Olympics deal helps drive G4S revenue growth
Wednesday 16 May 2012
G4S, the world's biggest security firm, said a thriving resources sector across developing markets and a contract to protect punters at the Olympic Games in London helped to drive a 7.5 per cent rise in first-quarter revenue growth.
G4S, which grabbed headlines last year when a £5.2bn deal to buy the Danish cleaning firm ISS collapsed under investor opposition, said strong growth in emerging markets had helped to push organic revenue to 7 per cent for the three months to 31 March.
The figure was up from 4.5 per cent in its last quarter and in line with expectations. Shares in the firm – the world's second largest private employer behind Wal-Mart – rose 3 per cent to 275.2p.
"Based on recent contract awards, outsourcing trends and the group's bid pipeline, the organic growth rate is expected to continue to improve during 2012," the company said.
G4S, which runs services from cash transportation to operating prisons around the world, is the official security provider for the 2012 Games, supplying 10,000 personnel for the event in a contract worth £200m to the company.
The Olympics deal will earn G4S £150m of revenue in 2012 and is one of many British contracts it is starting this year. Others include running services such as IT, custody and training for Lincolnshire Police and providing accommodation and transport to asylum-seekers across Britain. Strong growth in developing markets in Africa, Latin America and the Middle East also boosted revenues at both its core security division, where it won a number of contracts in oil, gas and mining sectors, and at its cash handling business.
Earlier this month the company said it was targeting a rising number of opportunities in Africa's buoyant natural resources sector, as part of its aim to grow group revenue from 30 to 50 per cent in emerging markets by 2019.
G4S added yesterday that budget cuts and government delays in the United States had continued to put pressure on its business, although its commercial market had improved.
Parts of southern Europe such as Romania and Hungary remained tough, it said, although Greece, dogged by political upheaval and a possible exit from the euro, did offer up some opportunities.
"Our fast-growing business last year in European cash services was Greece and clearly our biggest contingency issue would arise if the country were to leave the euro and go back to the drachma," G4S's chief executive, Nick Buckles, said.
"Basically we would be involved in the whole roll-out of the currency. We are not talking to anybody about that at the moment but that would be a big challenge for us."
Earlier this month, G4S's rival Securitas saw its first-quarter organic sales growth slow from 2 to 1 per cent as it reported an unexpected drop in profit.
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