APRIL–JUNE 2012: Total sales MSEK 16 969 (15 628); Organic sales growth 0 percent (3); Operating margin 4.3 percent (4.8); Earnings per share SEK 0.92 (1.01). JANUARY–JUNE 2012: Total sales MSEK 33 234 (30 403); Organic sales growth 1 percent (3); Operating margin 4.4 percent (4.8); Earnings per share SEK 1.90 (2.02); Free cash flow/net debt 0.15 (0.08).
Comments from the President and CEO – Alf Göransson
“The organic sales growth was weak at 0 percent in the second quarter. Slow organic sales growth in North America, severe market conditions in Spain and Portugal and our determination to manage the price and wage balance in France are the main reasons.
“For the first half year, we have achieved price increases on par with wage cost increases, and I remain confident that this will be the case also for the full year of 2012. The operating margin in the second quarter was 0.5 percent behind previous year. The two main reasons were difficult market conditions in Spain and the margin decline in the US operations. In the federal government business in North America lower extra sales has, in combination with an integration process more difficult than planned, resulted in a decline of the operating margin.
“The free cash flow improved significantly compared to the first six months last year, but we will continue to be restrictive on acquisitions until we have restored the financial target of free cash flow to net debt of 0.20.
“Market conditions in primarily Spain are deteriorating more rapidly than expected and we leave contracts due to uncertainty of customers’ ability to pay for the security services. In addition, the Spanish government has decided, as of August 1, 2012, to withdraw important subsidies on payroll taxes for certain categories of employees which will further increase our labor costs, and we are investigating what actions could be taken to mitigate the imposed cost increases. Thanks to the strengthened position in technology security solutions we are well equipped to face the harsh market environment in Spain and Portugal.”