 2011
5
Security Services Europe – Sales Development Q1 • Organic sales growth 1% (1) • Most countries had positive organic sales growth and Spain is no longer negative • As reported in 2010, two major contracts were lost in Q1 with an annual impact of -2 percent on organic sales growth • Another major contract, worth 36 MEUR with the European Commission, was lost as of April 1 • The price pressure in the security market remains difficult
Interim Report January-March 2011
6
Security Services Europe – Income Development Q1 • •
Operating margin 4.2% (5.2*) The negative development is explained by - The loss of major contracts with higher than average margins and inefficiencies and redundancy costs, in total -0.3 percent - The acquisition of Reliance diluting by -0.3 percent - Discrepancies between price and wage cost increases of -0.4 percent The remedy is to continue with the specialization and added value strategy, to prioritize profitability when managing the price/wage balance and reduce overhead costs where major contracts are lost
* Restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring.
Interim Report January-March 2011
7
Mobile and Monitoring – Sales Development Q1 • Organic sales growth 2% (2) • In Mobile, positive organic sales growth in most countries. • Most countries in the Monitoring operation had positive organic sales growth
Interim Report January-March 2011
8
Mobile and Monitoring – Income Development Q1 • Operating margin 10.4% (11.4*) • The operating margin in Mobile negatively affected by fewer call outs and increased fuel costs • In Monitoring, the operating margin was affected by restructuring costs in Belgium and Spain due to the negative sales growth
* Restated due to operations moved between the segments Security Services Europe and Mobile and Monitoring.
Interim Report January-March 2011
9
Cash flow
MSEK
Q1 2011
Q1 2010
FY 2010
FY 2009
712
818
3,724
3,756
-217
-221
-902
-951
219
228
901
928
Change in accounts receivable
-258
-291
-769
198
Change in other operating capital employed
-647
185
313
-556
Cash flow from operating activities
-191
719
3,267
3,375
Cash flow from operating activities, %
-27
88
88
90
Financial income and expenses paid
-61
-86
-521
-482
Current taxes paid
-109
-109
-735
-728
Free cash flow
-361
524
2,011
2,165
As % of adjusted income
-78
101
81
88
Free cash flow to net debt
0.13
0.35
0.24
0.26
Operating income before amortization Investments in non-current tangible and intangible assets Reversal of depreciation
Interim Report January-March 2011
10
Net Debt Development
MSEK Net debt January 1, 2011 Free cash flow
-361
Acquisitions
-137
IAC payments Change in net debt Translation and revaluation Net debt March 31, 2011 Interim Report January-March 2010 2011
-8,209
-7 -505 330 -8,384 11
Summary Q1
• The security market is recovering, organic sales growth 3% (-1) • Real sales growth including acquisitions 10% • Operating margin 4.8% (5.5), negatively affected by the margin development in Security Services Europe and Mobile and Monitoring • 8 major acquisitions in 2011, adding app. MSEK 2,700 in sales and 14,500 employees • Securitas has operations in 45 countries with 280,000 employees and targets to be in 60 countries within 3 years
Interim Report January-March 2011
12
How to improve EPS 10% in average annually?
Organic sales growth
Interim Report January-March 2011
Acquisitions
Improving the operating margin
13
How to improve EPS 10% in average annually?
Manage the machine Booming
Recession
+ Leverage
+ Cut costs
- Unbilled
+ Unbilled
+ Pricing
- Volume chase
- Recruitment
- Bad debt
+ Inflation
+ Acquisitions
Interim Report January-March 2011
Improve the operating margin year on year
Develop the core business • Focus on security / specialization and segmentation • Add value • Solutions, technology and innovations
14
Solution – One partner to manage and deliver a complete Security Program Physical Security Solutions
Customizing a solution that meets Client’s needs
Technology Solutions Security
Interim Report January-March 2011
Consulting & Investigation Solutions
15
Questions and Answers
Interim Report January-March 2011
Integrity | Vigilance | Helpfulness
securitas.com Interim Report January-March 2010 2011
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