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Edited Transcript of LOOM B.ST earnings conference call or presentation 25-Jul-19 7:00am GMT

Q2 2019 Loomis AB Earnings Call

Jul 31, 2019 (Thomson StreetEvents) -- Edited Transcript of Loomis AB earnings conference call or presentation Thursday, July 25, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Kristian Ackeby

Loomis AB (publ) - CFO

* Patrik Andersson

Loomis AB (publ) - CEO, President & Director

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Conference Call Participants

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* Aymeric Poulain

Kepler Cheuvreux, Research Division - Head of Support Services Research

* Carina Elmgren

Handelsbanken Capital Markets AB, Research Division - Research Analyst

* Dan Johansson

SEB, Research Division - Equity Research Analyst

* Daniel Thorsson

ABG Sundal Collier Holding ASA, Research Division - Research Analyst

* Henrik Mawby

Nordea Markets, Research Division - Senior Analyst

* Karl-Johan Bonnevier

DNB Markets, Research Division - Analyst

* Miguel Medina-Sivilotti

JB Capital Markets, Sociedad de Valores, S.A., Research Division - Director

* Mikael Löfdahl

Carnegie Investment Bank AB, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to Loomis Group 2Q 2019 Report. (Operator Instructions) I must advise you that this conference is being recorded today. And if you wish -- I will now hand the conference over to our first speaker for today, our CEO, Mr. Patrik Andersson. Thank you. Please go ahead.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [2]

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Thank you. Good morning, everyone, and thank you for joining the second quarter presentation from Loomis. My name is Patrik Andersson. As you heard, I'm the CEO of Loomis. With me here today, I have Kristian Ackeby, our CFO; and Anders Haker, Chief Investor Relations Officer.

So let's start the presentation and turn to the next page, which are the highlights. So these are the highlights of the quarter, and I will get back to some of them -- some of these points later in my presentation.

So we have recent acquisitions. As we announced this spring, we have closed the purchase of Prosegur Cash in France, and we are now getting into a integration mode. The real growth was 4% in the quarter. And what's supporting that is -- are, of course, the acquisitions in Chile and the CPoR, the French FX business, that was closed some time ago.

The organic growth in -- overall was 3% in the quarter. We see a very positive momentum in Europe, where growth was picking up in the quarter. The U.S. growth was impacted by restructuring programs in the international business and somewhat lower volume growth in the CIT business. However, very strong SafePoint sales and SafePoint volumes in the quarter.

Operating margin ended up at the 11.7%, and we see very positive effects now also from the restructuring programs in Europe especially, and then, of course, France and Sweden, and we expect further effects to be realized in the coming quarters.

Business mix in the U.S. was impacting the margins positively, very good and high margins in the U.S. in the quarter. And the EPS is then impacted by a

nonrecurring item that we had in the Q2 in 2018. The operating cash flow was strong at 166%. And we also communicated in the quarter around the

Danish media allegations, which I will come back to when I talk about Europe, so these are the highlights.

So let's turn to next page. And this slide is giving you a historical perspective on the margin. So as you can see, a very strong margin for Q2. And actually, in absolute numbers, if you look at the absolute numbers, also taking away the FX effect, this is the best Q2 we have ever had in absolute numbers. So a strong quarter in that sense as well.

So let's turn to next page, which is United States. So the organic growth was 3% in the quarter, as I mentioned. We have and are still doing restructuring of the international business. We have closed some branches. We are terminating some contracts and driving the business in a more profitable way, as you can see also in the margins. However, we see that the SafePoint concept is continuing to grow. So it was 18% growth in the quarter.

So if we turn to next page and go deeper into the SafePoint concept. We have now in total 29,300 installations, and we had a revenue growth of 18% and in the quarter was 1,036 net new installed. And as we see, the retention rate is very high in the market. We -- as we have mentioned during the previous calls, we are now focusing very much on sort of keeping our customers. So in the quarter, there were 375 refreshed or extended during the quarter. So contracts that are about to expire where we are able to keep the customers. So the activity level on the SafePoint side continues to be high. And we have a very strong pipeline and demand for the SafePoint

concept.

So let's turn to next page and talk about the margins in the U.S.A. As I mentioned before, strong -- very strong margin development versus Q2 last year. We see that the efficiency programs we're driving in our branches is supporting the margin expansions -- expansion. And we also see that the mix of development with higher share of CMS and SafePoint is also positively affecting the margins. And we also see

somewhat of a very positive impact by the restructuring of the international business that we expect to continue also in the coming quarters. So a very strong margin quarter in the U.S.

So let's start -- let's turn on to the next page and talk more about Europe. Regrowth 6%. As I mentioned, the acquisitions in Chile and France are ongoing, and we are now focusing very much on integrating these businesses and to realize synergies. Organic growth has been picking up and it was actually 3%. And here, I'd like to just mention that we have good effects from LatAm, also Spain, which is a -- if you say, more mature market, which is growing very nicely for the time being, finding new business opportunities. But we also have Turkey, Belgium and Switzerland doing very well on the organic growth. But also I would say that in overall terms, many countries

are supporting the top line growth in Europe.

On the operating margin side, we ended up at the 11.7%. We have positive impact from the programs we're running in Sweden, France, but also in many other places, and we expect further effects to be realized in the coming quarters.

So what we're doing now in France is that we have more or less finalized their restructuring program. We will see more effects in the coming quarter. We have then the integration of CPoR and Prosegur France, which will happen as we speak. And I think that also we see France becoming a more rational market with practically 2 players in the market. But we also continue to drive the efficiency programs in all our branches across Europe. And we also see positive impact or effect from the CPoR business that we bought some time ago. And here, the plans are, of course, to

continue to expand that business.

I just wanted to come back to the media allegations that was mentioned on the first page. So just to give you a short recap where we stand, we were accused of providing FX to foreign exchange offices in Denmark through our Norwegian FX subsidiary. And

these customers in Denmark were then suspected to be involved in money laundering. Based on that accusation, we made 1 internal, 2 external investigations, and the conclusions are that even though we have systems and procedures in place when it came -- comes to AML and KYC, Know Your Customer; we have found some improvement there, which we now are working very hard to close and to fix. And we have also been in connection with the investigations, in contact with the Danish and Norwegian's authorities and told them about our findings and also what we're going to do

to close those improvement areas.

We are under no suspicion from any authority, and this revenue coming from these exchange offices in Denmark was less than 0.1% of the Loomis Group revenue, and we have terminated all the FX offices in Denmark. And we estimated that there will be no

significant impact or effect or impact on our financial standing and position.

Yes, we also wanted to mention last, but not least, on this slide that we also have finalized an acquisition in the Canarian Islands. We have been subcontracting to other suppliers in the Islands. But now we have both our own business, giving us a stronger national footprint in the Spanish markets. So it's a business with a turnover of EUR 3.5 million, 150 FTEs and with 5 branches across the Canary Islands, which gives us, as I said, a stronger footprint in Spain.

So let's then turn to next page, which is the statement of income. I don't intend to comment very much on that, but just saying that, in my view, it's a good and strong quarter in all aspects.

So then let's turn to next page, which is the reminder on the Capital Markets Update that we will be having in London on September 5, it's a somewhat shorter and more condensed Capital Markets Day, you can say. We're going to talk about the progress

in relation to our financial targets, strategic targets until 2021. But we will also look at the global markets and how the industry is developing In general. We're also doing some deep dives into new business opportunities in adjacent categories, but also in new categories. So giving everybody a hint on what we can expect in the coming years in terms of business opportunities. So all interested companies, people,

are welcome to the Capital Markets Update.

So let's then turn to next page, which is the Q&A, and I say, operator, we are now open for questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question, it's coming from Daniel Thorsson from ABG.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [2]

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Daniel from ABG. Can you hear me?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [3]

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Yes.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [4]

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Excellent, excellent. So a question on SafePoint installations. They are around 1,000 or slightly higher a quarter currently, but you have a target of 10,000 annual installations in 2021. What are your actions to improve that figure, both short term and in the next 2 years?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [5]

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I think that -- I think we're quite -- we're quite happy with the figure, anyway. But I think that if we can be around 1,000 to 1,250 in a quarter, it's good. When it comes to what we do to improve, I think that to hit that number, we need to get some of the bigger contracts out in the market. And there are a couple of them out there. And if we get one of these, I think that we get -- we have a good chance of getting close to 10,000. But I would say that we also need to have some of the smaller customers, and we're working on both. And I think that I cannot promise anything, but I think there is a good chance that we can increase the numbers. We are now looking much more on the revenue growth coming from the SafePoint concept, I'd say. But in terms of installations, there needs to be some bigger contracts to get to that number.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [6]

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Okay. That's clear. Just to remind us the target of 10,000 in 2021, is that concentrated to the U.S.? Or does it also include the Europe?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [7]

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That was a number focusing on the U.S., yes.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [8]

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Okay. But now you're seeing a positive development across other regions as well, I saw in the report.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [9]

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Yes. We are -- there is very good traction in Europe. Many countries have been successful in sort of explaining the concept to retailers. We have trained the sales forces across Europe. We are getting the technologies working software, hardware, and I think that we're seeing very good momentum in many European countries, yes.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [10]

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Okay. Excellent. A final one on the organic growth in Europe. Can you split out what's the growth was in France and also in Latin America, if possible?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [11]

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Sorry, we cannot do that. But I can say that, of course, there was a positive revenue growth in France. So we're growing in France, and that's a very, very positive sign.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [12]

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Okay. And nothing about Latin America? What magnitude roughly it is growing at now?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [13]

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It's growing at the same level, as we saw very good growth rates in Latin America still.

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Operator [14]

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We will now take our next question. It's coming from Aymeric Poulain from Kepler.

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Aymeric Poulain, Kepler Cheuvreux, Research Division - Head of Support Services Research [15]

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It's Aymeric Poulain from Kepler. The question from me is on the European business because it's obviously very difficult for the forecasters that we have, due to -- to pin down the number coming from acquisition versus organic on the margin side. So -- and of course, last year, you had the significant restructuring activity and with some payback that you mentioned in the first half. So could you split the margin coming from the payback of last year restructuring in France and Sweden as well as the contribution from M&A? And what is actually the organic margin performance for Europe? And then going forward, there's even more acquisition to be consolidated in the second half and beyond. So I'm just wondering, would you be ready to provide a guidance in terms of the full year contribution from external scope in Europe as well as the EBIT contribution that you would expect bearing in mind that some of these acquisition may need some preemptive restructuring or maybe dilutive in the initial phase?

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Kristian Ackeby, Loomis AB (publ) - CFO [16]

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Thank you very much for the question. Kristian here. Looking into the margin, I don't have the split exactly as you referred to. But if we start by looking into the restructuring, the restructuring has a positive impact on the margin in Europe of close to 100 basis points. So if you take that isolated, that represents a large portion of the improvement we see now. In addition to that, you have an improvement related to IFRS 16 and CPoR, which has a higher margin than group average. That is partly then offset by the -- related to that, we have the higher growth. That gives us a lower margin in some areas where we have the higher growth to make sure, since we get the slightly lower efficiency when we take on the new contracts. So that is more from, you could say, a temporary point of view. I hope that gives you a better feeling for the total numbers, what I have to give you now.

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Aymeric Poulain, Kepler Cheuvreux, Research Division - Head of Support Services Research [17]

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Yes. That's helpful. But just looking at the second half to be even more difficult to forecast given the Ziemann and Prosegur Cash and alike. Would you have some indication of what that you should expect for the year in terms of the European sales and margin improvement?

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Kristian Ackeby, Loomis AB (publ) - CFO [18]

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No. We don't have that guidance to provide you today, I'm sorry.

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Operator [19]

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We'll now take our next question from KJ Bonnevier from DNB Markets.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [20]

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This is Karl-Johan Bonnevier at DNB Markets. So to continue on the last question on Europe. The 3% growth that you now see in Europe in the quarter is, obviously, a number we haven't seen for the last couple of years at least. And how do you see that number going forward? Is this a new level? Or was it some particular things happening in this quarter? Or is it comparable to all the problems you had in France last year? Or how should we see it?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [21]

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It's a good question, KJ. But I think that what I've said in the previous quarters is that, I think there -- in underlying, there is quite a good momentum in Europe. And that has been sort of shadowed by the problems we had in France. But I see that, first of all, we're good at taking market shares, we're good at getting new contracts

in many of the countries. We're good at pushing the SafePoint concept. We take ATM business and so on and so forth. So I think that there is a good momentum in many of the European countries in general. And if that's going to continue, so but -- it's very difficult to speculate. But I think that we have a very strong organization in Europe and they're pushing like crazy for these contracts and new services and things like that. So I'm very optimistic for the future, that we have a good foundation to continue.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [22]

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Excellent. And you just managed to close the Prosegur Cash. How quickly can you integrate that French operation into your own operation you think?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [23]

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We start to meet it, and we are doing as fast as we can. So I think that, let me say, by the end of this year or even faster that should be integrated. So it's full speed ahead, I would say.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [24]

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Excellent. And what we've seen coming out of CPoR devices in France is also thus confirming the old view on the company that there was a good growth business with very substantial margins?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [25]

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Yes, it is -- it's both in terms of FX, but they also have a gold business doing very well. Margins are very high or, let me call, higher than we have in our -- the rest of our business. And we're now also going to integrate that business into French operation in terms of getting the synergies, in terms of transport and things like that, buildings and so on. So I think that that's going to be very, from my view, a very strategic part going forward in Europe with the FX business.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [26]

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And when you look and compare it to the FX business you were driving in Denmark out of Norway, is there any [lead across] on the risks you are taking in the French operation on the side to what you experienced in Denmark?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [27]

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I think that if you compare the 2 businesses, I think the CPoR has been around for a

long period of time. It's built around the FX business, if you -- in [Nova], for instance, it's starting with the CIT/CMS and then going into FX. So when you look at the compliance organization and so on, there is, I would say, a very strong backbone in terms of resources and people. But you should never say never, of course, but I think there is a good foundation in the CPoR business.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [28]

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Excellent. And just finally on Europe, Ziemann, how do you see that process and finalizing that acquisition? Has there been any hurdles that you didn't expect at the time when you announced the acquisition? Or is it still hopefully getting cleared here in the early autumn or late summer?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [29]

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Yes. Now it's the dialogue or the discussions going on with the competition authorities in Germany. It takes some time, but that's what we expected. So I would say, as you say, early autumn that we can get some kind of reply back from the German authorities. That's what we expect.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [30]

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And when you look at Germany, obviously, it's a relatively new, re-new country for you, if you put it like that. How quickly can you then, hopefully, integrate Ziemann and [Chester] to really get to, say, your normal kind of efficiencies in the business?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [31]

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I would say that we are focusing very much on, I think, that Germany, in the short

run, it's not going to be on the group average when it comes to margin. That would be lower because of the structure of the market and so on. So I think that the first target is to merge these companies and get to a 10% margin. That's the first step. But then I think that when CMS is continuing to be outsourced, SafePoint concepts, we can get higher, but the first step is to get the combined business to 10%. It's going to take some time.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [32]

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Excellent. Just one final for me. Looking at SafePoint in the U.S., you thought earlier in the year that they were going to surpass 5,000 net installations. Do you still think that's a credible number looking at the development in the first half?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [33]

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Yes, I think so, yes.

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Operator [34]

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Our next question is coming from the line of Carina Elmgren from Handelsbanken.

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Carina Elmgren, Handelsbanken Capital Markets AB, Research Division - Research Analyst [35]

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This is Carina Elmgren from Handelsbanken. I have 1 question regarding the CIT growth in the U.S. You say it's a bit lower than last year. Is this a trend that has started now? Or has the growth there declined for many quarters? And how should we look at this volume in the U.S. going forward? I know maybe you're guiding -- previous year you had said that you expect to grow by 5% to 10% organic in the U.S. Is that still something that you do have as your target?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [36]

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Yes, that's right. I think that what we've done when it comes to CIT is that we are actually putting, I would say, not all our resources, but a lot of the resources into the CMS and SafePoint concept. That's what we really, really are pushing and focusing on, because of obvious reasons, margins and everything else. So CIT

will not be in that sense in focus. So that's -- I think that that's -- then I would say that, in general, going from CIT and CMS and SafePoint, I think that it's -- the market is -- sometimes, there are a lot of contracts coming out and then boom, there is we increased the revenue and then there's a slower period and it goes up and down. So we haven't changed our view in the top line in the U.S. I think that when we look to take 2 steps back and look at the CMS potential or look at the SafePoint potential, it's massive, and it's just about timing that we need to get some of the bigger contracts in play. We need both when it comes to CMS and SafePoint. And in the meantime, we are working on the margins. And I think that the top line will come, and we haven't changed our view in the U.S. in any way.

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Operator [37]

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Our next question comes from the line of KJ Bonnevier, again, from DNB Markets.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [38]

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It's KJ again. Just, Kristian, the cash flow, obviously, looks fantastic in Q2 on the back of, I guess, the reversal in the working capital challenge you had in Q1. Could you elaborate a little how we should see this going forward? Should

we expect these kind of huge swings in working capital? Or is it something that particularly affect these quarters?

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Kristian Ackeby, Loomis AB (publ) - CFO [39]

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Related to the cash flow, it's correctly, as you said. I mean first, we had the first quarter with a negative timing impacts and then we get the second quarter with positive timing impact. So if you look into the number, year-to-date, we were at 89% conversion approximately, which is a more reliable number, I should say. And looking into comparison with the prior year when we had closer to 75%, still at the ending period here, we have some positive impact in the cash flow. So just looking from a timing perspective, we'll probably have a negative here in July than related to capital and than as related to the cash stock and gold stock. So for example, in CPoR, sometimes when we buy gold and cash that we then sell, we don't use a credit line. We use other methods to hedge it. So that's when we take it on our balance sheet in a different way. That's when you get the bigger impact on the cash flow. But long term, we have not changed our view. Then we see -- this, historically, has been more in the 85% range long term. We don't see any change to that target.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [40]

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But basically, we should expect bigger swings in working capital between

quarters, but the long-term trend is unchanged?

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Kristian Ackeby, Loomis AB (publ) - CFO [41]

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That can happen, yes.

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Karl-Johan Bonnevier, DNB Markets, Research Division - Analyst [42]

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Excellent. And looking at your CapEx for the moment. Is there a lot of needs for, say, building up the fixed cost structure in the form of new roles -- bigger roles in different markets? But I guess it's burden a couple of years back, but seems to be less of an issue now.

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Kristian Ackeby, Loomis AB (publ) - CFO [43]

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Yes. Now we're -- when we exclude IFRS 16, which we have done here in the additional cash flow statement also to support the readers, we are at approximately 1 to 1 CapEx in relation to depreciation. And we see no real reason to why that should change significantly. When you have growth, of course, from period -- from time to time, we will be above 1, but we don't see any significant change compared with our most recent years in that item either.

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Operator [44]

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Our next question comes from Miguel Medina from JB Capital.

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Miguel Medina-Sivilotti, JB Capital Markets, Sociedad de Valores, S.A., Research Division - Director [45]

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It's Miguel Medina from JB Capital. Just one question from my side. I saw somewhere in the results release that you have attached an enterprise value to the French operations. You have acquired from Prosegur Cash of around EUR 39 million. Is that a good proxy for what you have paid Prosegur Cash for those assets?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [46]

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Yes, that's right. That's a number that is correct, yes.

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Operator [47]

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Our next question is coming from Henrik Mawby from Nordea.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [48]

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Henrik Mawby from Nordea. Coming back to organic growth in Europe, and more specifically, Argentina and in Turkey, I assume that a lot of that growth in those markets are related to inflation. Have you seen the inflation component of growth in those market increased? And then can you also comment a little bit about what you see on the volume trends in those markets, please?

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Kristian Ackeby, Loomis AB (publ) - CFO [49]

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Okay. So Kristian here. So if we start by, Argentina has, of course, very good growth, partly related to the inflation. What we compare is that we compare our growth with inflation. And if we look at that, we have a growth which is higher than inflation in Argentina as well. And then, in Chile, the impact is less there. We should also have in mind that our business in Latin America, it's, of course, growing very well, but it's still a relatively small part of our business. So maybe we could simplify it and say that for -- it's less than 5% of our business.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [50]

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Understood. And in Turkey, the same reasoning, basically, on inflation, how is that looking compared to volume growth?

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Kristian Ackeby, Loomis AB (publ) - CFO [51]

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Yes, it's similar.

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Operator [52]

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(Operator Instructions) Our next question comes from the line of Mikael Löfdahl from Carnegie.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [53]

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Most of my questions have been answered, but Mikael Löfdahl of Carnegie. Just on the AML investigations, where are you now? I mean you sent out the press release last week. So the investigations are completed, I would assume. But when should we expect further information on how this may impact earnings you say insignificantly or a minor impact, but I guess, there will be some costs associated with this, and you took $6 million in this quarter for the investigations as such. Is that the complete number those $6 million? Or will there be more and also on the reorganization of the compliance side?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [54]

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I think that we will see some more this quarter, but then it's over. So we're not going to make any more investigations and so on. From our side, I think that we will not make any more surveys or investigations. We are now -- we do 2 things. One is that we are strengthening the organization, strengthening compliance work, and then we have a dialogue with the authorities. And it's not like we're coming to the authority, saying, we have done something wrong. It's a dialogue around our findings. So these are the 2 things we are actually doing. And if there is something coming out, which are important, of course, we will communicate this to the market.

When it comes to the organization, I mean we're running a very lean organization. And we are not sort of adding a lots of compliance people. What we're looking for is a Chief Compliance Officer that can lead that work. But apart from that, I think that we want to use the strength of the CPoR organization, for instance, and use that competence to strengthen the compliance work. So you will not see that the organization will grow a lot in terms of staff people in that sense. That's not going to happen. So that -- and then -- so that is where we are with this case basically.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [55]

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Okay. A follow-up also on Europe. First, is it possible to give -- I know you don't want to go into specific countries, but some sort of spread between growth and margins from the weakest to the strongest country, perhaps, excluding...

(technical difficulty)

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [56]

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Hello? We lost you there in the end.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [57]

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Sorry. And in Europe, I know you don't want to go into details on countries, but is it possible to give a spread between the strongest and the weakest performing countries in terms of growth and their margins.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [58]

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It's -- we don't want to do that too much. There is a spread between the countries. There is some potential in some of the countries, but we don't want to get into that. And I think that my comment is that, if you're sitting here thinking that the Europe growth is pushed by the only LatAm countries, that's not the fact. The fact

is that we have a very, very strong performance in many European countries. Especially, I would mention Spain again, very mature country,

high margins and being able to grow quite rapidly. So I think that there is a good momentum in many, many European countries.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [59]

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And is it possible -- I know it's hard perhaps in your line of business, but -- to speak about price versus volume. I mean, you touched about -- upon the inflation

effect here. I guess that has an effect on the organic growth. But how much of the growth in Europe is price versus basically new contracts, new volumes?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [60]

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I mean I think that we don't want to get too much into that. But I think that, in Europe, it's not the price component, it's not that significant. We're just trying in Europe to get inflation and maybe something more, but not very much more than that. It's a good underlying trend in many of the European countries. That's the bottom line of the performance in Europe.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [61]

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In the U.S.?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [62]

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In the U.S., it's the same -- basically the same thing. I mean we -- the growth is coming basically this quarter from SafePoint concept. And I would say that it's basically the same story as in Europe.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [63]

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Final question on Europe and on SafePoint and recyclers. Where are -- you're mentioning you're being optimistic on potential here, but where are you in terms of actually installations and actually selling

(technical difficulty)

2020 or...

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [64]

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I missed you again, but the question was around SafePoint in Europe. Well, I think that we're doing, as I said, doing very well on SafePoint Europe. We are installing in many countries, taking contracts. We are working with the pilots with some of the bigger retailers. So I think there is a good momentum in Europe. And what we should keep in mind is that, of course, many of these European customers, they already have CIT. So while in the U.S. you're switching from nothing to SafePoint, you're taking customer from CIT to SafePoint, which is good for the margin. It's not driving the top line that much. But I would say there is a very good momentum in many countries when it comes to SafePoint.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [65]

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The question was, is that momentum based on your discussions with customers and the interest from customers rather than actual signings?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [66]

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Now we are signing -- we're installing and signing as we speak. And we have a good base, and that's continuing to grow. So it's not just plans and so on, it's actually installations, yes.

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Operator [67]

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We will now take our next question from Dan Johansson from SEB.

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Dan Johansson, SEB, Research Division - Equity Research Analyst [68]

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Dan Johansson at SEB. I had a question in regards to the U.S. business -- the restructuring of the international business. What was the magnitude of the impact on organic growth? Was it similar to the impact you saw in Q1? Or was it higher, lower?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [69]

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Same as in Q1, I would say, yes.

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Operator [70]

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(Operator Instructions) We don't have any further questions at this time. Sir, you can proceed.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [71]

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Thank you very much for calling, and have a really nice summer. Thank you.

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Operator [72]

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That concludes our conference for today. Thank you all for participating. You may all disconnect.