Original Article

UPDATE 2-UK's Securicor optimistic although conditions tough
Thu December 4, 2003 06:42 AM ET

By F. Brinley Bruton

LONDON, Dec 4 (Reuters) - Securicor (SCR.L: Quote, Profile, Research) posted a seven percent slide in annual profits on Thursday to the bottom end of forecasts, but shares jumped over 10 percent after the British security firm was cautiously optimistic about its future.


Its shares rose 10.8 percent to 89-3/4 pence by 1049 GMT, after falling about 15 percent in the last three weeks on fears that its results would prove disappointing.

Securicor reported tough trading amid sluggish demand for its key security guard business, while its cash processing unit also suffered from a slow take-up by financial service firms. But the company said it had more confidence about its prospects for 2004.

"What (shares) have done is go back to the level of a couple of weeks ago," said analyst Iain Armstrong at Brewin Dolphin Securities. "People were a little bit worried that there would be another downgrade," he added.

In May Securicor, which also transports money and processes cash, said its second-half performance would be hit by difficult markets, prompting analysts to cut forecasts.

Pre-tax profit in the year to September 30 slipped to 62.9 million pounds ($108.6 million) -- at the lower end of a range of forecasts gathered by Reuters. The company itself said the market had expected a profit of about 61-64 million pounds.

"We are responding robustly to the challenges which we continue to face in some of our markets, and we can therefore look forward to 2004 with greater confidence," Securicor said in a statement.

The firm boosted its annual dividend by 14 percent to 2.4 pence per share. This was above analysts' estimates of between 2.28p and 2.36p.

Annual pre-tax profit before interest, amortisation and exceptionals was 80.2 million pounds, compared with 80 million a year earlier.

Securicor did not urge analysts to change their 2004 pre-tax profit estimates of 70-77 million pounds.

"We are comfortable with that range," Securicor's Chief Executive Nick Buckles told Reuters.
Geoff Allum, an analyst for Investec Securities, said that while Securicor's comments were "as depressing as I've seen from them in a long time", the stock was undervalued. "A few people are doing a bit of bottom fishing," he added.

Brewin Dolphin's Armstrong said positive words from larger Swedish rival Securitas (SECUb.ST: Quote, Profile, Research) may also have helped.

On Wednesday, the world's biggest security services provider said it expected higher profitability for its key Security Services unit in the United States next year compared with 2003.