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Investing.com -- Shares of Securitas AB (STO:SECU-B) climbed 4% following the announcement of the company’s fourth quarter financial results, which were largely in line with expectations.
The security firm reported a slight exceedance in adjusted EBITA and a marginal shortfall in adjusted EPS compared to consensus estimates. The company also showcased robust free cash flow generation, despite a deceleration in organic growth to 4%, which was slightly below the consensus of 4.3%.
Securitas AB’s organic growth for the fourth quarter matched Jefferies’ forecast of 4.0% but showed a sequential slowdown from the 4.6% growth in the third quarter. The group’s revenue reached SEK 41,794 million, aligning with consensus projections of SEK 41,474 million.
Adjusted EBITA for the quarter was reported at SEK 3,036 million, consistent with the consensus of SEK 3,003 million, and the adjusted EBITA margin increased by approximately 50 basis points year-over-year (YoY), primarily due to improvements in the European market.
The company’s financials benefited from strong performance in the European and North American markets, with the North American margin meeting consensus and the European margin slightly underperforming expectations. Technology margins were also favorable, contributing to the overall positive results.
Securitas AB’s free cash flow (FCF) for the quarter was notably strong at SEK 3.66 billion, surpassing both the consensus estimate of SEK 3.1 billion and Jefferies’ expectation of SEK 2.8 billion. This led to a year-end FCF of SEK 5.0 billion, a 3% increase YoY, with operating cash conversion at 84%, exceeding the target range of 70-80%. The proposed dividend saw an 18% YoY increase to SEK 4.5 per share.
Despite limited new forward guidance, the company has stated its intent to divest further, including a put option on its French airport security business, and reiterated its target of an 8% margin by the end of 2025.
A quote from Jefferies analysts encapsulates the sentiment: "Overall result look solid, but must be paired against strong shares price movement in recent weeks." This suggests that while the results are robust, they should be considered in the context of the recent performance of Securitas AB’s stock.
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