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G4S sees bright outlook and further investment on cost-cutting

Stock Markets Mar 08, 2018 07:51
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© Reuters. FILE PHOTO: A G4S security van is parked outside a bank in Loughborough
 
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EDINBURGH (Reuters) - The world's largest security group G4S (CO:G4S) 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, said full-year revenue was 7.43 billion pounds, below analyst expectations for 7.55 billion pounds, but within in a lower range it had a forecast late last year of between 3 and 4 percent growth.

Profit rose 5.7 percent to 277 million pounds.

Leaner processing and better organisation would achieve recurring operating gains of 70 million to 80 million pounds by 2020, it said. Along with refinancing gains of around 20 million pounds, that would mean it could re-invest 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 to 6 percent 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 percent decline in London's FTSE 100 share index.

G4S sees bright outlook and further investment on cost-cutting
 

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