G4S reports that its turnaround plans are on track as it sees growth across most regions, but shares are down 5.3% in early trading – potentially due to profit-taking by investors
As G4S reports its first half results Graham Spooner, investment research analyst at The Share Centre, explains what this means for investors.
G4S gave a positive update this morning, reporting growth across the majority of its regions leading to a 6.2% increase in first-half revenue and a 7.6% rise in profit.
Management continues to be focused on restructuring the business and improving confidence in the group and its prospects, as it seeks to recover from previous failings such as its performance over prisons contracts and its handling of the Olympics security contract.
Although the shares have recovered strongly over the past year, G4S was the biggest faller as the FTSE stumbled this morning. This could be a reflection of some profit-taking by investors, who may have decided that the shares do not have much further to climb. The company has stated that it expects revenue growth for the year to be ‘broadly in line with targets’.
We have stuck with our ‘buy’ recommendation through a difficult period and hope that there could be more to come over the longer-term as the company’s transformation programme bears fruit. The sad fact is that in an unsettled world, demand for security work is unlikely to fall significantly.