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Investing.com -- Shares of Securitas (STO:SECU-B) fell 7.5% as the company reported sales and adjusted EBITA that missed analyst expectations.
The security services firm disclosed its financial results, showing sales of SEK 39.606 billion, which fell short of consensus estimates of SEK 40.868 billion. The adjusted EBITA also came in lower at SEK 2,525 million against the consensus of SEK 2,590 million.
The company’s organic revenue growth was reported at 3%, below the consensus forecasts of 3.7% and 3.2%, respectively, and a decline from 4% in the previous quarter. By region, Europe saw a 4% increase, North America 3%, and Ibero-America 3%, all falling short of forecasts. Notably, North America’s slower growth in Technology/Solutions was highlighted, with price increases contributing predominantly to the group’s organic growth.
Securitas also reported a marginally higher EBITA margin of 6.4%, slightly above the consensus of 6.3%, representing a 40 basis point improvement YoY. However, the company’s ’other’ segment reported a loss greater than expected, primarily due to a contract loss within Securitas Critical Infrastructure Services during the first quarter.
Free cash flow (FCF) was notably negative at SEK -1,048 million, driven by a working capital outflow of SEK 2,450 million and operating cash conversion standing at just 1%, a stark contrast to the strong conversion of 153% in the previous quarter. The company’s net debt saw a marginal decrease from SEK 37.9 billion in the fourth quarter to SEK 37.3 billion.
In terms of outlook, Securitas provided limited guidance but noted that it has not yet seen a macroeconomic impact and remains committed to achieving its target of an 8% margin by the end of 2025.
RBC commented on the results, stating, "Whilst the business should be relatively defensive in the current environment, we continue to believe SECUB needs to deliver sustainably stronger FCF and ROIC to generate a re-rating from here. We continue to see better value elsewhere in the sector at present."
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