- Total sales MSEK 26 477 (28 257)
- Organic sales growth 1 percent (2)
- Operating income before amortization MSEK 1 404 (1 497)
- Operating margin 5.3 percent (5.3)
- Items affecting comparability (IAC) MSEK –422 (–83), relating to transformation programs and the cost-savings program in the Group
- Earnings per share SEK 1.45 (2.38)
- Earnings per share, before IAC, SEK 2.38 (2.54)
- Cash flow from operating activities 109 percent (124)
- Total sales MSEK 107 954 (110 899)
- Organic sales growth 0 percent (4)
- Operating income before amortization MSEK 4 892 (5 738)
- Operating margin 4.5 percent (5.2)
- Items affecting comparability (IAC) MSEK –640 (–209), relating to transformation programs and the cost-savings program in the Group
- Earnings per share SEK 6.63 (9.20)
- Earnings per share, before IAC, SEK 8.02 (9.61)
- Net debt/EBITDA 2.1 (2.2)
- Cash flow from operating activities 147 percent (85)
- Proposed dividend for 2020 of SEK 4.00 (4.80) per share
- Launch of business transformation program in Europe and Ibero-America
Comments from the President and CEO
The Group continued to show resilience in the face of the ongoing corona pandemic and ended this challenging year with positive organic sales growth of 1 percent (2) in the fourth quarter, driven by Security Services North America. The negative impact of the corona pandemic on the airport security business remains to be significant, primarily in Security Services Europe. Increased extra sales, focus on helping our clients with their security needs related to the corona pandemic, have offset some of the corona-related sales reductions in the contract portfolio. Organic sales growth for the full year was 0 percent (4).
Security solutions and electronic security sales was 22 percent (22) of total Group sales in the fourth quarter. The installation business within electronic security was negatively impacted by the corona pandemic throughout the year.
The Group’s operating margin in the fourth quarter was on par with the preceding year at 5.3 percent (5.3). For the full year the operating margin was 4.5 percent (5.2), negatively impacted by the corona 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.
The operating result, adjusted for changes in exchange rates, increased by 4 percent in the fourth quarter while it declined by 10 percent over the full year.
The Group delivered a strong cash flow during the year, even when excluding the effects of corona-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 (4.40) per share which was resolved by an EGM in December.
Taking the next steps
At the beginning of the pandemic, we set an ambition to come out of this challenging period stronger and more focused. The corona 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 programs and took several actions to improve our focus and profitability.
In 2020 we initiated a cost-savings program in the Group, addressing profitability in parts of our business impacted by the corona 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 finalize the program 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 progressing well and are expected to be finalized according to plan by the end of 2021, in line with achieving the financial benefits of the programs by 2022. We are now taking the next major step by launching a business transformation program in our two other segments – 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. We will be able to benefit more from our scale and from common ways of working. These programs are driven by our strong ambition to change the business mix and to improve our margins.
During 2020, we acquired electronic security companies in eight focus markets. The integration of the five companies acquired from Stanley is progressing well and in December we announced the acquisition of the high-quality FE Moran business in the US. These acquisitions will greatly enhance our offering to our clients and contribute to our ambition to double our security solutions and electronic security business.
We have decided to leave 11 smaller countries where we deem the current and future business opportunities to be limited. We have by now already exited or are close to exiting from nine countries and expect this to be finalized by mid 2021.While we continue to face high-level of uncertainty related to the corona pandemic at the beginning of 2021, we enter the year stronger and more focused and with a clear agenda for pursuing the next steps of our transformation.
President and CEO