The operating margin narrowed to 3.8% from 5.3% in the previous quarter, but organic sales rose 2% from a year earlier.
- Total sales MSEK 28 420 (26 744).
- Organic sales growth 2 percent (7).
- Operating income before amortization MSEK 1 086 (1 290).
- Operating margin 3.8 percent (4.8).
- Items affecting comparability (IAC) MSEK –45 (–20), relating to IS/IT transformation programs.
- Earnings per share SEK 1.61 (2.08).
- Earnings per share, before IAC, SEK 1.70 (2.12).
- Net debt/EBITDA 2.4 (2.8).
- Cash flow from operating activities 34 percent (–5).
- Dividend proposal withdrawn, may consider a new dividend proposal later this year.
- Significant impact and uncertainty related to the COVID-19 pandemic.
Comments from the President and CEO
The Group delivered organic sales growth in the first quarter of 2 percent (7). Organic sales growth declined in all business segments due to the extraordinary situation of the corona pandemic which started to affect our business in the beginning of March and increasingly throughout the month. Our business segment Security Services Europe was most impacted, mainly driven by a rapid decline in activity in the aviation business.
Security services are considered essential services in most countries. We have been able to respond quickly to our clients’ demands by leveraging our strong range of protective services through our global and local footprint. We protect critical activities and supply chains required to handle the pandemic, including increased activity levels at hospitals and protection of facilities.
Security solutions and electronic security grew by 10 percent in the first quarter to represent 22 percent of total Group sales. We are currently not prioritizing acquisitions but we intend to return to our previous acquisition approach when the situation normalizes.
The operating margin in the first quarter was 3.8 percent (4.8), a decline deriving from all business segments but the main impact from Security Services Europe. The price and wage balance was on par in the first quarter and retaining that balance is a key focus area in 2020.
The operating result, adjusted for changes in exchange rates, declined by 19 percent. Earnings per share, before items affecting comparability, amounted to SEK 1.70 (2.12).
We delivered a good cash flow in the first quarter and our strong focus on cash management remains a key priority across all business segments.
Focus during a challenging period
Our current focus is on four priorities: the health and safety of our employees, maintain delivery of our services to our clients, cash flow and cost.
Securitas leaders and employees have demonstrated tremendous strength in maintaining business continuity, swiftly mobilizing resources to meet critical client demands. We are working relentlessly to adapt our way of working to minimize the risk of spreading of the virus and to secure protective equipment. To protect our strong financial position, we have taken a number of cash measures. We have also signed a new revolving 5-year credit facility used to replace the existing one. We are closely managing costs and continuously assessing how to adjust the business.
10 000 of our employees across the business are currently on a temporary unemployment scheme.
We continue to drive the strategic transformation programs despite the currently challenging conditions. Driving digitization and modernization is critical to enhance our offering and value creation in the future.
Looking ahead, we face significant uncertainty related to the corona pandemic. We are assessing different scenarios to ensure preparedness. We will continue to implement proactive measures to mitigate the impacts, and will take action as deemed necessary.
We are working closely with our clients to support them in re-starting their operations.
This is critical work not only for our clients but for many economies, people and society at large.
Chief Executive Officer