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G4S plc Drops Despite Increased Revenue

G4S (LSE: GFS) issued an interim management statement for the nine months to the end of September 2013 this morning. Despite reporting revenue up 6.4% (at constant exchange rates, but excluding the Olympics contract), and profit before interest, tax and amortisation (PBITA) that’s “in line” with the same period in 2012, its share price is currently down over 2.5%.

Organic growth increased by 4.8%.  Emerging markets, which now account for over 40% of group profits, saw 14% growth, which offset “broadly flat” performance in developed ones. 

As part of the statement, G4S said that it will “fully co-operate” with the investigation into  the provision of electronic monitoring services that was announced by the Serious Fraud Office yesterday.

The company has also issued a statement regarding its capital markets update, to be held this afternoon, at which CEO Ashley Almanza and CFO Himanshu Raja, will brief investors on the group’s markets and strategy.

The statement says that they have “identified 35 businesses to grow, restructure or recycle capital”, and that an additional £15m-£20m will be invested in sales, business development and “capability” during 2014.

Speaking ahead of the update, Ashley Almanza said

Our review of the business has confirmed that G4S has outstanding worldwide market positions. We are the global leader in integrated security, providing security products and security services and solutions in markets that are valued at over £100 billion.   There is strong and growing demand for our core products and services, particularly in developing markets which we expect will represent around 40% of our sales in 2016.  

“G4S has strong fundamentals and these will be improved by changes to the way we manage the business.  We will sharpen our strategic focus and strengthen our investment in customer service, organic growth, and technology and innovation. We will share best practice across the group and there will be a clear focus on capital discipline, cost leadership and cash flow management to ensure we deliver sustainable profitable growth.”

Shareholders will certainly be hoping that Almanza’s changes will deliver positive results. At its current 247.3p, G4S’s share price is down 3.7% for the year to date, and down 5.25% on this time last year. 

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> Jon doesn't own shares in G4S.