Security giant boosted by new markets

Mar 12 2008 by Our Correspondent, Western Mail

GLOBAL security firm G4S revealed a jump in annual earnings after the company was buoyed by strong growth in developing markets.

G4S, formerly known as Group 4 Securicor, said expansion in the Middle East, India and Saudi Arabia helped pre-tax profits for 2007 rise to £216.8m from £199.5m a year ago.

Organic growth in developed markets, such as Europe and the United States of America, of 7% compared with growth of 17% in developing locations, the Anglo-Danish firm said.

G4S is now the second largest employer in India and enjoyed 28% growth in the country in 2007.

The company has recently won contracts to provide security for airports in Delhi, Mumbai, Hyderabad and Cochin.

And its acquisition of Middle East firm al Majal earlier this year has seen it become the largest security company in Saudi Arabia.

The company expanded its operations into Mauritius, Mauritania, Cambodia and Sri Lanka during the year.

Chief executive Nick Buckles also dampened worries that the company would be hit by the impact of an international economic slowdown in the coming year.

He said, “The company is extremely pleased with the performance of the business in 2007 and feel confident about the further development of the group this year.

“Overall, the outlook for the business is good and we are not expecting the recent economic uncertainties to impact our ability to continue to deliver strong results in the future.”

Group turnover increased 14.5% during the year to £4.49bn.

In the UK and Ireland, the firm’s security services business saw growth of 6% after a number of major contract wins.

The company will also begin a contract to help passengers with restricted mobility at Gatwick Airport next month.

Its domestic ATM and cash handling business also performed strongly, with a major contract to provide out-of-hours bank branch servicing from Halifax Bank of Scotland boosting trading.

G4S, which employs 530,000 staff and has operations in more than 110 countries, also indicated that it would remain on the acquisition trail after unveiling a series of recent buyouts.

Last week, it acquired stadium and concert security firm Rock Steady for an undisclosed sum and is currently awaiting approval from competition authorities for its £355m buyout of Global Solutions Limited (GSL), which was announced to the market last December

It is also planning to sell its security services businesses in both France and Germany, which have combined sales of about £250m.

Shares in the company, which was promoted to the FTSE 100 Index in December, rose more than 3% as analysts welcomed the firm’s upbeat figures.

Julian Carter, analyst at Collins Stewart, said, “While management has now achieved its 7% earnings margin target, we expect further improvement from the ongoing mix shift towards new markets and the impact of GSL.

“We think sustainable medium-term organic sales growth is now likely to be closer to 8% than management’s previous target of 7%.”

G4S was formed through a merger between Danish firm Group 4 Falck and UK firm Securicor in 2004 to create the world’s second-largest security firm behind Securitas.