Good Times Return for Cash Industry Leaders

February is when several of the leading listed companies in cash report their annual results for the previous year. In 2019, all bar one reported strong results and optimistic outlooks. Needless to say, this was before COVID struck, and the optimism was quickly overturned in 2020 as the pandemic took its toll.

But 2021 turned out to be an altogether better year, with all but one of the companies detailed here announcing increases in both sales and profits.

Loomis – sales, profit and outlook improve

Loomis’ revenue for 2021 of SEK 19.72 billion exceeded the previous year by 4.8%, of which SEK 1.05 billion was organic growth, a 5.6 % improvement. In Europe revenue grew by 3.9% to SEK 10.2 billion and in the US by 6% to SEK 9.64 billion. The company’s new segment, Loomis Pay – an end-to-end payment platform for merchants launched in September 2020 to manage cash, card and other digital payments - achieved revenue of SEK 11 million compared with SEK 7 million in 2021.

Operating profit (EBITA) of SEK 1.9 billion increased by 10.5%, increasing the operating margin from 9.5% to 9.9%. Net profit increased by 54% SEK 1.1 billion.

By segment, EBITA in Europe of SEK 846 million increased by 43.9%, and in the USA it was 1.9% higher at SEK 1.45 billion (albeit that the impact of COVID in 2020 was markedly less in the US). Loomis Pay recorded an operating loss of SEK 48 million but is expected to achieve a positive operating income in 2023.

The pandemic had a negative impact during the first quarter of the year compared with the first quarter of 2020, but during the remainder of 2021 the overall impact on revenue and operating margin was lower than in 2020.

President and CEO, Patrik Andersson, noted that the positive trend is continuing. He anticipates that the negative impact of the coronavirus on travel and tourism throughout 2021 will be replaced by good growth as the situation normalises.

He also noted that the pandemic is driving the outsourcing of cash management and ATM services to providers such as Loomis.

Currency fuels growth at Crane

Crane Co’s group revenue for the year at $3.18 billion was $419 million (+15%) higher than in the previous year, comprised of a $343 million (12%) increase in core sales and a $71 million (3%) benefit from favourable foreign exchange. Operating profit of $502 million was 109% higher than in 2020, and the operating margin increasing from 8.7% to 15.8%, a record for the company.

Banknotes, paper and security features, along with cash handling systems, are included in the Payment and Merchandising Technologies sector which achieved sales of $1.34 billion, up by nearly 22% from 2020. The sector’s operating profit nearly tripled to $307 million.

The company is forecasting group sales of approximately $3.3 billion for 2022, a core sales growth of between 4% and 6%.

‘Terrific’ year for NCR

Retail and banking automation specialist NCR has described 2021 as a ‘terrific’ year.

Revenue increased by 15% to $7.15 billion, and adjusted operating profit (EBITDA) by 38.8% to $1.24 billion, increasing the operating margin by 3% to 17.4%.

Full year income from operations increased from the prior year due to stronger revenue and higher margins, partially offset by the absorption of the operating expenses of Cardtronics, the acquisition of which was concluded at the start of the year. A net income loss of $7 million was turned into a gain of $97 million.

In the banking segment, sales increased by 20% to $3.7 billion (some due the inclusion of Cardtronics). Retail sales increased by 10% to $2.28 billion and the Hospitability segment by 24% to $848 million. Sales in the T&T (Telecom & Technology Solutions) segment fell, however, by 14% to $297 million.

Software and Services now account for 73% of turnover, and increased by 17% to $5.2 billion in 2021. A large part of this is made up of recurring revenue.

For the full year the company is forecasting revenue of $8-8.2 billion (an increase of 12-15%) and adjusted EBITDA of $1.5-1.575 billion (21-27%).

Looking ahead, the NCR Board has unanimously approved a comprehensive strategic review process, with the objective of evaluating a full range of strategic alternatives to enhance value for all shareholders. The alternatives could include a disposal of a material business or assets, a spin-off, merger or sale of the company, other structural changes, changes to branding or geographical footprint or other transactions or alternatives. No timetable has been set for the conclusion of the strategic review.

But not so good for Diebold Nixdorf

The one company that has didn’t see an upturn in sales was Diebold Nixdorf, where revenue for 2021 remained virtually static at $3.9 billion, while EBITDA fell by 1.5% to $126.2 million, resulting in a small fall in the operating margin to 11.6%.

Operating profit (EBIT), however, increased by 47.1% to $137.1 million. The company still recorded a net loss of $78.8 million, but this was substantially less than in 2020, when the net loss was £269.1 million. The sales backlog ended the year approximately 11% over 2020, providing a strong foundation for 2022.

Comparing revenue by the segments - Services, Products and Software - the former fell by 3.6% to $2 billion, Products increased by 4.8% to $1.5 billion and Software by 0.7% to $460 million. Services accounted for 49.4 % of sales, Products for 38.9%, and Software for 11.7%.

The company expects revenue of $4-4.2 billion in 2022, and an adjusted operating profit (EBITDA) of $440-460 million.

Brinks breaks records

Brinks was the last of the companies to announce its 4th quarter earnings and full year results in February, announcing revenues of $4.2 billion for 2021, a record for the company and an increase of 14% over 2020.

Operating profit was up by 23% to $471 million and was also a record for the company. EBITDA of $683 million was up by 21%.

All geographical segments (North America, Latin America, Europe and ROW) achieved both revenue and operating profit growth, the highest being in Europe at 75% and the lowest in Latin America at 10%.

For the current year revenue is expected to grow by 8-11% and adjusted EBITDA by 10.5-15.7%. For more information on Brinks’ digital strategy and forecasts to 2024, see page 5.

In the March issue we will report the annual results of GardaWorld, Glory and Prosegur. It will be interesting to see if their figures support the turnaround of the sector.