May 6, 2019 / 12:40 PM / a month ago

UPDATE 1-Securitas profit beats forecasts on sales growth, cost control

* Q4 EBITA 1.29 bln SEK vs consensus 1.26 bln

* Q4 organic sales +7 pct vs consensus +4 pct

* Shares outperform wider market

* Says passed on wage costs to customers (Adds detail, background)

STOCKHOLM, May 6 (Reuters) - Sweden’s Securitas, the world’s biggest security services group, reported a slightly larger than forecast rise in first-quarter core profit on Monday, helped by cost control and sales growth across regions.

Operating profit before amortisation at the rival of Britain’s G4S reached 1.29 billion crowns ($135 mln), up from 1.09 billion a year before and slightly above a mean forecast from a Reuters poll of 1.26 billion.

Its margin was roughly unchanged.

Securitas, whose output costs consist mainly of wages for its around 300,000 employees, is pushing to grow electronic surveillance as a share of turnover, partly to reduce exposure to wage inflation.

It said price hikes fully compensated for wage cost increases in the quarter.

Electronic security sales grew by 17 percent in the period, it said, to now represent 21 percent of group turnover.

“The operating conditions are similar to 2018 and we have good momentum,” Chief Executive Magnus Ahlqvist said.

Organic sales growth unexpectedly accelerated to 7 percent from 6 percent, against a predicted slowdown to 4 percent.

In North America however, Securitas said, organic growth slowed, and a few large client contracts were terminated towards the end of the quarter.

Shares in Securitas, whose services range from manned guarding and alarm surveillance to airport security, were down 1.1 percent at 1148 GMT, performing slightly better than the overall market in Stockholm.

Ahlqvist, who became CEO last year, unveiled programmes in February to modernise Securitas’ global IT platform and to cut costs to boost margins in North America in the coming years.

Several analysts lowered their ratings on Securitas after that news, as concerns grew about cash flow due to the heavy investments. Shares have however since risen to all-time highs.

“Operating and free cash flow improved compared with the same quarter last year but cash management remains an area of focus across all business segments,” Ahlqvist said on Monday.

$1 = 9.5800 Swedish crowns Reporting by Anna Ringstrom; Editing by Helena Soderpalm and Jan Harvey

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