12th August 2015
As G4S reports its interim year results, Graham Spooner, investment research analyst at The Share Centre, explains what they mean for investors…
The world’s leading security group, G4S, announced its interim results on Wednesday. Past problems with high profile contracts have led to a strategic review aimed at cutting costs, improving efficiency and hopefully restoring confidence with its customers, especially with the government. Investors should be aware that the fall in profits was put down to restructuring and one off costs. However, the dividend was raised by 5% and the CEO pointed to “strong momentum” along with expectations of further improvements in performance in the second half.
Those interested in the company will note that there were £1.4bn worth of new contracts, along with revenue growth of 5.7% in emerging markets, with strong, underlying growth in Latin America and Asia Middle East.
Investors should see signs of improvement in these results, along with a more confident tone for the future from management. We hope this trend will continue further, as a result of the restructuring that management has undertaken. We currently recommend the shares as a medium to high risk long-term recovery ‘buy’ for investors adding to a balanced portfolio. It is also worth noting that since April the share price has fallen by around 15% giving potential investors a better entry point.