After a difficult year in 2011, I sense optimism when entering 2012, in spite of an instable and unpredictable macro economic environment. That is Alf Göransson, President and Chief Executive Officer of Securitas, on the multi-national security company, from the firm’s 2011 report. Securitas CEO Alf Göransson also said:
The organic sales growth in 2011 was 3 percent, and including acquisitions the real sales growth reached 11 percent. We have made 19 major acquisitions with annual sales of BSEK 4.5 and strengthened our presence in the United Kingdom,Belgium, Eastern Europe, in the government sector in the US and in various high growth markets in Latin America. We have also grown in the technology area and in the consulting and investigation market. The sales growth of 11 percent was the highest since 2002 but has strained the cash flow mainly due to working capital needs, but also due to the decrease in earnings compared to last year and a slight increase in Days of Sales Outstanding (DSO). In 2012 we will be restrictive on acquisitions until we have restored the financial target of free cash flow to net debt of 0.20.
The fourth quarter operating margin was burdened by further restructuring measures in Europe, in order to reduce the indirect cost base for 2012, and by full year adjustments and increases of payroll related taxes in the US as well as start up costs related to the large airport contract we have won in Canada. For the full year of 2011, the lower operating margin was primarily due to dilution from acquisitions, the loss of a few major contracts inEuropeand the discrepancy between wage costs and price increases.
During 2011 we have grown substantially by acquisitions and taken significant restructuring and integration costs which we will benefit from in 2012. We are investing in new solutions and technology resources to bring added value to our customers, and at the same time we have reduced the overhead costs.