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UPDATE 1-Securitas posts surprise profit fall as Spanish costs weigh
May 5, 2014 / 11:46 AM / 4 years ago

UPDATE 1-Securitas posts surprise profit fall as Spanish costs weigh

* Q1 EBITA 738 mln SEK vs forecast 770 mln

* Says hit by higher labour costs in Spain

* Says U.S. recovery gaining traction

* Q1 organic sales growth 2 pct vs forecast 1 pct (Adds detail, background, share price)

STOCKHOLM, May 5 (Reuters) - Securitas, the world’s second-biggest security group, posted a surprise fall in first-quarter core earnings, hit by higher labour costs in Spain, but said the U.S. market was showing signs of recovery.

The Swedish company, a rival of market leader G4S, said on Monday it had been hit by new labour-related taxes introduced in Spain at the end of last year, while it had also been forced to cut prices as it renewed some contracts there.

Operating profit before amortisation fell to 738 million Swedish crowns ($113 million) from 749 million in the same period last year, short of a forecast in a Reuters poll of analysts for profit to increase to 770 million.

The company does not release figures for sales in Spain alone, but said difficult market conditions in what is one of its biggest markets had weighed in the quarter. Shares in the company were down 1.3 percent by 1122 GMT.

Securitas hires out guards and surveillance systems in 52 countries across the globe, but makes more than half of its sales in Europe where a recession stemming from the region’s debt crisis has hit demand in recent years.

The company said that while Spain remained weak, the French security market had pulled out of decline, while a U.S. recovery was showing signs of gaining traction and demand in Latin America remained strong.

The company said sales grew 2 percent year-on-year on an organic basis, which strips out the impact of currency swings and acquisitions, coming in ahead of a mean forecast for a 1 percent expansion in the quarter.

$1 = 6.5136 Swedish Crowns Editing by Mark Potter

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