Securitas profits lower than expected

Security company Securitas posted profits way below market expectations on Tuesday, causing its share price on Stockholm Stock Exchange to fall.

Potential buyers are circling the company’s cash handling operations, which have been the subject of a number of violent robberies, both in Sweden and Britain.

Securitas’ pre-tax profits for the first quarter were 824 million kronor, up from 818 million kronor for the first three months of 2005. Analysts had expected significantly better, though, with Reuters’ survey suggesting an average profit prediction of 948 million.

The group’s European operations, particularly within airport security, are seen as a problem child. Reduced prices and lost contracts have hit margins in this division, but Securitas says that fortunes will improve as the year progresses.

It was not all bad news for Securitas: turnover for the company was somewhat better than analysts had expected, at 17.1 billion kronor, compared to 15.2 billion a year ago.

Organic growth – the increase in turnover once exchange rate fluctuations and sales and acquisitions have been discounted – was 6 percent. Improvement was seen across all divisions.

“We are on the right track,” said CEO Thomas Berglund as he presented the report.

The company’s main goal now is to complete the creation of the group’s three new listed companies: Securitas Systems, Securitas Direct and Loomis Cash Handling Services.

The plan is to list the companies, currently divisions within Securitas, in the fall. However, Securitas revealed on Tuesday that it could sell off Cash Handling Services entirely.

The company says it has received “expressions of interest” in the robbery-hit division from venture capitalists and competitors.

“We will know within the next six weeks whether we will continue with the listing plans, or whether we will do something else,” said Berglund.

The CEO said he expected continued strong organic growth during the rest of 2006, and better year-end results. The stock market was unimpressed, however, and Securitas shares fell somewhat in morning trading in Stockholm.