Emerging markets growth helps boost G4S Q1 revenue
07 May 2014, 12:17
London - G4S, the world's biggest security firm, said strong demand in emerging markets helped group revenue rise 4.8 percent in its first-quarter as it looks to bounce back from a series of scandals that have severely damaged its reputation and profits.
The British group is in the middle of overhauling its sprawling 125-country business, shaking up management, cutting costs, improving customer service and restructuring weak divisions to help revive its fortunes.
On Wednesday it said revenue for the three months to March 31 grew 4.8 percent, with organic growth up from 4.5 percent in its fourth quarter to 5.0 percent, in line with forecasts.
Growth was led by a 16 percent revenue rise in emerging markets, which already make up 37 percent of group turnover and are a key focus for expansion. Revenue in developed regions was flat on a year ago.
Operating profit for the period was up slightly on 2013, the firm said, adding it had won work worth 440 million pounds ($748 million) annually in the quarter, including retail contracts in the United States and Brazil, a port security consultancy in the Middle East and a work programme deal with the UK government.
Cantor Fitzgerald analyst Caroline de La Soujeole said G4S had had "a good start to the year", but she left her forecasts unchanged and its rating on 'Hold'.
On Monday, Securitas, the world's No.2 security group which makes over half its sales in Europe, posted a surprise fall in first-quarter core earnings, hit by higher labour costs in Spain.
Having failed to provide enough security guards for the London 2012 Olympics, G4S suffered another scandal last July when, alongside rival Serco, it was banned from new UK government work after being found to have charged for monitoring criminals who were dead, in prison or not tagged at all.
Following a repayment of 108.9 million pounds and a commitment to improve scrutiny of its contracts, Britain lifted the ban in April, although the tagging scandal remains the subject of a Serious Fraud Office probe.
Reputational recovery aside, Ashley Almanza, chief executive since last June, has moved to cement control over G4S by pushing for better integration of its numerous acquired businesses and to cut costs by sharing services such as IT and human resources.
Its balance sheet has also been boosted by a share sale, while the firm is restructuring its UK and Ireland cash security arm and has identified other units to improve or sell in favour of investment in high-growth developing markets.
Shares in G4S, which in March posted an 85 percent fall in 2013 group operating profit after charges to 56 million pounds, were up 1.8 percent to 244.7 pence at 0759 GMT.
($1 = 0.5885 British Pounds)