By Neil Maidment
LONDON Nov 5 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
Chief Executive Ashley Almanza said on Tuesday 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
G4S also said on Tuesday that trading in its fourth quarter
was expected to remain challenging in Europe and the United
States, sending its shares down 2.2 percent in a slightly lower
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 400 million pounds of G4S's 7.3 billion pound
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
The firm, which runs services from immigration centres to
guarding tennis players at Wimbledon, also said it would invest
15-20 million pounds 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 Sept. 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
He also announced a 30-35 million pound restructuring of
some European businesses and its UK and Ireland cash security
On Tuesday he said the programme was progressing well with
price rises agreed with major clients, and branch closures and
the removal of 250-400 UK posts to come in the next 18 months.
The firm, whose business spans some 120 countries, has
around 45,000 staff in the UK.
Speculation that Almanza's overhaul might lead to a break-up
of G4S cooled last week when the firm rejected a $2.5 billion
offer for its cash security business, saying the unit was
integral to its strategic plans.
G4S said it had brought six new directors on the board since
June last year and made five changes to its executive team in an
effort to give clients more confidence in its ability to manage