Belfast Telegraph

G4S shares tumble despite 16.7% rise in profits

Shares in G4S tumbled on Wednesday, despite the global security giant reporting a rise in half-year sales and profits.

The FTSE 100 firm's stock was the biggest faller on the index in midday trading, dropping nearly 6% to 312p.

The group reported a 16.7% rise in pre-tax profits to £237 million in the six months to June 30, while revenue rose 12.5% to £3.97 billion.

Analysts put the share price fall down to slowing growth in the second quarter.

Kean Marden, equity analyst at Jefferies, said: "Organic revenue growth slowed considerably in the second quarter.

"Although not explicitly disclosed by the company, we calculate a circa 3.5% organic revenue growth rate in Q2, which is sharp deceleration on Q1 (8.9%) and well below our 7% estimate, primarily due to emerging markets."

G4S said revenue in the Middle East and India region was 7.8% down in the half as "sustained lower oil prices" weighed on the trading environment in the Gulf.

In India, it was adversely impacted by the country's demonetisation programme and changes to "regulatory institutions and processes".

The blot comes as the firm's operational turnaround continues under chief executive Ashley Almanza.

Mr Almanza has been overseeing an overhaul following a series of historic blunders, including a prisoner-tagging scandal and G4S's failure to supply adequate security for the London Olympics in 2012.

He said: "We continued to make substantial progress with G4S's transformation and this provides increased confidence in the group's prospects.

"The scale and quality of our pipeline is materially improved and this, together with our ongoing investment in sales operations and new products and services, provides stronger support for our organic growth plans.

"During the second half of 2017, our growth programme will focus on consolidating contract wins made over the past year and on converting attractive opportunities in our pipeline."

In the UK and Ireland, revenue grew 1.9% as G4S was boosted by new electronic monitoring, facilities management and integrated security contracts.

The company added that its productivity programme will allow it to deliver efficiencies of £90 million to £100 million by 2020.

G4S has also been selling off under-performing assets and has won a number of new contracts on its way to recovery.

To this end, it pointed to a new contract with an unnamed US retailer, similar to a deal with Walmart that will see G4S provide cash services across the chain's American stores.

The group has offloaded more than 20 businesses since 2013, with dozens more earmarked for sale or closure.

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