Securitas grows profits despite labour shortages

STOCKHOLM (Reuters) -Sweden's Securitas reported on Wednesday a rise in first-quarter core profit that was slightly bigger than expected as sales growth made up for higher staff costs.

Operating profit before amortisation at the world's biggest listed security services group, which last year bought Stanley Black & Decker's electronic security division, was 2.18 billion crowns against a year-earlier 1.45 billion with a record quarterly profit margin of 5.8%.

Analysts had on average forecast a 2.14 billion crown profit, according to a poll on Securitas' website.

"The development was driven by the technology and solutions business supported by healthy margins in the Stanley Security acquisition," CEO Magnus Ahlqvist said in a statement.

Shares, however, reversed early gains to trade 7% down at 1225 GMT.

"European profitability struggled in the quarter and, excluding Stanley acquisition synergies, we believe there was no underlying group margin improvement," analysts at Jefferies said in a note to clients.

Securitas, whose biggest cost is wages for its guards, said price hikes to customers were on par with wage cost increases overall. In Europe, however, increased costs related to labour shortages, such as for subcontracting, held back margin growth.

The group in February said labour shortages meant business conditions in Europe remained challenging.

"The macroeconomic environment remains uncertain, but I am confident that we are well prepared to continue delivering high-value services even during more challenging times," Ahlqvist said on Wednesday.

Organic sales growth was 12% in the quarter, beating a mean forecast 8%.

(Reporting by Anna Ringstrom; editing by Niklas Pollard and Christina Fincher)