Hello everyone. Very welcome to the H1 of 2016. We'll go straight to the summary. We had a very very good quarter. We are very pleased with the quarter. Very good organic growth in the quarter. And of course supported a lot by exceptionally high extra sales coming from refugee situation from the terror-related businesses and the increased need for security. And some needs in the U.S. with some of our major customers there. And a few other things. But still having said that it's important to stress that out of 8% that represents 3%. But the remaining 5% in the quarter is still the ongoing traditional business growing very well in the Q2 and also for the first six months.
So I mean if we take that also for the first six months then 2%-3% in that range is the extra sales. And then the remaining so to say ordinary business is still 5%-6%. So we are growing faster than the market both in North America and in Europe. The operating margin has also improved. A good operating margin in the quarter. We're up 40 basis points compared to last year. And for the first six months it's 0.2 compared to last year. And we get leverage from the growth. We have the Securitas Electronic Security in North America that supports the margin and the extra sales as well. So a combination of those things that support a good development of the margin especially in the Q2. Price wage approximately on par.
EPS good real change. Free cash flow is not good. As always in the first six months, so we are behind. But we normally catch up in the H2 and we expect to do that this year as well. The security solution electronic security business is growing well. We are making acquisitions there. We made a during the quarter we finalized one in Germany. And during the summer we have signed an acquisition in Norway. And we still have a few others that we are looking at and working on within the electronic security and also in fire and safety. And hopefully one or two of those could possibly be finalized, small medium-sized companies during the H2 of the year. So we expect to continue to grow that at a high pace also for the full year.
Yeah, here you see the numbers. Good growth. Good margin in the quarter. Higher financial income because we have converted the Eurobond and our financing to dollars in order to finance the Diebold and the Securitas Electronic Security acquisition in the same currency as the equity, so to say. Which means that we have a higher interest rate because of the dollar interest rates compared to the euro interest rates. We have to explain that more thoroughly in the report in order to give you a little bit more guidance on that subject. North America, the market is growing in the range. We are increasing our estimates and changing those upwards, both for North America and Europe. The markets are presently growing a little bit faster than we expected a quarter ago.
So now we think that the North American market is growing in the range of 4% right now. We in the quarter at 7%. And then 2 out of the 7 were related to the extra sales for some of our major customers on specific events. But they are now all done and that's finalized. So that will not continue in the coming quarters. But still we are growing without the extra sales in the range of 5% in a market growing about 4%. So we are slightly ahead of the market in North America. We also think that the market will stay on this level for next year. So we expect 2017 to continue to grow in the range of about 4% also next year in North America. So the economy's doing well.
The security market is fair and we have a good position and we are doing well in North America. The electronic security and security solution piece is also growing. Its relative share. And of course a good development in Diebold that supports our margin basically along the same pace as in Q1. And according to our plan and what we expected when we acquired the business. So it continues to have a positive development also in the Q2. And supporting the margin in North America during the H1 and which is explained on this slide here as well. So the extra sales, the good leverage, and the electronic security piece are the main factors to why we are improving the operating margin in North America.
So a very solid good position good development in the North American business. In Europe we said in the Q1 that we expect the market to be growing in the range of 2%-3%. We have now changed our opinion about that. So we think it's more in the range of 3% and driven by the security needs of different kinds in Europe given the overall macroeconomic situation. And we think it's probably be in that range maybe a little bit lower next year. But the 2%-3% growth in the European market also in the coming year is what we expect. We have had a good growth from the extra sales. Half of the 8% is coming from the extra sales related to the refugee situation which is the main driver of that.
The terror attacks of course have had some impact but still not very much but to some extent fair. And then we had the football championship in France that supported France in Q2, and a few other minor things. So all in all a very good growth in the European market. We are expecting that some of these services will reduce during the H2. And what we also see is that the refugee related business will probably be different during the H2 compared to the H1. And because the amount or the number of refugees coming to Europe is now substantially less than it was last year. It's about half in Germany and it's about a quarter in Sweden for example.
That's the forecast we have given. We have seen from the official authorities on the expected refugee situation. So that will have an impact. How much it will reduce we don't want to quantify that. And we just say that it we just say that we'd probably not be on the same level the H2 as it was in the H1. And also in addition we should also mention that we are facing a little bit tougher comparatives in the fourth quarter, not so much in the third but in the fourth quarter because we had a very strong pickup of those kind of services October November and December last year as you might remember. The margin positive good development good leverage from the good growth in Europe.
Leverage in the cost base so that is the main reason why the margin is picking up well in the Q2. Ibero-America more or less on the same level growth-wise. So still doing well. Good development in Colombia, for example. Also Portugal, which had a good situation in the quarter. Argentina is basically in recession right now. And when we convert those numbers to Swedish kronor because of the big devaluation of a peso in the beginning of the year, it becomes less kronor. And we have quantified that in the report to give a little bit of guidance on that subject. But still all in all a pretty good growth in Latin America.
But we see some concerns of the slowing down of the Latin American economy due to the macroeconomic situation influenced by raw material prices and oil and so forth. And some concerns of the macroeconomic development in Latin America. But so far we are doing well and growing well in Latin America. Margins have also improved. It was a good quarter. We improved compared to last year. And it's mainly Spain which is supporting that but also to some extent Peru where we had trouble last year. And then you have the same effect on the peso in Argentina as I mentioned before.
The Spanish economy I should also mention is growing in the range of 1%-2% this year and probably more or less in the same range the coming year. So still a little bit of tough times. And now the political situation uncertainty about that how that will develop in Spain. Deflation in the economy makes it a little bit more difficult than usual to also increase prices. And we have a CBA correction of 1.7% as of July. That will be hard to offset against the customers in price increases. We'll do our best but we are a bit concerned that we could if we can push those increases onto the customer base given the total situation in Spain.
Cash flow as I mentioned initially it's basically in the quarter was basically as the level as last year. But we are a little bit behind compared to the H1 year of last year. But that is mainly explained by payroll differences in the U.S. which makes a big swing. So that will catch up during the H2 and we should have a good cash flow as we always do during the H2. There's no reason to believe anything different at this point in time. And the debt is a consequence of the acquisition of the Diebold and the dividend paid. Those are the main reasons to why the net debt situation has developed as it has. We continue with an increase in electronic security and security solutions. So good pace here.
We are. It's according to our plan. And on top of that, of course, we have the acquisitions adding to that. Especially Diebold, of course, has a huge impact. That will support that relative share when we come to the end of the year. But also other acquisitions such as the German and the Norwegian ones will also add to that relative development. So good development according to our expectations and the equation works that we are basically doubling the operating margin when we move a contract from a guarding contract to a solution contract. That is confirmed every month, every quarter. So I can again confirm that that is working. So we had a Capital Markets Day in June in Malmö.
And I think many of you who are listening into this call have either been there or you have seen it on our web. And if you haven't, don't miss it. Log in and have a look. And most of the questions regarding our strategy and our thinking and our views and how we develop ourselves as a company, our vision for the years to come. And also more specifics about the divisions of the segments is presented at that or was presented at that occasion. And it's also available actually on the web in case you would be more interested. So I spare you that chapter at this presentation and will now allow for questions and we will try to answer your questions. So please go ahead.
Ladies and gentlemen, if you have a question for the speaker, please press zero one on your telephone keypad and you enter a queue. After you are announced, please ask your question. Please hold until we have the first question. Our first question comes from a line of Rob Plant from J.P. Morgan. Please go ahead. Your line is open.
Hi, Alf. You mentioned that in Spain you have the 1.7% increase and the backdrop isn't great. In the past sometimes there's been a renegotiation of that. And if there wasn't, how much of that 1.7% do you think you're going to be able to pass through? Thank you.
There has been some discussions if that was possible to change what was agreed last year. But in the end we concluded that that was not possible.
So there will not be any change to that CBA. So the 1.7 is a fact. I mean we will try to compensate some of it but it will be difficult given deflation the macroeconomic situation the setback a little bit about the recovery the political uncertainty. All those things influences that. So it will be difficult. And I would think that it's probably a minor part that we could recover from the market. And the major part we will probably not be able to recover short term. Of course long term we need to correct that balance to get back on track. But short term it will be difficult.
That's clear. Thank you.
Thank you.
Our next question comes from a line of Micael Sjökvist from Danske Bank. Please go ahead.
Your line is open.
Hi. Two questions. First, regarding the expected slowdown during the H2 of the year in Europe related to refugee situation. Is that something you've already seen or is it something you expect given those forecasts for refugees coming to Europe? That's the first question. And the second one is also related to Spain. When we tried to back out the organic growth for that country. It seems like organic growth is accelerating a bit in the recent three quarters. Is that correct? Or what is the driver behind that? Is it something else than just the economy?
Well, I mean, we have the extra sales in Europe, the extra sales in Europe. Some of it is already gone, the football European Championship for example.
The terror-related extra sales. I mean we hope we don't need we don't see those extra sales going forward.
But those are kind of facts or assumptions I should say. When it comes to the refugee situation we know that the flow is substantially lower. So the answer to your question is that we have not seen it yet because we continue on a high level in the first and Q2. But we expect it to be less in the coming six months. Now that's our prediction. And so we're just pointing out the direction how much and how dramatic if dramatic at all that remains to be seen. And then of course you could have incidents which would be unfortunate and/or unexpected in the H2 that could influence that forecast as well.
It's hard to predict. It's hard to predict. We just like to, and then we also meet the comparatives in Q4. But we just like to point out a little bit our expectation and the direction, but nothing more than that.
Okay. That's clear.
And then on the Spanish situation, I mean, we have had an improving situation on the organic sales growth in Spain, especially in the Q2. So, I mean, the Spanish market is growing probably 1%-2% in Q3. We had in Q2 an organic sales growth of 3% in Spain. It was just over 1% in the Q1. So we kind of maybe in the upper part of that growth so far this year.
So we are, yeah, in the range of 2% in the first six months in Spain.
Okay. Thank you.
Our next question comes from a line of Paul Checketts from Barclays. Please go ahead. Your line is open.
Hi everyone. I've got two questions please. Alf, the first is with regard to the acquisition pipeline. I'm interested in what sort of level of leverage you'd be comfortable with going up to on the balance sheet and whether or not that's likely to occur in the H2 and into next year. And the second question, you've had Diebold for somewhat longer now. I'm interested in whether or not you know who you've now identified additional or new synergies that you can take out of that business. Thanks.
I mean on the Diebold situation it's basically what we have said all along. No surprises. It's moving on as we expect. We are happy with that acquisition. Very strong good team doing a good job. We think the synergies will be as we expected. And we're taking a lot of good actions in the U.S. to make those commercial steps in the right way. How we can support each other from the former Securitas side together with the SES business and how we can leverage that together. So nothing negative nothing positive. So it's a more positive than what we expected. But still all in all this is the right thing for us and it will strengthen our position in the marketplace and allow us as we hope with our strategy to continue to grow faster than the market.
When it comes to the acquisitions, we don't foresee any major acquisitions in the H2. What is on our radar screen now are medium-sized or small acquisitions. And then I'm talking about companies in the range of EUR 5-20 million sales turnover per year. Those are the kind of companies. We are looking at companies in technology specifically and also some in fire and safety, which is the area that we explained in Malmö, which we like to continue to grow because it fits very well with our complete protective services capability that we can offer our customer to optimize their costs. So those are the kind of companies. Primarily in Europe is what we're looking right now. But we have a few others also outside Europe that we are contemplating.
So I hope that some of those or a few could materialize during the H2. But that will not dramatically change the leverage, which was your second question on that topic. I mean, we will have a very good cash flow as we always do in the H2. And that will restore our free cash flow to net debt relationship we think. So right now we are a little bit higher than normal, but that's very much related to the Diebold acquisition. And that will happen that we from time to time we are leveraging a little bit more. And then we restore the situation and then we are ready to make a larger medium-sized acquisition going forward.
So with the cash flow that we now expect from the ordinary business plus of course the business that we have acquired we should be in good shape by the end of the year as we usually are.
Thanks very much.
Our next question comes from a line of Sylvia Barker from Deutsche Bank in London. Please go ahead.
Your line is open. Hi, good afternoon. I've got three, please. The first two on North America. So you've been growing quite fast in North America for a while now and even the market forecasts seem to be quite a bit kind of above what we've seen in terms of GDP prints. Why is that or what drives that? Is it the U.S.? Is there anything kind of in, I don't know, in Mexico or other areas where you are maybe growing a bit faster?
Or are there any particular end markets which might be growing a little bit faster than the general kind of macro suggest. And then the second one on North America: could you tell us what the one-off events were? And would you say that this is a sign of kind of a late cycle market or is that just something that came along and you don't expect to repeat? And then finally on Europe, if we exclude the extra sales we're still seeing very good growth. So which would you say are your top three countries kind of excluding the extra sales please in terms of contribution to growth? Thank you.
Well, in North America we—I mean the market is the macroeconomic situation is good so that helps of course.
And then a number of companies are also reviewing the security needs for all kinds of different reasons and increasing the security levels or the screening or the efforts they put in for security. So when we say that the market is growing in right now in the range of 4% we are looking at different. We're looking on our own estimates. We talk to our own organization of course and check what they feel. We look on the BLS statistics, the number of guards in the market and all those things. And I think this is a pretty accurate estimate that the market is growing in the range of 4%.
I think that's gonna continue next year in the same level. For the reason good macroeconomic development and increased security needs in many many companies where they just kind of upped the level of security at their sites. The extras we prefer not to mention to which was the cost customers was some of our larger customers. There was extra needs that was primarily during the month of May. It's now we did the service. It's now gone. It's over. So that specific situation is now not there anymore. And those extra sales basically disappeared in the month of June in the beginning of the month of June. In the European security market we have without the extra sales we have I mean we have good growth in many markets. Germany is doing well.
Sweden is doing well. Well, I would say basically the Nordic countries are doing well. Also, Turkey has good growth in our services there. And Eastern Europe is picking up a little bit compared to last year where we was struggling with the growth. But now we see a couple of percent, 3%-4% growth in Eastern Europe in the H1. So and the extra sales is primarily coming from Germany and Sweden related to the refugee situation and to a minor degree from France, Belgium, and the Nordic countries for other reasons.
Great. Thank you very much.
Our next question comes from a line of Andrew Fennell from Morgan Stanley. Please go ahead. Your line is open. Hi, just a couple from me.
I wonder if you're able to give a split of the margin benefit that you've received from extra sales versus underlying growth. And then my second question is just could you give us an indication of what kind of pricing power is like by region?
Well, I mean, pricing power. It's—it's there is not much pricing power in this market because it's a very scattered and a lot of companies in the marketplace. So the way to drive the market is not to try to get pricing power on selling guarding services. That's very difficult or almost impossible. So the margin improvements comes from changing the business mix and increasing the security solution piece.
That is the key factor of how we long-term and short-term improve our margin by acquisitions or by growing that relative share as we have mentioned many many times. And that works. I mean it works. It's for sure the right strategy on how to continue to drive margin long-term. Then of course we get some leverage also when we had good growth. And we leverage with the indirect cost the cost base when we get growth in the sense that we that we have seen here now. The margin on the extra sales we prefer not to mention. We have a good margin. It supported a little bit in the Q2. But we don't try to abuse the situation. That would be wrong. So we get a good leverage from it.
We have a little bit better margin in some of those cases in Q2. But I prefer not to quantify that any more than that.
Okay. But the bulk of the margin improvement is coming from business mix and so on right as opposed to your extra sales?
Well the margin improvement comes from the inclusion of SES in North America with Diebold acquisition. It comes from the leverage and it comes from the extra sales. Those are the main and our strategy. So it's a mix of all those things together. And we have a kind of rule of thumb let's say that when we mention something it's usually in the range of 0.1 on the margin impact.
Okay. Thanks.
Our next question comes from a line of Viktor Lindeberg from Carnegie.
Please go ahead. Your line is open. Thank you. And just to understand the Swedish migration administration related volumes going forward, you mentioned of course the refugee volumes probably coming down. And I think I recalled you mentioning some time ago that this contract is being up for tendering ahead. Is that the case?
It was up for tender but then it was prolonged. So now the contract ends during Q1 next year. So it will be retendered during the fall.
Okay. And looking at the U.S. employee turnover now being at the 70% level, what level do you think is sustainable without seeing too much either salary inflation or negative spillover effect in the organization from operating at this level?
I mean this level it works on this level.
I mean, we said in Q1 that we'd probably see more wage inflation rather than 2% than the 1% that we've had when employee turnover was lower. And that remains. That statement still remains now. That'll probably drive a little but not any excessive push on that. There has been some minimum salary adjustments in a few places in the U.S. as well. But no major concerns on that. We still find people. We're still able to manage. We will a little bit more wage inflation but no dramatic changes as we have seen so far. But it's on a relatively high level. We have to remember that. We have to watch out for it.
But as you probably also know, the U.S. market works totally different than when you have a CBA situation where most of the U.S. market is based on individual wage agreements. And when we have a change in the wage agreement in one specific customer or one specific site or one specific city et cetera, we are then able to manage that directly with our customer and try to then negotiate a price increase on equivalent amount. So we are able to keep the price wage balance in the U.S., and I foresee that we should be able to continue to do that. That's usually our ambition. And I think that we don't see any big change in that balance for the remainder of the year.
Okay.
And just to understand your internal targets regarding growing the technology business, you've been growing now the past two years 40% 30% organically. And looking ahead and just to understand your plans and target is this a growth level you also target going forward or do you expect this to slow down organically now adjusted for Diebold?
I don't wanna, I prefer not to relate it to a number. So I mean we are growing well. It's growing. I mean you have to remember when the base is growing the percentage will might be different. It gets more if you have if you're at 1 and you grow to 2 it'll be 100%. And then of course it's the bigger the amount the more difficult it gets to keep a very high percentage.
But still compared to our internal target and our expectations we are growing well. We're doing strong good development in all the divisions in most of the countries. We are happy with that. And we are growing according to our own expectation and our own internal plans. And on top of that then we have the acquisitions that of course makes that growth even higher. Like especially the Diebold but also the other ones for Germany and Norwegian and potentially other acquisitions during the H2.
Okay. That's all from me. Thanks. Yep.
Good.
Our next question comes from a line of Henrik Nielsen from Nordea Markets. Please go ahead.
Your line is open.
Thank you operator. Hi Alf. On the margin in North America it's up 40 basis points roughly year-on-year.
Can you comment on how much of that margin improvement is related to organic improvements versus Diebold?
I prefer not specifying that any more. I mean we had a the I mean the no I prefer not to give any more details on that. It's the leverage. It's the Diebold acquisition. It's the extra sales. And those are it's a combination of the three and that supports the margin in the first six months and the quarter, sorry, in the quarter.
Okay. Thank you.
And they are all sizable and they are all important. And they make up the 0.4.
Yeah. So it's fair to assume that each of those have at least 10 basis points contribution or?
Yes. Yes.
Okay.
In Europe, then, the year-over-year roughly 4% organic growth from extra sales. Can you comment on how much is related to immigration?
Most of it.
Thank you. And in general it seems like you're winning market shares in both North America and Europe. Are you winning shares from all types of players or is it mainly small or both large and small competitors?
Well, I mean it's mainly large and medium-sized competitors besides the really local small ones. They kind of live on their own in their own lot they have their own business climate to manage in so to say. So those we never compete with those really. I mean those are the small mom and pop local companies around the corner.
But I mean it's the medium-sized and the large players that we are winning from. And also as we mentioned on the Capital Markets Day we also see some positive signs that I mean in North America for example that the outsourced piece is slightly growing. That also supports the market and us that we can, and then we have a good story to tell with our ability to optimize the technology with the services.
In Europe, we haven't seen much of an impact yet, but there is a promising discussion in a number of countries where, between the private security industry and the police, the police need help to manage the situations and offload them from work where the private security could support that and allow the police to have policemen focusing more on really where which are the core and the most prioritized services.
Okay. Thank you. And a follow-up on that, can you mention any specific market in Europe where that discussion is ongoing?
It's ongoing in Sweden, in Denmark, Belgium, Germany, for example, UK.
Okay. Thank you. And I know you've been outsourcing, as you mentioned here, and you have mentioned a couple of quarters ago the outsourcing of airports in North America.
Is there any news there or anything happening?
We were bidding on the San Francisco Airport but we didn't win. That was one attempt. It was the incumbent supplier kept the contract. We are bidding on some medium-sized minor smaller airports or pieces of contract in a few other airports that we have bidding on right now in a few places in the U.S. And we expect there to be some larger airports coming maybe already in the H2 that we will perhaps participation in those tenders. I prefer not to mention which. It will not be very smart to say that. So I but yes. So I mean for sure we have put a team in place.
We have resources in place because we expect that the U.S. security services for the aviation industry in the U.S. will gradually be outsourced. And we hope to take a chunk of that to take a piece of that business. And that's gonna happen. That's that we are pretty certain about. The question is exactly when and to what extent. But it's moving now and we have the resources in place and the team in place to be able to meet that need.
Thank you. And one last question if I may here. Could you please reiterate what you said regarding the extra volumes in Germany and Sweden? Did you say that they were expected to be half in the H2?
No, I didn't say that.
No, I didn't say that. That's—I didn't say that. I didn't say anything. I don't—I don't—I'm not giving any numbers on that, so—so I didn't. The refugee, yes. Okay. Well, okay. Sorry. I was—I was correct. Yes, sorry. I—I—maybe okay. I—I didn't say anything about us. What I mentioned was my colleague here mentioned helped me guiding me right here. Is that the—I mean, the forecast that I have seen for—for the German—for the German—for Germany of a number of people seeking asylum in—in Germany is about half compared to last year, this year. And in Sweden it's probably in the range of a quarter. That's the latest forecast I have seen compared to the 163,000 that was seeking asylum in Sweden last year.
So the volumes are substantially less. The number of immigrants coming to Europe asking for asylum are much less this year than it was last year. That's what I mentioned. No, it was not about the security market as such. It was more on the macro level.
Yeah. Yeah. I understand. Thank you very much.
Okay.
Our next question comes from a line of Srini Konda from HSBC. Please go ahead. Your line is open.
Hi, this is Srini Konda from HSBC. I have two questions if I may. First, in U.S. staffing, churn 70% seems to be pretty high. Can you give us some color on what's happening there? And the second question: how much of staff cost of people who install systems is capitalized? And is asset life still 3-6 years of such capitalization?
And what happens if the contract is terminated early to such assets? Thank you.
Well on the level of the staff turnover in the U.S. I mean those levels we have seen before pre the crisis. I mean go back to 2007 and 2008 we still we have seen those levels I think as well. And those I mean they are high but they are manageable. And of course a little bit of a mirror picture on the employment rates in the U.S. But I mean as I mentioned before on a similar question this is manageable and but it will probably mean that we see a little bit more wage inflation in the U.S. this year than we have seen in the past years but still within so to say manageable territory.
Okay.
And on the second question I wasn't sure I fully understood that. Hang on a second here.
We'll see if
sometimes we use subcontractors and we capitalize the total cost of that. Sometimes we use internal resources and then we would capitalize direct labor but mostly we use subcontractors I would say. When we do the solution installation.
Yes I mean yes. Okay. I'll see if I see my friend here he's maybe understood the question better than I did. But anyway the one we when we use if your question is that if we use when we do installations to our customers then we subcontract that usually in the U.S. We don't perform that with our own resources. And then that is a cost.
That is what we charge to the customer or we capitalize. And then we amortize that cost during the period of the contract. Okay. So the philosophy we have when it comes to all equipment or work or installation work related to contract is that we amortize it during the period of a contract. So we don't end up at the end of the contract with a residual value. So we sit on a ticking bomb so to say of having a cost in our balance sheet for which we do not have a contract. So the length of the contract decides the amortization of the investment at the customer sites.
And then of course if we can prolong the contract after that it will become some negotiation where we share that upside with the customer. Or the customer would have the opportunity we have agreed if they don't wanna amortize to that level then we have an agreement with the customer with a residual value of equipment at the end of the contract. And then their annual amortization would be less because they buy out the equipment at the end of the contract at the residual value.
Okay. What if it terminates early?
Then they have to pay. I mean if they break the contract then they will have to pay.
Okay. Yeah. Thank you.
Our next question comes from a line of Stefan Andersson from Handelsbanken. Please go ahead. Your line is open.
It's just a few small follow-ups on the U.S. airport market. Roughly speaking, how large would you say that the U.S. airport market is? And who would you say is the largest airport security provider in the world?
I mean today, I mean the market potential is $3 billion-$4 billion annually. So it's a big market and a big potential. Today, there are I mean most of that. I mean most of that base is a big part of that. I mean, or most of it is today in-sourced with the TSA. And TSA is doing that. So that is what we expect will change in the years to come and that the private security industry can do some of that work. Not all of it of course but some of that work hopefully will be outsourced.
It will be airport by airport. Was that your question on the second one?
Yeah. No, the second one was who do you consider to be the largest airport security provider in the world? I guess that's you.
I think it's us. I think so. But I'm not. We don't follow that closely. There are a couple of companies of course our competitors G4S, ICTS, Brink's yeah a number of different companies doing that kind of service. But I think we are probably the largest one in the world if we're doing almost 200 airports around the world primarily in Europe. So I think we are probably the largest one today in the marketplace. But I could be wrong but I hope I'm right.
All right. Just a final one.
Generally speaking, how would you describe your current position in Asia? And more importantly, how do you see that position change over the next five years?
I mean, we will never be a big player in Asia. We have a sizable operation in India. That's really the only larger one we have. But I mean, our preference is not to—our thinking is not to be a large player in every single country. Our thinking is to work with our global clients, multinational companies, to serve them in a high-quality, high-professional way with excellent services, and not to be too active, so to say, in the local market. And in some markets we will probably get into compliance matters and difficulties if we would.
So we try to limit our scope to serve customers who are willing to pay for quality services and where compliance is also a very important matter. We are missing a few countries where we like to make acquisitions and to get started. Malaysia being one, the Philippines being another one. We are considering Australia. Could be potentially also in Oceania or Asia to give a few examples of countries where we are investigating what possibilities there are.
Okay. Thank you.
Our next question comes from the line of Andy Grobler from Credit Suisse. Please go ahead. Your line is open.
Hi, just one follow-up question if I may on Spain. You talked about the collective bargaining agreement and the impact on or your ability to pass that on in terms of prices.
What do you think that does to the competitive environment in Spain given that many of your competitors are already struggling to make any money in that market?
It's hard for me to have an opinion about that. But I think we all have the same issue and we face the same difficulties in the market and to push on a wage increase of 1.7% in an economy with deflation and a little bit of a setback in the recovery and a little bit of a political uncertainty of what will that mean for the future is not that easy. And I think everyone will struggle with basically the same situation because we play ball in the same field.
So I mean, some of the companies—I mean, you probably heard me mention before that there has been quite a number of companies who went into bankruptcy over the past year and a half and two years. And this will not make for some companies who are at the borderline; this might be too difficult simply to manage. I don't know. So it could change the competitive landscape, but I'm not sure. It's hard to speculate about that.
Okay. But there is a potential there that what some of what you may lose in margin, you're gonna gain a bit of that back in terms of market share.
I mean, we only—that could happen.
And when companies went into bankruptcy or were liquidated we could pick up pieces of those portfolios over the past two years. That has helped us. What's gonna happen is we cannot count on that. What we're counting on is and what is predictable is to try to go to the customers suggest solutions technology how we can optimize the services and then try to plug in the price increase in that equation as well to cover on the guard side and still protect the contract give the customer a better solution reduce the cost for the customer and mitigate by smarter solutions the guard wage increase. That's how we try to do it and in order to protect our margin and still being able to also protect our portfolio.
Okay. Thank you.
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Hi, sorry, I just had a couple of very quick follow-ups. Could you just remind us your market share in France, Sweden and Germany if you could? And then just in terms of the international customers. So if you have a global customer and you win a contract in somewhere in Asia for example would you report that within the home kind of country of that customer or would you report that within the other segment please? Thanks.
Oh, we win a global contract we report the services that we perform in Thailand or Vietnam or China or India or whatever country or Sweden or Germany. We report the services that we do in that country. Those are reported in that country in that region so to say.
So it's not in any other division. So it's wherever services perform where we report it. Our market share in France is 20% plus in the range of in that range. In Germany probably more like 12%-14% range I would say. Sweden is high in the range of at least in the range of maybe 50%. I don't have a specific number of that but we have a high market share in the Swedish market.
Great. Thanks very much.
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