G4S share price jumps after revealing positive results and being buoyed by Trump administration prospects

 
Oliver Gill
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Safety first: G4S is three years into its "transformation" plan

G4S shares flew this morning after posting revenue growth, revealing a strong pipeline and making progress against a company overhaul initiated three years ago.

The group's chief executive also made upbeat comments about US President Donald Trump's economic plans, saying "what's good for our customers is good for us".

The figures

Statutory revenue grew by 10.6 per cent to £7.6bn with continuing business revenues at constant rates increasing by 6.3 per cent to £6.8bn.

While earnings from continuing businesses grew by 16.6 per cent to £246m but on a statutory basis they plummeted from £198m to £8m.

Operating cashflow was markedly up: rising 61.5 per cent to £638m on a continuing basis and 71.3 per cent to £615m under statutory disclosures.

Read more: G4S exits Israel after agreeing cash deal

Full year dividends were maintained at 9.41p per share in line with the previous year.

Why it's interesting

On a press call this morning chief executive Ashley Almanza was upbeat about the impact of President Donald Trump's pro-business agenda. "So far the administration has signalled a business friendly policy and agenda," said Almanza.

He added that while the details of Trump's plans were yet to be seen he expects his policies to "be good for business generally". He added:

What's good for our customers is good for us. When our customers do well, we do well because they expand, invest and as result they typically buy more security services. That is probably the most important overall opportunity that we see.

Read more: Security firm G4S reports results this week

In November 2013 G4S kicked off its "transformation" strategy. While the firm said "there remains much to do to realise the full potential of our strategy", G4S stressed it had made "significant progress" against its plans in each of the three areas it set out to change.

Almanza also underlined the fact that G4S doesn't make forecasts. But, the firm stressed it has a strong pipeline with £6.8bn of sales on tap.

What the analysts said

Andrew Brooke of RBC Capital Markets said:

"Results are in line (earnings before interest, tax and amortisation were £454m versus forecast £454m).

"However organic growth was better than expected at 6.3 per cent (with acceleration to 8.1 per cent in the fourth quarter) driven by North America cash retail solutions and the cash flow was better than expected driven by an £87m working capital inflow.

"The outlook remains positive, with more of a growth focus, now stronger foundations are in place."

What the company said

In its official announcement to the stockmarket, Almanza said:

We made good progress with our transformation strategy in 2016 and our continuing businesses delivered revenue growth of 6.3 per cent and earnings growth of 16.6 per cent.

We now have much stronger foundations, growing competitive capabilities and an attractive array of market opportunities.

Our transformation strategy is expected to produce further performance improvements and underpins our aim of delivering sustainable, profitable growth.

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