Good afternoon, everyone, welcome to our Q1 call. We have a busy day today. We've had a board meeting in the morning, and we are now presenting the results. We have an AGM here in Stockholm, which is starting in a few hours. Bart and I are going to try to be a little bit briefer than normal and wrap up at 3:00 P.M., but still giving good amount of time for questions. If we are looking to the results on Q1, we've had a good start to the year with 7% organic sales growth. All the segments have contributed to the improvements. As we have commented in previous quarters, we have continuously tight labor markets, but we have been able to balance the wage cost increases with price increases.
Good top-line growth together with cost control contributed to operating results, real change of 11% in the quarter, which we are proud of. We also had an improved operating margin to 4.8%. In terms of earnings per share, we have a positive growth of 3% real change. Our cash flow improved significantly in Q1 versus Q1 last year. Cash collection and cash management remain important areas of focus for us during 2019. We should also note that we have adopted IFRS 16 leases without restatement of the comparative periods. If you're looking at the quarter all in all, we see that we are off to a good start to the year. We're turning to the strategically important area of security solutions and electronic security. Here we continue with good activity, security solutions and electronic security in Q1.
These sales now accounted for 21% of the total sales of the business and 17% real growth, real sales growth. Obviously, as we have had a quite a strong growth, the base also keeps getting bigger. Good momentum in terms of solutions, electronic security. We also completed a few important acquisitions during the quarter that will help and enhance our protective services offering in a few important markets. Starting with commenting on the Staysafe acquisition Australia, this is important for us because we will essentially strengthen our protective services offering, improve the guarding service delivery, but also then with a state-of-the-art monitoring capability, also be able to offer remote video services and alarm monitoring in our solutions.
If you're looking at Allcooper in the U.K., another fine company that we have partnered with for a number of years, and with Allcooper, we would also then strengthen our protective services capability in the important U.K. market. We are very happy to welcome the teams from Staysafe and Allcooper to the Securitas team as of Q1. One of the most important priorities for us is to continuously strengthen our protective services offering and to do that then for the benefit of our customers. As in previous quarters, I would like now to share a new customer reference case, and in this case, it's a reference case from the Danish company, Maersk. If we can please play that video.
When we started, it was a concept. We are still moving boxes from waterside to landside. We try to do that as fast as possible with the help of automation. If you want to build the safest and the most secure automated terminal in the world, where do you start?
It has never been done before. They're stepping up their efficiency. It creates other risks. We listen to those risks and get in with new ideas to mitigate those risks.
A proactive partnership. We have to learn, and Securitas has to learn, too. You get to a higher level of technology.
We are a specialized security and safety company. We perceive ourselves as knowledge leaders.
We try to use the knowledge that's inside Securitas to do it the best as possible.
Maersk is making a shift towards automation and make the combination between people and technology. Securitas is already, for the last 10 years, on that road.
Usually, security and safety are separate services within companies. We combine the two to make it more efficient.
The best way to be successful is to communicate openly and transparently, to say what you do and to do what you say.
It's a serious job. We need serious people with commitment. That's why we global security.
Good. This, I believe, is a good example, where we started with a risk assessment, sitting down with Maersk, understanding their needs, and then we have developed. As you can see in this video, a comprehensive solution leveraging a number of our protective services. What I also believe is good about this case is that you also see that we are able to deliver this solution not just in one location, but in numerous locations in different regions and different countries around the world. We're leveraging the presence of Securitas, but also to the great value to our customer, in this case, Maersk. With that, let us now turn to the performance in the different segments. Starting with North America, with a solid start of 2019. We achieved 6% organic sales growth despite strong comparatives from last year.
We should also highlight that we lost a few large contracts in the quarter, but we have healthy overall commercial activity in our North American segments. If we turn into profitability, solid improvement to 5.7% in the quarter, and this is based on good performance across all areas of the business. Looking at Europe, we had solid growth also in Europe in the quarter, and organic sales growth came in at 4%. This was supported by strong contribution from Belgium, Germany, and Turkey, but some negative impact from France and Sweden. If you're looking at Securitas Solutions electronic security, we had 22% of the sales in the quarter from solutions and ES.
If you're looking from a profitability perspective in Europe, we saw an improved 5%, and this was supported by good leverage and some impact from the cost reduction program, which is going according to plan. The margin was hampered by startup costs in a few contracts. We lost a profitable contract in Sweden, and we also face challenging or continued challenging conditions in our French market. Looking at Ibero-America, we had a good quarter overall and strong support from solid performance in Spain. Spain, once again, is setting a very good example in terms of top line as well as bottom line development. Organic sales growth in the segment of 19% in Q1, and we had strong double-digit growth in Spain.
If you're looking then at the profitability perspective, Spain, like I mentioned, are clearly contributing, and this is very much thanks to our successful solutions business. We should highlight, like we've done in the previous quarter, that we have some short-term contracts, and we highlight that more to be prudent because we do not know when those might be terminated. The operating margin in Argentina burdened the results in Q1. As we commented in the previous quarter, we are not happy with the performance, and we expect continued challenging conditions in the near term. With that, I am happy to hand over to you, Bart, for some more details on the financials.
Okay, many thanks, Magnus. Before we go into the numbers, today it's a bank holiday in the U.K., to the people based in the U.K., I'm very sorry for breaking into your bank holiday, especially thank you very much for being with us here today as well. Thank you. Let's take a look into some further financial details into the quarter, we start with the income statement and some details around that. I believe, as Magnus said, also that we had a very good start to the year. As of Q1 now, we have adopted the IFRS 16, which is the standard that deals with leasing contracts. In essence, as of 2019, all equipment that is leased is considered as assets for accounting reasons.
We have implemented this standard without any restatement of comparatives, all of our existing contracts we have accounted for as if they started on January 1st. There is an effect on our income statement, as you can see here in the small table in the right upper corner, there's a positive effect of SEK 17 million on operating result, a negative effect on financial items of SEK 36 million. A net negative of SEK -19 million on income before tax. Moving to the next item here, we accounted for SEK 20 million as items affecting comparability in the first quarter, this of course relates to the transformation programs we commented upon before.
We have now made a further level of details in the planning related to 2019, we currently expect that we will recognize around SEK 200 million of items affecting comparability for 2019. Everything depends a bit on how fast we can implement certain matters and when exactly will we incur then the cost connected to that. The remainder will come in 2020 with potentially some costs running into 2021, we will take everything at the end of 2020. The total cost of SEK 650 million is still the relevant amount to account with.
As to the financial income and expenses, that is SEK -139 million in the quarter. As said before, being negatively impacted through the adoption of IFRS 16 leases for SEK 36 million, further some negative impact compared to last year through increased net debt, also the development of the U.S. dollar currency rate compared to the Swedish krona. Let's go further down then. We take a look at our tax line. Our current estimate is that the full year group tax rate in 2019 will be around 27.8%. That is an increase compared to 2018. It's mainly due to reverse effects from the U.S. tax reform. This is related to the introduction of the tax on foreign payments, the so-called BEAT. This BEAT reduces, quite importantly, some of the positive effects from the nominal tax reduction in U.S.
I should also add that the BEAT by itself makes the calculation of the effective tax rate a bit more difficult to forecast as it is more sensitive to certain elements in the income statement. You notice in the bottom here a small difference between EPS and EPS before items affecting comparability relating, of course, to the earlier mentioned items affecting comparability of SEK 20 million related to the transformation programs. We turn to the next page. We take a look at the effects from the different currencies. As always, the numbers here mentioned to the right are the foreign exchange and rates in Swedish krona, measured at quarter end and compared to the same quarter last year. As you can see here, the U.S. dollar has further strengthened to the Swedish krona during the quarter.
At the end of the quarter, compared to the same quarter, it means an increase actually more than 12%. The euro during the quarter was more around EUR 10.3-EUR 10.4, so much more stable compared to the U.S. dollar. The Argentina peso continued to be around -50% compared to 12 months ago. The drop is especially that happened since May to September last year. It has been more stable since October, you could say, the Argentina peso. Due to especially the effect from the U.S. dollar, as you can understand, our quarterly consolidated income was positively affected comparing to last year. Our nominal numbers got quite some tailwind from the currency. On sales level, there is a 6% tailwind, that you can see from the difference between total change and real change. On operating result, the difference was 7%.
I would just also like to point for a second at the deleverage that happens in between operating result and net income. Mentioned also at the outset of the presentation, the real change on operating income level is 11%, while the real change on EPS before items affecting comparability is 3%. That difference is entirely due to the higher financial items due to the higher tax rate. Turning to the cash flow and the balance sheet. It shall be noted that the net cash flow is not impacted from IFRS 16. The impact is on the income statement and on the balance sheet, but there is no impact on the net cash flow. However, while the net amount, I mean, the net cash flow is not impacted, some of the individual lines are actually impacted in the calculations.
We see here net investments of SEK -67 million, and that results then from investments of SEK -707 million and reversal of depreciation of SEK 640 million. One shall then understand that IFRS 16 leases impacted the investments with a bit over SEK 200 million, actually, and it impacted the reversal of depreciation also with a little bit over SEK 200 million. With IFRS 16, our CapEx gets now insulated, and that is from around SEK 2 billion per year to an amount now of more SEK 2.9 billion under the new measurement, under the new accounting. Meaning that you could, for instance, expect a sizable impact in a quarter where we would sign a new rental contract for a large office building with a long duration. That could then in that quarter have a larger impact on the measurement of the investment in that quarter.
As you know, there is some seasonality in our operating cash flows. We had a substantial cash flow improvement compared to the same quarter last year. A good improvement, all in all, we are not fully happy yet with the DSO achievement. We have further analyzed and we have further worked with issue and action plans are ongoing. Moving to the next slide, we look at the net debt, this stands now at SEK 19.3 billion, up from SEK 14.5 billion at the beginning of the year. This is here where you need to get a little bit more acquainted actually with the numbers after IFRS 16 also. The main difference relates to the implementation of IFRS 16, which made the net debt increase with almost SEK 3.5 billion.
Of course, we have the development from the operating cash flow, as just explained, the net debt was also impacted from the foreign exchange development, largely from the U.S. dollar. As you can see here on the slide, that added SEK 451 million in translation to net debt since January 1st. To the far right of the slide, the net debt in relation to EBITDA is on 2.8x, that is after IFRS 16. As I said, IFRS 16 had a quite substantial impact because now the net debt fully includes the entire effect from IFRS 16, while 10 or 12 months rolling EBITDA only includes one quarter with the effect from IFRS 16. The net debt to EBITDA before IFRS 16 then stands at 2.4x.
Only by including more quarters with EBITDA measured after IFRS 16, our leverage shall come down by itself with about 0.3x. The seasonality of our cash flows will normally increase the leverage at Q2 and go down again in the second half of the year. We go to the next slide, here we have tried to summarize the effects from IFRS 16. As a summary here, there's a net negative impact to the income statement. We do see an important impact to the balance sheet with an increase of net debt and assets with about SEK 3.5 billion. The EBITDA, of course, changes also substantially because previously what was operating expenses have now become depreciation and interest. There is no impact to the net cash flow, we do see increased amounts recognized for investments and for reversal depreciation.
For your reference here, we have included some KPIs before and after IFRS 16 so that you can see the impact and the development of the different KPIs. This table you will also find in the note two to the report, together with all the other explanations on IFRS 16. The good news is, so to say, that the rating agencies followed already for quite some time the KPIs pretty much in line with how IFRS 16 treats leases. Securitas is rated BBB from Standard & Poor's, but maybe you noted that our outlook was changed recently from stable to a positive outlook. With this positive outlook, I would like to hand back to Magnus, but also would like to say one more thing.
We have reworked a bit the quarterly report with the main goal to make it as clear as possible for the readers, for the audience. We worked a bit with the tables and headers and all the different smaller and bigger things. I hope you like it, but I want to especially take the opportunity here also to thank all of our teams, the people that help producing the numbers and the tables and wording. Many thanks for that to all of our teams. With this, I'm happy to hand back to Magnus.
Very good. Thank you, Bart. You have no small role yourself in that work. With that, before we open up the Q&A, I will just make a few updates related to the strategy work. If you're looking at the position that we have today, we have a strong position. As we have shared in some of the previous updates, we have a good position and presence, but we also see good opportunity to leverage this presence and our customer relationships to drive the development in the next phase. Part of this is obviously related to how do we work to strengthen our protective services, our ability to respond. The other one is then also related to how do we leverage the vast amounts of data that we generate to be able to enhance the quality and the security to our customers.
When you're looking at what are we focusing on in terms of delivering 2020, it's focused on three different areas. One is on our client engagement, and this is then looking at all the ways that we are interacting with customers. Second one is to continue to strengthen the protective services leadership. Like I mentioned earlier, we are happy to also then complete a few new acquisitions in Q1, and we're continuously looking at acquisitions that are attractive to especially then enhance our electronic security capability. Then the last effort is related to modernization and digitalization, and also then enhancing efficiency. A lot of that is important because that is where we also have the enablers of building a platform which will enable us to launch more digital products at scale as we go forward.
If you then looking back a few months, in early February, we announced two major transformation programs to help and drive these changes. The objective with the first program is to radically modernize our global IS/IT, building a strong platform and capability throughout the group. We do that with two main objectives. One is efficiency, and the other one is to be able to launch more digital products and to scale those across countries and regions more quickly. The second program, which we are in the middle of as well, is our North American Business Transformation Program, where we're looking at a number of different activities to help and operate our business in a more effective way.
Both of these programs are long-term programs as we have communicated previously, I'm also glad to say that we are progressing according to plan. When you look at Securitas today, we have a strong foundation, and we also have very exciting opportunities ahead. Looking at the lower parts, which is really representing our foundation, we are looking continuously at how do we strengthen our core, which is our guarding. We continue to invest in what is here, the middle layer in terms of our protective services capability to ensure that we don't only have the best offer to the customers today, but also in the future. Now taking the first steps in terms of launching more data-driven products and driving more data-driven innovation for many years to come. To conclude, we've had a good start to the year.
Solid growth and year-on-year operating results improvement, and we continue to invest in our strategy and are also excited about the opportunities that we have in the mid and the long term to ensure that we continue to lead the development of this industry, and that we bring the best value to our customers. With that, I think that Bart and I are happy to open up for questions. Like I mentioned at the beginning, we have an AGM here in Stockholm right after this call, so we will try to wrap up at the latest at 3:00 P.M. CET. Now happy to open up for questions.
Thank you very much. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad and you will enter a queue. After you are announced, please ask your question. Our first question comes from the line of Chirag Varia of HSBC. Please go ahead. Your line is now open.
Hi there. I've just got three questions. Firstly, could you talk about where the broad base of organic growth came from, and if you expect to see similar rates throughout the year? Second question, what level is the current employee churn rate? What mechanism do you use to pass the wage increases on with clients going forward? Finally, on M&A activity, how do you view M&A in the U.S. guarding market given the recent activity by some of the larger competitors in the space? Thank you.
Thanks a lot for the question. If you look at your first question, when you say where is it coming from, the fact is that this is fairly broad-based growth. We have contribution from all the segments. We also had when you're looking at some of the terminations, et cetera, they did not happen until the end of the quarter. We mentioned a few contracts in North America, for example, so they did not have any material impact in Q1. I would say that the growth is really coming down to the fact that we have a good offering, generally speaking, good commercial activity, and we're also retaining and pretty good at retaining our customers. There is obviously competition, and that is the reason that we have lost a few contracts as well that we would have liked to keep.
Maybe I can save question number two for you later on, Bart. If you look at the third question, which was then about guarding acquisition interest in North America, if I understood it correctly. We have a very strong team in North America. We're winning organically, and when you look at where are we investing, well, it's strengthening the other parts of the protective services. We have strong guarding capability. We have invested significantly, as you know, in terms of the Diebold, and then last year closed the Kratos acquisition. From my perspective, guarding acquisitions in North America is not a high priority. If you look then and extend that question to a global perspective, the focus is really more on electronic security and some of the other protective services more generally when we look at our acquisition interests.
You could see other markets though, that's a different question. Feel free to ask that later on where we could be more interested in if good opportunities come up, but not primarily guarding in North America. Maybe Bart, if you want to comment on the second question.
On the employee churn, as published in the annual report, we are at around 40% for the totality of the group, and that is pretty much in line with the number from the year before. I should mention, however, that we have done a small remeasurement there because our number before included, you could say temporary staff as well, that for some reason was measured as churn, but it had nothing really to do with churn. Probably if you could take it from a legal angle, yes, those people were coming in and out from the company. That is something we have corrected, but that is only a minor correction. It's on the same level as last year for the totality of the group. You questioned also about the wage increases. Yes, we pass on that, of course, in the prices.
As mentioned before, we have had quite some discipline and focus on this throughout the years. You could say on average, our price increases are around 2% during any cycle. Then that turns out to be a bit higher in good economical times to between 2% and 3%. Last year, we were already in the higher end of that 2%- 3%. Now this year it seems like the price increase will also be a bit ahead of actually where it was last year. Q1 and Q2 are very important for our price increases. That is the key quarters. So far, we have been good. We have been on par. Of course, also the last negotiations are always the toughest ones, I should say. We will come back to this matter also at the end of Q2 then.
Great. Thank you.
Answers your question.
Thank you. Our next question comes from the line of Edward Stanley of Morgan Stanley. Please go ahead. Your line is now open.
Thank you. I'll try and be quick. A couple. If we try to break down the 17% growth in solutions and electronic security, can you give us an idea of which geography that's predominantly coming from? Secondly, in Iberia, Latam, you mentioned in the coming quarters or the near term, however you described it, you expect that to remain challenging. Can you give us a feel for how many quarters before you think you'd turn a corner there? Finally, on IFRS 16, because of the leverage increase, does that change anything about the way you think about M&A in the coming year or two? Thank you.
Could you repeat your last question, please?
It was impact of IFRS 16, how that affects leverage and if that has an impact on.
Okay.
M&A thinking.
Yeah.
Yeah. Thanks for the questions. If you look at solutions electronic security, we have healthy growth of 17%. The momentum is pretty good across the different segments. Obviously, you have part of that is organic, part of that is also then helped by acquisitions. When you're looking at all the different segments, it is fairly good momentum across the board, which is important, and it's a good thing because this is obviously an important aspect of our strategy that we continue to drive, to really increase our solutions electronic security share of the total business. If you look at the second question, I think you asked about the Ibero-America and Argentina. Well, we have not been happy with the development in Argentina like we communicated in previous quarter as well.
Part of this has been macroeconomic conditions that remain challenging, but we've also done some leadership changes as well. We have kind of a long cycle business. Typically when we have some challenges, it typically takes a little bit of time until you're really back to a level where you want to be. I think that is as much as we can say. It's a bit difficult to say at this time if it's a matter of three or six or nine months, something like that. This is what we see. Obviously putting quite a lot of emphasis on improving this as we go forward. Maybe Bart, you want to take the IFRS 16?
Yeah. There's an impact now on our leverage as it is calculated, but as mentioned before as well, the rating agencies already calculated in this way. From that perspective, there is no real impact in the way we should be rated, and that is of course what is important also when it comes to acquisitions and the capacity we could have there. By itself, the real effect then from IFRS 16, once we have been through the cycle, so to say, four quarters further down the road or three quarters additional to this first one, we will come back then to around 2.3x, 2.4x. That is a very normal level of leverage we have seen before. Depending on the cash flow during the year, it could even be further down from the 2.3x, 2.4x.
There is no really big effect to be expected from IFRS 16 on our acquisition capacity.
Excellent. Thank you.
Thank you. Our next question comes from the line of Bilal Aziz of UBS. Please go ahead. Your line is open.
Good afternoon. Just two from my side, please. First, in Europe, I think you suggested some large contracts were a drag due to ramp-up costs. Can you give a bit more detail on where these are based and how you expect that to phase through the rest of the year? The second one, just a bit of clarification, Bart. I think you said SEK 200 million of transformational costs this year and the remainder of the SEK 650 million last year. Just clarifying, is that correct? Thank you.
Yeah. On the first question, Bilal, we have won a few contracts, they're helping the organic sales growth. Like we've highlighted, they're burdening the margin in Q1, and we see that there will be some impact from that as well in the near term. That is as we are optimizing and building up and scaling up according to those contracts. I should mention as well that we highlighted in the previous quarter that there is one larger contract in France that we communicated three months ago, which is terminating now during Q2. This is obviously part of the ongoing business. We have a strong offer, we have good commercial activity, but we highlight this because there have also been more substantial impact from this contract. Do you want to take the second?
Yes. On the items affecting comparability, it is exactly as you phrased it, Bilal. The totality for the two programs is still around SEK 650 million, in line with what we have talked about before. The impact for this year is a bit lower maybe than what we have been thinking before. The reason for that is that until we could disclose this to the world, these were insider projects with an inside registration on them. Of course, now we have been able to enter into the next level of detailed planning. For this year, we plan then that we should have around SEK 200 million of items affecting comparability for 2019.
That's very clear. Thank you.
Thank you. Our next question comes from the line of James Winkler of Jefferies. Please go ahead. Your line is open.
Hi, guys. I think a lot of them were answered there. I was just wondering if you could give me any more color on the lost contracts in the U.S. You said they happened near the end of the quarter. Wondering if they are significant enough to where we should be considering any sort of impact from either a growth perspective, margin perspective, or both in the coming quarters within that division. If you could just reiterate the staff turnover, and maybe if you could give any color on a division basis, how that's moved, that'd be great. Thanks.
Yeah. Thank you, James. There are a few large contracts, that's the reason that we highlight, we don't specify specific numbers. There will clearly be an impact. This is also the reality. Some years we might lose a few. Some years we do not. Now we have lost a few, that's the reason that we highlight it. I should also emphasize that we are meeting strong comparatives as well in the second quarter, in terms of organic sales growth. I think that's something which is also just important to keep in mind.
Yeah. Maybe to add, Magnus, that effect for North America is expected more to be on the organic sales growth than on the margin.
Yeah.
On the staff turnover. Yes, I commented that the number is 40 for the totality of the group, we have not split that out per division. We have not reported on that. We will not comment on it either now in the call.
Okay, thanks.
Thank you. Our next question comes from the line of Carina Elmgren of Handelsbanken. Please go ahead. Your line is open.
Yes, hi. I have two questions. One is regarding the cost savings program that you have in Europe, that you say is going according to plan. How should we think about it going forward? Do you expect the effect to be the same in the coming quarters? Do you expect the positive effect to increase, going forward? The second question is related to the contracts that you mentioned. Did I understand it correctly that the big contracts in North America that you have lost was towards the end of the quarter? Is that the same for Sweden, where I think you also mentioned you lost a contract? If you could maybe say a little bit about in what sectors these contracts are. Thank you.
If I start, Carina, the impact from the cost reduction program in Q1 in Europe was around SEK 20 million, and we're expecting a gradual increase of that for the remainder of the year. Just to give a fairly clear view in terms of where we are. If you look at the contracts in North America, yes, it's correct. They were towards the end of Q1. No material impact in terms of the Q1 figures. If you're looking at Europe, and more also the reference in the comment that we made related to Sweden, that's a bigger contract that we terminated end of last year. That will have an impact on a year-on-year comparison basis up until November or the December timeframe, this year. I'm not sure. Was there another question related?
I could just add that the gradual buildup on the saving program, we expect to have around SEK 100 million of savings for the totality of the year.
Yes.
The larger contracts in North America there, they stopped actually on 1st of March. That was when the impact already happened.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Karl-Johan Bonnevier of DNB Markets. Please go ahead. Your line is now open.
Yes, good afternoon. Just a final one of those. Are they in the technology space, or are they pure guarding contracts we are talking about? Also on the business transformation study that you are talking about doing in Europe to see if there's the same kind of opportunity as you have found in the North American operation. Have you come to any conclusion there?
Yeah. If you look, the North American contracts are primarily guarding contracts. If you're looking at the contract in Sweden, that was a profitable contract and also then a mix of different protective services. In terms of the second question, Karl-Johan, you asked about the transformation programs and-
You mentioned before that you were looking to do a case study for the European operation if there was a similar opportunity.
We are right in the middle of that work. We will come back, as we previously communicated, in the second half of this year with more information, in terms of what is feasible or not to do in Europe.
The main guidance there will be the return on investment over a longer term period.
Absolutely.
If you look at your business structure in North America and compare it to Europe, do you think there is a similar kind of group-wide European opportunity that as you have found in the U.S., or it would be more a country-by-country?
If you look at North America, it's obviously the way that we operate, and also then when you look at the underlying dynamics, it's one big country, and then you have Canada and Mexico. We have more of a shared-service setup and structure already in place in North America. If you're looking at Europe, we have been growing more on a country-by-country basis. The starting points are quite different, and that is also the reason that we are taking the pre-study and really analyzing this carefully before we are designing and engaging and saying, "This is what we believe we need to do in the short, mid, and the long term in Europe." The starting points, I think you correctly assumed, are quite different.
Thank you.
Thank you. Our next question comes from the line of Allen Wells of Exane BNP Paribas. Please go ahead. Your line is now open.
Good afternoon, Bart and Magnus. Just two very quick ones just around the Ibero-America business. I'm not sure if I missed this earlier, but can you quantify the benefit from the short-term contract uplift that you touched on in the report? Any comments you can make in terms of timing? Will they still be a benefit in Q2, or do they roll away quite quickly? Second question also just on Spain, obviously still seeing pretty good growth there. I don't know if you could just quantify what underlying market growth looks like in Spain at the moment, and exactly who you're taking share from or why you're taking share in that market versus peers. Thank you.
The Spanish contracts, the short-term contracts that we mentioned there is obviously a certain significance when you look at the total impact. I should also mention that we have strong overall momentum in Spain. A lot of the progress that we are making is coming from ongoing, more normal long-term part of business, if you will. I think that is one important clarification. That is one. If you're looking at our Spanish business, I think for those of you who have followed us closely over a number of years, I think this is a very good example where we had a very tough situation in the middle of the financial economic crisis in Spain, if you're going back to 2011.
We have continuously been investing, what we have seen in the recent quarters is that we are growing from strength to strength, I would say, thanks to the protective services offering. We're winning quite a lot with our solutions capability. We have also seen in recent quarters that some of the guarding customers that we have lost previously are starting to come back as well because they appreciate, they know now what they lost when they discontinued services with Securitas, a number of those are also coming back. I would say that we are really winning with good momentum thanks to the great work that our Spanish team is doing.
Sorry, can I just make a quick follow-up? In terms of who that you're gaining share back from, is this coming from other key larger players, Prosegur, et cetera? Or is it coming from maybe the smaller mom-and-pop shops that were very aggressive on pricing to keep in business during the downturn that you're now winning stuff back? I'm just trying to differentiate between who's losing here. Is it the bigger guys or the smaller guys?
It's a bit difficult to generalize. I think we are generally winning in the market, but like you say, there were a few companies that have also gone out of business in the last couple of years because they were too aggressive and not responsible in terms of how they managed their income statement or importantly, their people. That obviously then probably helps as well. It's a little bit, generally speaking, more healthy situation in the market overall, but we cannot really say that we are winning more from one specific category of competitors.
Okay, understand. Thank you.
Thank you. Just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypads. There are no further questions at this time. Please go ahead, speakers.
Okay. In that case, on behalf of Bart and myself we are happy about the first quarter. Our team is doing a tremendous job across all the different segments and the different countries. Thanks a lot to all of you for dialing in today and good questions. Thank you.
Bye-bye.