By Agata Rybska
(Reuters) -Core profit at Sweden’s Securitas rose 8% in the first-quarter year on year as expected on Wednesday but a dip in its profit margin in Europe on integration costs and challenges in airport security staffing knocked its share price.
The results were led by its performance in North America while the 5.0% margin it reported in Europe came in below the 5.1% a year ago, sending shares down around 4% by 0800 GMT.
“The margin in the European business actually disappointed and fell year over year, and I think that’s seen a little bit negatively by the market,” Kepler Cheuvreux analyst Johan Eliason said.
The company said it had intensified recruitment and training in its airport security business and was finalising the integration of Stanley Securities.
“We are expecting performance to improve in Q2 as we work through those transitions,” CEO Magnus Ahlqvist said in a call with analysts.
The acquisition of Stanley Security, which the company closed in 2022, has added technology solutions exposure to Securitas’s staff-intensive offering, but put it in significant debt, which the company has been trying to reduce.
Integration of the U.S. electronic security company realised further cost synergies, Ahlqvist said in a statement, although these were partly offset by operational cost increases from the transition.
Ahlqvist added Securitas is on the right path to achieving its target of an 8% operating margin by 2025.
Securitas, one of the world’s biggest security services firms, posted an operating profit before amortisation (EBITA) of 2.36 billion Swedish crowns ($216.95 million).
This was against an analysts forecast of 2.33 billion, a poll published by the company showed, and up from 2.18 billion a year earlier. EBITA margin widened to 6.0% from 5.8%, slightly lagging the 6.1% expected by analysts.
($1 = 10.8781 Swedish crowns)
(Reporting by Agata Rybska; editing by Philippa Fletcher)
