Wednesday, March 13, 2013
G4S profits rise despite Olympic debacle
LONDON (Reuters) - Security group G4S posted a six percent rise in annual profit, as emerging markets growth helped soften the blow of an Olympics staffing blunder that rocked the British firm in 2012.
The world's No.1 security group on Wednesday said 2012 operating profit excluding the Olympics was 516 million pounds, up six percent on 2011 and within analysts' forecast range of between 510 and 520 million pounds.
Underlying revenue rose 8.1 percent to 7.3 billion pounds, with improved organic growth of 7 percent. The group's emerging markets division performed strongly with revenue up 15 percent, while the firm was also boosted by new British government contracts.
Having severely dented investor confidence in late 2011 with the surprise and eventually aborted multi-billion pound takeover of Danish cleaning firm ISS, any hopes G4S had for a quieter 2012 vanished last July when it admitted just weeks before the Olympics it could not provide a promised 10,400 venue guards.
The blunder sparked heavy criticism of the firm and led to G4S agreeing with Games organisers in February to take a higher than expected 70 million pound loss on the contract. This, along with additional related costs of 18 million pounds, was taken as an exceptional charge in its 2012 accounts.
The group has shown signs of recovery in recent months however, winning British government and commercial contracts, and has spoken of receiving government assurances that its Olympic failure would not hinder its chances of winning work in future.
As part of plans to grow its emerging market revenues from 30 to 50 percent of the group by 2019, G4S has also begun exiting lower margin businesses in European markets like Poland and Denmark, as well as its high-level government security arm in the U.S., which has struggled due to federal funding cuts.
The firm on Wednesday recommended to increase its full year dividend by 5 percent to 8.96 pence. It also announced that its Chief Financial Officer Trevor Dighton would retire on April 30 and be replaced by ex-BG Group CFO, Ashley Almanza.
Shares in G4S, which fell around 20 percent in the wake of its Olympics failure, closed at 307.5 pence on Tuesday having earlier reached a year high of 310.5 pence.
(Reporting by Neil Maidment; Editing by Kate Holton)