LONDON: G4S plans to shake up the weakest parts of its business and lay off up to 400 UK staff as the new boss of the world’s largest security firm by revenue battles to restore its reputation tarnished by a series of high-profile blunders.
Chief Executive Ashley Almanza said yesterday he would sell or restructure 35 poorly performing businesses, accounting for about one twentieth of group turnover, with any disposal proceeds earmarked for higher-growth emerging markets.
G4S, which along with rival Serco is being investigated by Britain’s Serious Fraud Office over electronic tagging contracts, acknowledged that it has suffered “significant reputational damage.”
The company, whose mistakes include its failure to properly staff the 2012 London Olympics, last week denied an allegation that its employees had abused inmates at a prison it ran in South Africa. G4S also said yesterday that trading in its fourth quarter was expected to remain challenging in Europe and the US, sending its shares down 2.2 percent in a slightly lower market.
Almanza, a former executive at oil and gas firm BG Group who was promoted from finance chief in June, said G4S had been damaged by its short-term focus and would now manage the business for the long term, reviewing its regions monthly, and improving customer services and technology.
“G4S has strong fundamentals and these will be improved by changes to the way we manage the business,” he said. There were significant opportunities to grow in emerging markets, which already make up over 40 percent of profit, he said.
The 35 underperforming businesses to be reviewed in the next year made around £400m of G4S’s £7.3bn revenue last year and have an average operating profit margin of 3 percent, below the 5.5 percent for the group at the half year ended June. Almanza would not comment on where they were located.
The firm, which runs services from immigration centres to guarding tennis players at Wimbledon, also said it would invest £15m-£20m in its operations to help achieve an annual organic growth target of 5-8 percent. G4S, which issued a profit warning in May, said organic revenue rose by 4.8 percent in the nine months to September 30, although margin pressure kept adjusted pretax profit in line with the same period a year ago.
In August, just a few months into his new role, Almanza raised 348 million pounds through a share sale and earmarked more cash to come from disposals to help avoid a costly credit-rating downgrade, improve profit margins and fund expansion.
Reuters
