Conversely, this environment has allowed the company to improve its cost structure and achieve its highest operating margin in twenty years. This development was notably highlighted by President and CEO Magnus Ahlqvist at the beginning of his annual letter to shareholders.
Continuing this providential monetary theme, cash generation has been supercharged while net debt and interest expenses have fallen sharply - as 2/3 of Securitas' borrowings are denominated in dollars. This has resulted in a sudden and notable improvement in group solvency ratios.
As the group simultaneously announced it has nearly concluded the strategic review of its underperforming contracts, it remains uncertain whether this momentum will be sustainable should currency dynamics reverse once again.
This has not caught the market off guard, however, as investors continue to value Securitas more or less in line with its historical multiples.
The Swedish company's priority remains increasing the share of its technology segment - namely remote alarm and video surveillance services - which currently represents about 1/3 of consolidated revenue, but where margins are twice as high as in traditional security services.
In 2022 this transition was accelerated by the acquisition of Stanley Security (formerly a Stanley Black & Decker subsidiary). The corollary was a pronounced expansion in the number of shares outstanding following the capital increase used to finance the acquisition.
As MarketScreener noted last year in Securitas is testing its shareholders' patience, this explains why EPS has failed to keep pace with the very real growth in business.
