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UPDATE 2-Securitas Q4 core margin shrinks, shares fall

Published 02/08/2011, 06:38 AM
Updated 02/08/2011, 06:40 AM

* Q4 EBITA 1.06 billion SEK, vs consensus 1.05 billion

* Acquisitions squeezed EBITA margin to 6.7 percent

* Dividend set at 3.00 SEK, vs forecast 3.12 SEK

* Organic growth back in North America as market recovers

* Shares down 2.7 percent, hit two-month low

(Recasts, adds CEO, analysts, detail, background, shares)

By Anna Ringstrom and Rebecka Roos

STOCKHOLM, Feb 8 (Reuters) - Swedish security firm Securitas AB was hit by an acquisition-related margin squeeze and said two big lost contracts would be difficult to replace, sending its shares down.

"Prospects for this year don't look too exciting with some contract losses and margins under pressure," said an analyst, who declined to be identified.

Securitas, which bought on average one company a month in 2010, said on Tuesday the acquisitions of British group Reliance and Paragon Systems in the United States hit its earnings before interest, tax and amortisation (EBITA) margin, which came in at 6.7 percent, down from a year-earlier 7.0 percent.

Shares in Securitas, which supplies security guards for venues such as airports and shopping centres around the world, reversed early gains to trade down 2.7 percent by 1044 GMT, underperforming Stockholm's blue-chip index. The stock fell as low as 75.10 crowns, its lowest since December.

Chief Executive Alf Goransson told a conference the loss of large contracts in Britain and Belgium in the third quarter would be difficult to replace.

Traders said disappointment over the 2010 dividend weighed on the shares too. Securitas said it would pay out 3.00 crowns per share, unchanged from a year earlier and below expectations for 3.12 crowns in a Reuters poll.

Quarterly profit before interest, tax and amortisation (EBITA) was flat at 1.06 billion crowns ($163 million), roughly matching the mean analyst forecast.

U.S. GROWTH

Securitas, whose main European and North American markets soured amid the global financial crisis, said its markets were mostly recovering though some European countries remained stagnant.

It said core sales in North America had started growing again due to slowly recovering demand. Organic sales grew 4 percent having in the previous quarter edged up for the first time in more than a year as demand in North America stabilised.

Core sales in North America, which account for roughly a third of revenue and were hardest hit during the recession, rose 3 percent after being flat in the third quarter.

"It now feels as if the security market is recovering and the (underlying growth) numbers reflect that," Chief Executive Alf Goransson told Reuters. "I hope and believe we will have a positive top-line development in 2011."

Securitas was the world's biggest security services group until the spin-offs of systems business Niscayah in 2006 and cash-handling unit Loomis in 2008. It now trails rivals such as Britain's GFS Plc in market value. GFS posts full-year earnings on March 15. (Editing by Dan Lalor and David Holmes) ($1 = 6.493 Swedish crowns)

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