G4S optimistic after successful cost-cutting drive
Edinburgh — G4S, the world’s largest security group, said its gains from a cost savings drive would go towards boosting its technological capabilities, giving it "substantial confidence" in its medium-term outlook.
G4S, which provides outsourced services such as guarding, security and cash management, and has operations in SA, said full-year revenue was £7.43bn, below analyst expectations for £7.55bn, but within in a lower range it had a forecast late last year of between 3 and 4% growth.
Profit rose 5.7% to £277m.
Leaner processing and better organisation would achieve recurring operating gains of £70m-£80m by 2020, it said. Along with refinancing gains of about £20m, that would mean it could reinvest in growth and boost profit.
Growth in technology-enabled revenues and good cash generation, as well as better productivity, gave the group "substantial confidence" for the next three years, with a goal of raising core revenues by an average of 4%-6% annually.
Overall, strong growth in developed markets was partially offset by the effect of weak trading in the Middle East and India region, which was expected to stabilise during 2018.
G4S provides outsourced services such as providing guards and security, including the supply, installation and monitoring of alarm systems, as well as managing sensitive care and justice services.
The stock has managed to buck some of the trend in its sector, where sentiment has been soured by the collapse of building and outsourcing firm Carillion in January. That led to a political backlash about huge and sensitive contracts awarded by public departments to private companies.
G4S shares are flat so far this year versus a 6% decline in London’s FTSE 100 share index.