Welcome to the third quarter presentation from Loomis. These are the headlines and the content. Excuse me, from the stage and from the web and from the telephone. During the Q&A, I will invite the CEO of the company, Anders Håker, to join me here on stage. Operating margin of 13.4%, which is actually the highest margin in the single quarter ever. EPS was at SEK 4.93 and 91% in the quarter. Also during the quarter we acquire Intermarketing, which is a Finnish company. I'll talk a bit more about that later. We are very much on our way to hit the financial targets we have for 2017 above the bracket we put for 2017. As many of you know, we have presented a new strategy or an updated strategy, a new financial targets. I'll talk a bit more about that even though it's public.
I come back to many of these points during my presentation today. In Loomis we're obsessed with margins. This is one way of showing the margin development. As you can see on the rolling 12-month basis, we're now at 12.1%. It's actually the first time ever we're above 12% on the rolling 12 basis. If you compare it to Q2, we were at 11.9%, when looking at the 12-month rolling. Actually taking quite a step up in terms of margin development. We can look at the margin like this. Here you see the different Q3 during the last couple of years. As you can see, we take a big jump upwards, 13.4% in the quarter, and as I said, it's the highest margin ever in a quarter. There are of course, many factors behind that development.
We have the number of SafePoints, which is generating sales and profit. We have increased of European countries like U.K., but also from the acquisition in Denmark and many more. Let's look at the different segment and start off by U.S. and looking at the organic growth, which was at 8%. CIT growing by 5.1%. CMS 8.1% and SafePoint 20% or 20.1%. All parts are growing. We are taking market share, we are gaining new contracts, and we have a very good momentum in the U.S. business, and it's very nice to see and very encouraging to see for the future. If you then look at the SafePoint development, we have now year to date installed 21,600 safes. In the quarter, we installed 919 compared to 1,270 the same quarter last year, so it's actually a bit slower.
As you can see, the growth is still there coming from SafePoint, growing 20% as I mentioned. Year to date, we are at 2,555 installed SafePoints. As you can imagine, that's not the pace we need. There's been quite a lot of flooding going on in U.S., in Texas, in Florida, but especially in Puerto Rico. We have been spending a lot of time on repairing, replacing damaged safes. That's been the focus. Also on top of that, the customers are very much focused on getting back in order, and they don't want to discuss new contracts, anything like that. I expect a good Q4. We have made here lots of requests from our customers. I see this as a short-term effect, and long-term, we should be moving on a way to reach 10,000 a year at the later stage.
We have actually refreshed one of the bigger contracts in the U.S. It's a company called Cellular Sales, which is one of the big independent mobile operator and mobile phone operators in the U.S., and we have refreshed over 500 safes. Of course, that's not included in the numbers, but still that's a sign that the companies, our customers like the concept, they like to continue, and they like to renew their safes. All in all, I think that we're on a good way to improve SafePoint further. However, 2017 will not be up to our plans. Looking at the operating margin. We have, as I said, growth in all our business lines, there is a lot of efficiency coming from route density, but also that we have been able to digest all the volume we got from the Bank of America contract in SafePoint business.
That's very encouraging to see. In the quarter, we have a limited impact of the hurricane season in terms of profitability and sales. We have quite a big impact on the SafePoint installations. We expect that we'll see some kind of effect in Q4. It's a bit early to say. Just to mention that Puerto Rico is actually one of our more important areas. We have $1 million in revenue, US dollars in revenue each month in Puerto Rico, and it's quite an important SafePoint area, as I mentioned. Looking at the numbers, still a lot of households without power. Many bank branches are closed. Running water is still scarce. There's a lot of repair to be done in the country as such and then, of course, influencing us to some extent.
Also like to mention when it coming to U.S., that we have now a strategy, of course, to grow in the U.S., and we are now in 2018 making quite some investment to capture that growth, to assimilate that growth. We're going to invest even more in salespeople when it comes to SafePoint. Key count salespeople to further drive growth in SafePoint. We're going to update or continue to update and the margins in the same place we have seen today. It's to be able to handle future growth. That's on U.S. Also looking at the CMS part of the business, we can see that that's still on a very healthy level, 33%. As I said, CMS grew by 8.1% in a quarter. It of course, in the sense that we have very nice growth in countries like Turkey, 30%, Argentina, 65%.
We are growing in the U.K. actually for the fifth consecutive month. We had a 10% growth in Portugal. We're also growing in Spain, couple of percentage points. That's very nice to see. Sweden growing due to the note and coin exchange program which is now actually ends. We're seeing quite some tougher competition in France, also lower prices. France is actually declining and, of course, that's our second biggest country in Loomis, that has an effect on the totality, of course. Also what we have said, the underlying volume is declining in the Nordic countries. We've said that many times. There's no change except then. Very nice to see that U.K. is continuing to improve in terms of profitability. That's been going on for quite some time, that's very nice to see.
We also see that the integration of the Danish business, the Belgian business, is going very much according to plans. Also a couple of words on Intermarketing. Intermarketing was a company we bought in the quarter, and now we're rolling out that concept to many different Loomis countries around, especially Europe, especially Nordic countries, but also in Europe. I think that's working very well, and hopefully we see some good effect. Before there is still a weak demand in the market in general, especially when it comes to flow of goods coming in and out of India. In this quarter, we had a negative growth of 7% versus 2% the same quarter last year. Of course, even though there is very nice profitability or gross margin on these services, if we don't have the volume, the fixed costs are there.
Getting the local U.K. operation, taking care of risk operations and so on, and the Loomis International people focusing much more on the sales and customer management. In the U.S., actually, we're putting together Loomis International and the part we bought some years ago called LSL, which is also an international business, putting that together in one piece and having that reporting to the regional president in the U.S. to get the synergies and scale in place. A lot of things happening on the structure part within Loomis when it comes to Loomis International. Financials. I think I've been through the most important things. I'd like to just mention that we had a one-time capital gain last year selling off the general cargo business, which is of course affecting the EPS. Correcting for that, we had also on the margin, doing 12.1%.
That's nice to see when we're ending 2017. Into 2021. The new target on the top line is SEK 24 billion. The plan is that it should be split 50/50. As I have said many times, if we don't do any major acquisition that's diluting the margins, we should be at 14% by the end of the policy or the plan here. Last but not least, we are now introduced a number of sustainability targets. [audio distortion] work, that, as I said, is a new target, which we are quite proud of 2%. That's.
Stefan Andersson, SEB. Few questions. First, you mentioned, I think also more so maybe in the report than your comment here, that Europe was helped by the Swedish replacement of cash. I got the impression when I read the report that you're kind of warning that period is kind of ending. My question is really.
Let that question go to Anders.
You're correct. In the big picture, it did not have a significant impact, but it had an impact for Sweden in particular during the quarter.
Did I understand correctly?
That's correct.
Yeah. The other question was on France, where you're suffering from Well, two questions on France, asking there is your view on them. Are they reasonable or are they irrationally competitive? Second question is, obviously, should we expect a large cost for the restructuring measures you take there now?
I'll answer the first question. I'll let Anders answer the second one. Usually, couple of big tenders coming out. Everybody gets a bit nervous. We think that we didn't want to go lower on price. That's why we lost a bit of business. If that's a rational competitor or not, I don't want to judge that. There was a price pressure on the market during these tender when three, four tenders are on the table. Now we're focusing very much on right-sizing the French business, but also actually also Answer the second question.
I think we're quite used to the situation in most of the European countries that the contracts come and go. We're quite quick to adapt to the new situation. We are prepared in France, so I don't think that it will have a major impact on the margins going forward. On the cost side, I think we can expect that that will be quick. It will have more of an impact on the organic growth in France, obviously.
Okay, thank you. Maybe the final question, if you know, there's so many countries, but have you any view on what portion is price increase and what portion is volume decline in that number?
We prefer not to comment on that because it's a very difficult calculation, obviously, it's a combination of both, we have to be very strict in our price increase programs that we need to cover our costs. To split the revenue piece is just too complicated.
Let's move on to the telephone conference. Operator, do we have any questions on the line?
Just a question on SafePoint. In the second quarter, you said you sold, I think it was 2,000 units during the quarter, and I think it was 1,000-
Installation, also due to the fact that customers in general, and specifically in these areas I talked about, don't want to have any new installations, and also delay in customer negotiations. These are the three things actually affecting the number of SafePoints installed, new installations.
What was the gross installation in the quarter? I guess you had a negative impact in this space being impacted by the hurricanes.
If you say gross installations, then you can take into account installations. Obviously, we did a lot of installations, but that's not counted in the number, of course, as we have chosen to measure it.
What's really important and what makes a difference.
Thank you. Your next question's coming from the line of Peter Biester. Please go ahead.
Hi. Thank you. Just to complete on the SafePoint in the U.S., can you give some sort of sense as to the signing rate and whether you feel outside of Puerto Rico that the U.S. market has sort of returned to normal in terms of negotiations, installation pace, and so on?
I think that I expect it to a bit of recovery in Q4, as I said. I think we are not fully up to speed where we want to be in Q4 either. I think that there's customer negotiation, how the pipeline looks like, the backlog, et cetera. I think that we have a plan to install 10,000 by the end of strategy year during a single year, and we stick to that very much.
Okay. No, I understand you lost time in Q3, but I was wondering whether the run rate had sort of come back closer to normal ex Puerto Rico in Q4.
It's more back to normal, but it's not to be better, but not really up to the speed we want to see. Maybe then from Q1 forward, we'll see we get up to normal speed again or the speed we should have.
Right. Okay, thank you. Then on SafePoint Europe, which wasn't much comment today, I was wondering if you had any views on the pace at which you could start to bring that on in, say, not necessarily this year, but also in 2018, just giving some thoughts as to that, especially related to your comments in France, for example.
No, I think that we see a lot of activity in Loomis. We are, as I said, building up the sales force still. Many of the salespeople are now in place. We have solved some issues we had around the provision of credit, selling and installing in some of the countries. France is one example. Spain is another example where we actually sell and install at a decent. It's, as always, in Europe, a bit of a scattered picture, but we're moving absolutely in the right direction.
Okay. Then the last question was just if you had any thoughts on pipeline of new business in North America, any comments you can make whether that had been affected by hurricane or whether you feel, any comments you want to make on the.
Nothing that we like to highlight. I think that when things happen like the hurricane, the one being affected immediately is the SafePoint business. When it comes to CIT, of course, there are a couple of days when the routing starts again, but if you get water into SafePoint, it's really destroyed, and you have to change it. The big impact is really very much on the SafePoint. We have discussions with a lot of CMS, CIT customers, but.
Thank you for the answers.
Thank you. Your next question is coming from the line of KJ Bonneville. Please go ahead.
Yes, good morning. I think you answered all my questions on SafePoint already. I'll jump to Intermarketing instead, and that's obviously adding another type of retail solution to your portfolio. It sounds like you're already in pace for exporting it over your footprint or is there a lot of customization?
Software is needed, we are very much up and running already. We had a big kickoff with all the sales people in Europe. We need to talk to the customers, convince them, and so on and so forth. That will take some time and some updates when he has a separate company, and not integrating that into the local Loomis countries, keeping it as a separate company to keep that creativity and entrepreneurship within that company. Off to a good start, I would say.
I guess, should we?
It's the same principle as SafePoint, actually we can combine these two offers to some customers as well. It's a good synergy between. It's the same, you have a contract of several years. We expect also the stickiness to be the same as in SafePoint. When you go into these solutions, you stay with them. It's very much comparable to selling a SafePoint. Now we're building up that competence within our-
In the U.S. operations to get the footprint up to basically and continue to allow the current organic growth rates. Do you see the growth in operating margin in North America flattening out at the current level or do you see still that net there will be an expansion opportunity also in the margin, even taking on these extra costs?
I think within the strategy period, there is definitely an opportunity for a margin expansion. I still think that 2018 and 2019 it will not expand as much as it has done historically, simply because we will now move more into an investing phase when it comes to future revenue growth.
Excellent. Thank you for clarification.
Okay.
Don't seem to have any more questions.
Okay.
Also just a follow-up on the organic growth in Europe. I think we were all surprised by you at the latest three years. Now, one month later, you come in under that interval you indicated back then. Why would that swing back to more of 1%-3% for the coming years, considering that the Nordic markets now are declining and you will not have the deposit?
Turkey, for instance, Argentina, Spain will continue to grow. That's one reason that the big countries will continue to grow. I think that Turkey, for instance, just to mention that, it's a big country. We can get bigger and there is a lot of underlying growth. That's one element. The other element is that we will planning to add new services, taking Intermarketing as one example that will support the growth. SafePoint is another.
Okay, why wasn't that the case then in Q3? I guess Turkey and Argentina was growing nicely, it's a larger proportion than last year's.
It's not a long-term structural thing. I think that France will come back to zero or positive. It's the big delta. It's very much small differences also when it comes to invoicing days.
Okay.
The 1% to 3% as well represents for a longer period. Just looking at an individual quarter. I'm sure there will be certain quarters whether there will be zero growth, but there will also be.
That was rather than given the historical term. We could leave it there. Just on the U.S. margin, just a clarification. You expect basically it to improve by 2 steps. Is that right? Is that how it should be, the communication?
You should not interpret this as flat. We expect, the ambition is still to grow the margins on a year-by-year basis. Okay. Any more questions here from the floor? No. I say thank you very much and have a nice day.