Securitas AB Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Raymond Ke - Nordea - Analyst : Good morning. A couple of questions from me, starting with the first one on just SCIS. In the margin bridge to 8% that we're all familiar with, you have the strategic assessment there. Is it fair to assume that this refers to SCIS? Or do you see the margin target as feasible even leaving SCIS as it is?

Question: Raymond Ke - Nordea - Analyst : Yes, that's very clear. And then just one other question on -- you're right in the report that you will address the majority of nonperforming contracts in Europe and Ibero-America in the next 12 months. Could you just help us understand, Magnus why it's taken until now to address them? I'm sure there's a reason. Just if you could help us understand what your focus has been until now and why now this has become a bigger priority, so to speak?

Question: Raymond Ke - Nordea - Analyst : That's very helpful. And just a follow-up on that. So it sounds like it's more a matter of maybe execution from your organization here in Europe being maybe a bit slow and stickier rather than, say, contracting client reasons that have been preventing you from addressing it properly up until now. Is that fair to say?

Question: Raymond Ke - Nordea - Analyst : Excellent. Thank you very much for that. I'll get back in line.

Question: Annelies Vermeulen - Morgan Stanley - Analyst : This is Analisa on behalf of Remi. I have a couple of questions, please. So just coming back on the strategic assessment for SCIS. You've said it's included in your margin bridge we calculate around 20 to 30 basis points accretion to operating margin from the divestment. Is that in the right sort of ballpark? If you could quantify a bit more the impact on group margins. And similarly, do you have an idea in mind of what kind of consideration you would hope to receive from a divestment? And then secondly, related to that, would you expect the divestment of SCIS to drive higher one-off costs or impairment charges under our divestment process? And then finally, technology and solutions growth remained a little bit constrained and below your midterm guidance. Could you break that down between price and volume in Q1? And are you still comfortable with the 8% to 10% midterm guidance range? Thank you.

Question: Annelies Vermeulen - Morgan Stanley - Analyst : Thank you. Just a follow-up on the first one. I appreciate you've said you're early in the strategic assessment in terms of your options. But I think you said earlier that you think the business would be better under a different owner. So can we assume that divestment is the ultimate end game and also your preferred option for this business?

Question: Annelies Vermeulen - Morgan Stanley - Analyst : Okay, thank you.

Question: Neil Tyler - Redburn Atlantic - Analyst : Yeah, thank you. Good morning. Two questions on margins again, please. Firstly, if we think about the contributors to the margin improvement in the quarter, both positives and negatives, and without assuming any sort of portfolio changes that have been muted, can you just help us understand how might those puts and takes differ over the remainder of the year? And then equally, beyond '25, assuming you complete the objectives within portfolio optimization and the bank that -- the savings. How should we think about the pace of margin improvement that can be derived purely from organic portfolio mix change and the growth in technology solutions? And then just coming back to Analisa's earlier question on the growth rate there. The bridge talks about high single-digit organic growth, but you're mentioning that -- and that clearly requires commercial synergies from acquisitions. But can you just sort of clarify what is required to reach the 8% exit rate from that component in terms of growth? Thank you

Question: Neil Tyler - Redburn Atlantic - Analyst : Yes. So in terms of the positives and negatives contributing to the 40 basis point margin improvement in the first quarter, can you help us understand how those will stay the same or change over the remainder of the year in terms of the pluses and minuses? Because obviously, you've got drags from from the SCIS business, improvements from year-on-year contribution from the savings programs. And if we think of it in terms of in terms

Question: Neil Tyler - Redburn Atlantic - Analyst : No, that's helpful. But just within that mix change, obviously, crucial to that is the growth in technology. And you mentioned in your earlier remarks, you're rebuilding your go-to-market approach to rebuild the growth momentum there. Can you just -- sorry to dwell on this, but can you just sort of touch a little bit on exactly what you're doing or vaguely what you're doing there to do that?

Question: Neil Tyler - Redburn Atlantic - Analyst : That's very helpful. Thank you. Thanks for that.

Question: Stefan Knutsson - ABG Sundal Collier - Analyst : Morning gentlemen. I just have a follow-up on the Europe profitability uplift, which was impressive here in the quarter. Can you just quantify how much of that was because of a weak comparison last year and how much was from actual underlying improvement?

Question: Stefan Knutsson - ABG Sundal Collier - Analyst : My question referred to Europe as a business area, not the group. And then also follow up on Magnus, I know that you mentioned that you didn't have any large impact from the tariffs. If you look ahead in the technology part, especially, do you see any any issues there with components and such?

Question: Stefan Knutsson - ABG Sundal Collier - Analyst : Okay, thank you very much for the clarification. That was all for me.

Question: Viktor Lindeberg - Carnegie - Analyst : I have a couple. Firstly, looking at the the European contracts, you commented upon them in your initial remarks. And maybe if you could quantify on this improvement potential you see from contract portfolio management that you either target to exit or address in one way or another? Is this a meaningful portion of the total contract base today? Any numbers you could sort of help us to understand where you are underlying in terms of profitability? I guess that's my first question.

Question: Viktor Lindeberg - Carnegie - Analyst : Okay. That's understood. Trying to fetch more numbers then on Europe again, deconsolidation of France airports, 1.5 billion sold in terms of revenue. When exactly is -- did this sort of leave your P&L? And could you help us any on how many bps of margin accretion this could be just on a pro forma basis for Europe, maybe for the full year or at least ballpark numbers to help us look into the second half? .

Question: Viktor Lindeberg - Carnegie - Analyst : Positive as accretive or just positive?

Question: Viktor Lindeberg - Carnegie - Analyst : Got it. And then more numbers from my side, 8% that's the margin ambition you've been very firm on in the past couple of years and also today, 8% by year-end. Just to understand more explicitly what do you mean by 8%? Is this the quarterly expectation or hope for Q4? A stand-alone, pro forma or the run rate pro forma, obviously, going into 2026, just so that we know what your ambitions are and how we should reason about that.

Question: Viktor Lindeberg - Carnegie - Analyst : So it's fair to say that seasonality will help you to get to that number

Question: Viktor Lindeberg - Carnegie - Analyst : Happy --

Question: Viktor Lindeberg - Carnegie - Analyst : Finally from my side, I noted on your annual accounts that you've changed a bit on your provisions on accounts receivables. Do you expect to make any more meaningful provision changes in 2025?

Question: Viktor Lindeberg - Carnegie - Analyst : What was the reason for changing?

Question: Nicole Manion - UBS - Analyst : Just one follow-up, please, on the European margin. Can you maybe give a sense of how far you are through the SEK200 million business optimization program, just looking at the kind of exceptional spend in Q1, that looks like a relatively small proportion of what you've guided to. So is it fair to say that will be back-end weighted this year in terms of the savings? Thanks

Question: Nicole Manion - UBS - Analyst : Great, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 7:30AM, SECUb.ST - Q1 2025 Securitas AB Earnings Call

Question: Sylvia Barker - JPMorgan - Analyst : Hi, morning, everyone. Thanks for taking the questions. Three for me, please. Firstly, just a quick one. Could you give us your wage inflation expectations by region, please? Second one, maybe just a bit of detail around end markets. You said no impact from Paris yet, and I know that your business is very late cycle, but we'll be quite interested to hear your observations on client activity, especially within logistics in the US In automotive in Europe, we have seen a lot of announcements around employee cuts. Is any of that impacting you at this stage or any conversations with customers? And then final question, just another one on provisions actually. So you took a lot of provisions during COVID, not really been able to work out whether any of them have been released or utilized. Can you just remind us what happened to all of the COVID provisions.

Question: Sylvia Barker - JPMorgan - Analyst : Understand. Thanks very much for the answers.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Good morning, Magnus and Andreas. Just a question on the French airport divestment. I think you mentioned something about deferred payment there. Should we expect any additional cash to come in later on? Or what was that comment about?

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Okay. And is that a reasonable model also for potential further divestments to come.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Okay. Good.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 7:30AM, SECUb.ST - Q1 2025 Securitas AB Earnings Call

Question: Karl Green - RBC Capital Markets - Analyst : Yeah, thank you very much. Good morning. Just a question on the impact of the SCIS contract loss. I think you said that, that went in the second half of the first quarter. So -- just wondered what the impact on the other divisions underlying EBIT will be on a full quarter basis. So just some sort of guidance to how we should expect that other line to trend. And then the second question, just in terms of the European portfolio optimization. Just wondered if you could comment about the speed at which you're going to be able to eliminate any stranded costs and your process for dealing with that. Thank you very much.

Question: Karl Green - RBC Capital Markets - Analyst : That's helpful, thank you.