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Last updated: August 13, 2014 3:04 pm
G4S, the world’s biggest security company, staged a comeback in the first six months of this year, led by new contract wins in emerging and North American markets.
The company, which employs 618,000 staff in 120 countries and is one of the world’s biggest private sector employers, is currently overhauling its sprawling empire after being shaken by a series of scandals on government contracts.
On Wednesday, G4S said it had won £1.2bn of new work, including deals providing security for ports in Brazil and mine clearance in South Sudan.
For the six months that ended on June 30, underlying profit before interest, tax and amortisation – adjusted for currency fluctuations – grew by 6.3 per cent to £185m. Revenues increased nearly 4 per cent to £3.4bn, led by a 12 per cent rise in emerging markets. Underlying earnings rose 13.2 per cent to £86m.
Ashley Almanza, chief executive, is in the process of shaking up the management – cutting costs, improving customer service and restructuring weak divisions to help revive G4S’s fortunes.
“There is more hard work to be done and we are not going to chase everything but the good news is there is a lot to go for,” he said. “The transformation of G4S is clearly under way.”
The group has raised £160m from the sale of six businesses including a Swedish alarms company as part of a long-term strategy to sell poorly performing operations. It is also in the final stages of selling US Government Solutions, which has just signed a deal to provide housing and facilities at the Guantánamo Bay US naval base in Cuba.
At the same time it is expanding some streams of business, including a risk advisory service that operates in Iraq, Afghanistan and the Middle East and a technology company in the US.
There remains much to be done to capture the full potential of our strategy and to strengthen the group’s performance
- Ashley Almanza, G4S chief executive
The company recently confirmed that it would withdraw from controversial work supplying security equipment for the Israeli government by 2016.
In Britain, revenues declined by 2 per cent to £790m in the first six months of the year as it was hit by reputational damage as a result of an ongoing investigation by the Serious Fraud Office for overcharging on electronic monitoring tags, including for offenders who had died.
Despite this, G4S has won significant new work including a deal to manage community work placements for the long-term unemployed.
Stephen Rawlinson, analyst at Whitman Howard, described it as a “long game”. He added: “G4S is making steady progress with its programme of stabilising the business and setting it on track for future sustainable growth.”
Shares in G4S rose 13p, or 5 per cent, to 272.8p in mid-afternoon London trading.
Mr Almanza, a former executive at oil and gas group BG Group, was promoted to chief executive a year ago after a string of blunders – including a failed takeover bid in 2011 and a botched contract to supply staff to the 2012 Olympics – claimed the scalp of his predecessor, Nick Buckles. The company is in the process of appointing a new UK head, after Eddie Aston quit in May. He was the unit’s third boss to leave in two years.
Net debt at the half-year was £1.7bn, reflecting the seasonal nature of G4S’s cash flows. Total cash generated in the seasonally weaker first half declined to £212m, from £224m a year earlier, partly on the cost of its £109m electronic monitoring settlement.
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