Securitas to close government business in SCIS after solid Q2 results

Investing.com -- Securitas AB (STO:SECUB) on Wednesday reported solid second-quarter results with adjusted EBITA approximately 2% ahead of consensus and adjusted EPS in line with expectations.

The security services company posted organic growth of 5% in Q2, exceeding consensus estimates of 3.6% and showing acceleration from Q1’s 3% growth. This growth was largely driven by pricing and some improvement in the European airport business.

Group revenue reached SEK38,564 million, about 1% below consensus of SEK39,059 million, primarily due to foreign exchange headwinds of -9%.

By region, North America delivered 7% organic growth (versus 4% consensus), Europe achieved 5% (versus 4% consensus), while Ibero America posted 2% (versus 3% consensus). Technology Solutions growth slowed to 4% from 6-7% in previous quarters.

Adjusted EBITA came in at SEK2,798 million, exceeding consensus of SEK2,754 million, with margins improving to 7.3% (versus 7.1% consensus), up 40 basis points year-over-year.

North America margins reached 9.6%, Europe 6.9%, and Ibero America 7.5%, while Technology margins improved 60 basis points to 11.0%.

Adjusted diluted EPS was SEK2.79, broadly in line with consensus of SEK2.78, while reported EPS matched consensus at SEK2.56.

Free cash flow generation was strong at SEK2,191 million, a 500% year-over-year increase and significantly ahead of the SEK840 million consensus. This left first-half free cash flow at a positive SEK1,143 million compared to negative SEK930 million in the first half of 2024.

In a significant development, Securitas announced it will close down its government business in SCIS (representing 5% of group revenues) rather than sell it as originally planned.

The closure is expected to be 20 basis points accretive to margins with approximately SEK150 million in one-off costs, but broadly cash neutral due to working capital benefits. Completion is expected by the end of 2026.

The company’s net debt to EBITDA ratio improved to 2.4x from 2.5x at the end of fiscal year 2024.

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