In This Article:
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Organic Sales Growth: 5% for the group in Q3.
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Operating Margin: Improved by 60 basis points to 7.5%, the highest in 20 years.
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Operating Cash Flow: 115% of the operating result in Q3.
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EBITDA Margin: 6.6%, a significant improvement from last year.
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North America Organic Growth: 3% in Q3.
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Europe Organic Sales Growth: 7% in Q3.
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Ibero-America Organic Sales Growth: 5% in Q3.
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Net Debt to EBITDA: Reduced to 2.7 from 3.1 last year.
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Free Cash Flow: SEK2.3 billion in Q3.
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Client Retention Rate: 87% in North America, 92% in Europe and Ibero-America.
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EPS Real Change: 24% increase, excluding items affecting comparability.
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Tax Rate Forecast: 26.3% for the full year.
Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Securitas AB (SCTBF) reported a 5% organic sales growth for the group and a 6% real sales growth in technology and solutions.
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The operating margin improved by 60 basis points to 7.5%, marking the highest margin recorded for the group in the last 20 years.
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Strong performance in Europe, with a 7% organic sales growth and a 7.7% operating margin, driven by improvements in security services.
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Operating cash flow was significantly improved at 115% of the operating result, contributing to a better leverage position.
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The company is making steady progress in its strategic transformation, aiming for an 8% operating margin by the end of 2025.
Negative Points
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North America's performance was slightly below last year, impacted by the termination of an aviation contract.
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The technology business in North America faced negative cost developments after the completed carve-out, affecting margins.
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Pinkerton's performance was weak due to modernization efforts, negatively impacting profitability.
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The operating margin within technology and solutions was slightly below last year due to negative cost developments.
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Items affecting comparability included a SEK697 million charge, with SEK536 million related to the Paragon US government investigation.
Q & A Highlights
Q: Can you elaborate on the margin bridge towards the 8% target and any changes in components driving margin accretion? A: Magnus Ahlqvist, CEO: We are making steady progress with no significant changes in the relative importance of components. We are executing the plan built, managing different dynamics as they arise.
Q: What is the nature of the strong free cash flow in the quarter? Is it timing or structural changes? A: Andreas Lindback, CFO: The strong free cash flow is due to solid performance with no major timing differences. The net working capital as a percentage of sales remains stable, supported by reduced growth.