Securitas quarterly core profit up 7%, wider margins boost shares

By Agnieszka Olenska and Jesus Calero

(Reuters) -Sweden's Securitas reported a near 7% rise in second-quarter core profit on Tuesday, driven by a strong performance in its technology business and improved margins in Europe.

Its shares rose nearly 6% to 116.55 Swedish crowns following the earnings release, their highest intra-day price since December 2021 and among the best performers on the European benchmark STOXX 600 index.

Kepler Cheuvreux analyst Johan Eliason said the year-on-year improvement in European margins - to 6.4% from 5.9% - puts the company back on track after a disappointing performance in the first quarter.

Securitas' earnings before interest, tax and amortisation (EBITA) were 2.80 billion Swedish crowns ($259.6 million) in the quarter, up from 2.62 billion a year earlier and broadly in line with an average analyst forecast of 2.77 billion crowns in a poll provided by the company.

The group, one of the world's largest security services providers, added it was on the right track to achieve its target of an 8% operating margin by 2025.

With the 2022 acquisition of Stanley Security - which came with a significant debt the company has been seeking to reduce in recent quarters - Securitas is gradually transforming from its highly labour-intensive manned guarding model to a more technology-intensive business.

"Two years after the acquisition our global Technology business is stronger than ever before," Securitas said in a statement.

Organic sales in the technology business grew 8% in the second quarter, contributing to 5% organic growth at the group level, above expectations.

Securitas said operating cash flow improved after a weak first quarter, paving the way for a strong full-year performance in 2024, with analysts at Jefferies noting that that should also ease some concerns.

($1 = 10.7861 Swedish crowns)

(Reporting by Agnieszka Olenska and Jesus Calero in Gdansk; Editing by Milla Nissi, Kirsten Donovan)