Sales of security solutions and technology are gradually increasing, says the President and Chief Executive Officer of multi-national security firm Securitas, Alf Göransson, in an upbeat report on the company’s first nine months of 2014.
He said: “Organic sales growth continued to show a positive trend driven by successful sales efforts and by our strategy of security solutions and technology offerings to our customers. All business segments improved compared to last year and the organic sales growth reached 4 percent in the third quarter. In real terms earnings per share improved with 4 percent in the first nine months. The operating income improved in the quarter as well as in the first nine months compared to last year, even though burdened by difficult market conditions in Spain. A re-organization will be implemented in Spain during the fourth quarter, reallocating resources from traditional guarding operations to security solutions and technology sales efforts and also adapting the structure to the reduced volumes. These actions will likely require a one-off restructuring cost not exceeding 2m euros, which will be recognized in the fourth quarter.
“In 2012, sales of security solutions and technology represented approximately 6 percent of Group sales. We have set a target to triple this share of sales by the end of 2015. We continue to invest in resources within security solutions and technology and the share of sales run rate in the third quarter 2014 was 9.5 percent.”
In the United States, President Obama’s Affordable Care Act (ACA) will come into full force as of January 2015. By mid-October, for about 80 percent of the US total portfolio, either agreements have been made effective as of January 1, 2015 or the contracts are already compliant with the US healthcare reform (ACA). Göransson added: “For the remaining portfolio, the final months of the year will be crucial to determine to what extent the customers will accept the price increase or decide for a security solution and technology alternative. We estimate that the previously expected cost increase of 8–10 percent for the non-compliant contracts will be more in the range of 4–5 percent because of lower wage compensation, which will result in lower guard participation rate than anticipated. Consequently, by mid-October more customers than expected have opted for the price increase rather than security solutions and technology alternatives. We estimate the net organic sales growth effect in Security Services North America coming from the ACA implementation to be approximately 1 percent in 2015.”
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