G4S shares slump 12 per cent after security firm signals flat profit

Callum Keown
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G4S said profit for the year would be in line with 2017 (Source: Getty)

Shares in G4S have tumbled more than 12 per cent after the security firm warned it would not achieve profit growth for the year.

The London-listed company reported organic revenue growth of 2.5 per cent for the third quarter, below analyst expectations.

The FTSE 250 company, which runs prisons and detention centres as well as storing cash, said higher labour costs and investment in new services meant revenue growth would be in line with 2017.

Chief executive Ashley Almanza said: “Strong organic growth rates in security services in North America and Asia and in cash technology solutions were partially offset by lower revenues in Benelux and conventional cash services.

“We continue to exercise commercial discipline in markets where labour supply is tight and while this is expected to constrain revenue growth in 2018, our new contract wins and substantial, high quality pipeline provide good momentum into 2019.”

Security revenue growth was 3.4 per cent but offset by lower revenues in its care and justice services – with its security arm posting 2.5 per cent overall growth.

Shares fell 12.8 per cent in the morning to 188.6p following the trading update.

Given the CEO has been there for around 5 years and has not created any value, we wonder whether it is time for something more radical,” said Andrew Brook at RBC.

After five years of turnaround strategy, G4S still struggles to gain momentum,” analysts at Jefferies said in a note to clients.