SCTBY - Securitas AB (publ) (SCTBF) Q4 2023 Earnings Call Transcript
2024-02-07 23:13:03 ET
Securitas AB (publ) (SCTBF)
Q4 2023 Earnings Conference Call
February 7, 2024 03:30 ET
Company Participants
Magnus Ahlqvist - Chief Executive Officer
Andreas Lindback - Chief Financial Officer
Conference Call Participants
Annelies Vermeulen - Morgan Stanley
Johan Eliason - Kepler Cheuvreux
Andrew Grobler - BNP Paribas
Raymond Ke - Nordea
Allen Wells - Jefferies
Stefan Knutsson - ABG Sundal Collier
Karl-Johan Bonnevier - DNB Markets
Viktor Lindeberg - Carnegie
Suhasini Varanasi - Goldman Sachs
Presentation
Magnus Ahlqvist
Good morning, everyone and a warm welcome to the Q4 and the Full Year 2023 Update. We have delivered decent results in the quarter, and strong cash flows and margin improvement from technology and solutions are two clear highlights of the quarter. We recorded 6% organic sales growth. In services, the price increases were the main driver of the growth, but we also had volume coming from the aviation business.
The growth in technology and solutions was 6%. The operating margin improved to 6.8% in the fourth quarter, and all 3 business segments contributed. And the technology and solutions business line was the main driver of the margin improvements. We have balanced price wage in the group for the full year. And similar to the previous quarter, I would say that we have seen some improvement in the labor market.
The operating cash flow was 166% in the quarter and 80% for the full year, and with SEK5 billion of free cash flow in combination with favorable FX development, contributed to solid deleveraging. And as we guided for – in 2022, we had planned to achieve a net debt-to-EBITDA ratio of less than 3 in 2024, and we are now in line with this target 1 year early.
The integration of STANLEY is progressing well. And with our greatly enhanced offering, we are seeing strong interest from existing and also potential clients. The dividend proposal of SEK3.80 represents a 10% increase versus last year, and 47% of net income when excluding the capital loss from Argentina.
So with that, let us shift the focus to the performance in the business lines. And the growth in Securitas services was 5%. And as commented earlier, this growth is mainly driven by price increases and volume growth in the aviation segment. The EBITA margin of 4.9% represents a slight decline versus the previous quarter, and the price wage balance and active portfolio management helped the margin. But the Securitas Critical Infrastructure business, which is reported in other, had a significant negative impact on the margin in the quarter due to a poor performing contract. But this is being addressed and they are expecting an improvement during Q1.
The European services margin was below our plans, but we expect improvement going forward based on the actions initiated by our European leaders. The 9% real sales growth in technology and solutions – sorry, the real sales growth in technology and solutions was 6% in the quarter and 9% for the full year. And we have continued robust order intake and backlog for our installations business....
Securitas AB (publ) (SCTBF) Q4 2023 Earnings Call Transcript