Guarding

Securitas on look-out

by msecadm4921

Securitas is on the look-out for companies to buy, the multi-national security contractor has made plain in its 201 annual report. 

 

Alf Göransson, President and Chief Executive Officer of Securitas, said that the company actively seeks out acquisitions of security technology companies; and made a few such acquisitions in 2011. “We attempted to accelerate this process in 2011 by making a public bid for Niscayah (formerly Securitas Systems), but were not successful due to a higher bid by another company. Instead, we are now building our expertise organically, primarily to support and enhance our existing customer portfolio, and adding new areas of competence and customer bases by conducting acquisitions.” Over the past five years, the company has made 76 major acquisitions, including a total of 90,400 employees. In the UK, this has included the guarding arms of Reliance, and Chubb Security Personnel.  

 

Göransson summed up: “Large corporations sometimes tend to focus inwards as they find themselves more interesting than meeting with customers. We work actively to prevent this from happening at Securitas, and by working closely with our customers and developing solutions together, we will show that we are different from other security providers and that all of our more than 300 000 employees make a difference.” 

 

The main challenge in coming years will be to improve operating margin, he said. The decrease in earnings per share in 2011 was disappointing, he admitted, after having reported our best year ever in 2010. He said: “The security services market is mature in most of our areas of operation, with low added value, high price transparency and a fragmented competitive landscape. In many countries, the market is also poorly regulated and has a low barrier to entry. If you are unable to prove your added value in such an environment, the only remaining weapon will be price, which turns services into a commodity with weak profitability as a result.” This has been a theme of previous Securitas reports. He said that the company is convinced that focusing on specialisation rather than diversification will allow the company to break the vicious circle.  

 

As a result of total employee turnover, the security company hires about 100,000 security officers annually, “which requires extremely efficient operational control. In 2011, employee turnover was 44 percent in the USA and 28 percent in Europe”. The report said that the company has conducted employee satisfaction surveys since 2008 and have learned from officers that a key element for them is to respect and be respected. “A number of actions are being taken on local and divisional level to address this.”

 

And hence the company’s “Managing the machine” which entails delivering services to customers ‘through a flat organisational structure based on efficient branch offices’.

 

More than one-third of the firm’s branch offices are organised by customer segment, such as retail or aviation.

 

The market for outsourced security services excluding mobile and monitoring services) in the countries where Security Services Europe operates grew slightly in 2011. Securitas says that it has a strong position in the European market and is the market leader or number two in 18 countries. In 2011, Security Services Europe’s market share was 19 percent. The security market in Europe is still fragmented and most of the companies are local players. The primary competitors are G4S and [the Spanish firm] Prosegur, but Securitas claims that it has an unrivalled footprint in Europe, serving customers from Finland to Portugal and from Ireland to Turkey.

 

According to the report, the global security services market employs several million people and has annual sales of more than 80 billion US dollars. In the long term, the industry is expected to grow about 7 percent annually.

 

Besides general economic growth, the main driving

forces for growth in the security services industry are said by the company to be:

 

· Increased privatisation. “Many countries choose to outsource their security services needs to private actors. This is done to control or reduce public spending and, sometimes, to open the market for competition due to political decisions.”

 

· Continued industrialisation. “Increased industrial activity leads to investments in factories, offices and other workplaces that all have their specific security needs.” 

 

· Increased urbanisation. “Globally, urbanisation leads to a higher population density and greater social differences. This disparity causes social tension and insecurity, creating a need for additional security services.” 

 

· A growing middle class. “In mature markets, to some extent, but particularly in developing markets, more people are leaving poverty to form a growing middle class whose disposable income and net worth are higher. People have

more to protect and can also afford to do so, which fuels demand for security services.” 

 

· Investment in infrastructure. “Investments in real estate, public transport, public logistic hubs and other infrastructure create a need to safeguard these assets, which increases demand for security services.” 

 

You can read the full report at the Securitas website – www.securitas.com

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