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UPDATE 2-Securitas Q2 profit in line but clients trade down

Published 08/07/2009, 05:36 AM
Updated 08/07/2009, 05:39 AM

* EBITA 880 million SEK, slightly above market forecasts

* Existing N.American clients scaling back security cover

* Eyes acquisitions, says prices have come down

* Shares rise 0.8 percent, outperform Swedish market

(Adds CEO comment, analysts, share price)

By Katarina Gustafsson and Veronica Ek

STOCKHOLM, Aug 7 (Reuters) - Guard services firm Securitas posted second-quarter earnings that inched ahead of expectations but said cost-conscious customers in North America were trading down to less comprehensive security packages.

The Swedish firm, which provides security and monitoring services for airports, banks and shopping centres, had previously said its sector was less exposed to the global financial crisis than other industries.

It said on Friday many of its customers were now under continuous pressure to slash costs.

"Our sales are okay and we have decent new sales, but the customers are reducing their existing contracts to cut costs," Chief Executive Alf Goransson told Reuters.

Shares in Securitas were up 0.8 percent by 0900 GMT, outperforming a 0.9 percent decline in the Stockholm bourse's blue-chip index.

"Numbers look good on the operational level. I think that people will be happy with the EBITA result," said Lars Hallstrom, an analyst at Handelsbanken Capital Markets.

He said the absence of bad debt provisions related to General Motors, one of the firm's largest clients, was a bright spot.

Earnings before interest, tax and amortisation (EBITA) rose to 880 million Swedish crowns ($122.9 million) from a year-ago 733 million. That compared with an average forecast of 868 million in a Reuters poll of analysts.

LOOKING FOR BARGAINS

Securitas, which has acquired a long list of security service firms in the United States, south and central America and across Europe in the past year, said it would continue to look for acquisitions as it expected the downturn to generate more targets.

"There have never, during my time with Securitas, been so many objects to look at," Goransson said.

"Prices are lower and companies have become cheaper and cheaper. The question is whether this will continue and if one should buy now or wait until next year."

Second quarter sales rose to 15.9 billion crowns from 13.3 billion, undershooting the mean forecast of 16.2 billion.

"Sales are somewhat weaker. The report is a bit weak, but not dramatically," said a Stockholm-based analyst.

(Additional reporting by Oskar von Bahr; editing by John Stonestreet)

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