SHARES in security giant G4S plummeted 8.5 per cent yesterday on investor fears that the firm’s failure to provide enough Olympic guards will cause long-term reputational damage.
Chief executive Nick Buckles will appear in front of parliament’s home affairs select committee today to explain what went wrong.
But he is fighting to stay in his job as the £50m cost of paying for 3,500 members of the armed forces to make up the shortfall looks set to be dwarfed by the public relations disaster.
“G4S has evidently over-stretched itself with a high profile contract, which could have wider implications for the group’s ability to win work,” said Espirito Santo analyst David Brockton. “[This] could result in either senior management change or loss of future prospects.”
Robert Plant at JP Morgan Cazenove added: “Around 10 per cent of G4S’ revenue is for UK public sector contracts and management had said that the UK public sector was one of the more active parts of the pipeline.”
G4S’s stock dropped to 254.6p yesterday, leading the FTSE 100 loserboard.