EDINBURGH (Reuters) - The world’s largest security group G4S (GFS.L) downgraded its revenue growth outlook for the rest of the year on Tuesday, flagging a flat performance in the Middle East and India that sent its shares down almost 6 percent.
The UK outsourcing group said trading for the first nine months was in line with expectations but it expected 2017 organic revenue growth of 3 to 4 percent and “good” profit growth. Earlier this year it said full-year revenue growth would be 4 to 6 percent.
G4S, which provides outsourced services such as guarding, aviation screening and mobile patrols, said organic revenue growth was 4.4 percent in the nine-month period, with expansion in all regions except the Middle East and India.
Those regions, whose economies are suffering the impact of sustained lower oil and gas prices, were already contracting at mid-year and G4S's shares have since fallen 17 percent versus a flat performance for Britain's FTSE 100 .FTSE.
At 0900 GMT shares were down almost 6 percent at 264.2 pence, versus a 0.2 percent fall in London’s FTSE100 index, with analysts noting that performance was slightly weaker than forecast and comparisons versus last year were tough.
“Whilst growth has slowed a touch more than expected – we remain positive. Comparatives get easier through 2018 and we expect organic growth to pick up back to the 4 to 5 percent range,” brokerage Stifel said in a note to clients.
G4S said its bid pipeline and contract wins were “encouraging” and net debt to earnings before interest, taxes, depreciation and amortisation were seen at 2.5 times or lower by year-end.
The company, whose main growth engine is now the United States, said systems and technology-enabled security was performing well in key markets and accounted for over 1.7 billion pounds in annualised revenue, up from 1.5 billion in December.
Its retail cash solutions business were also expanding well.
G4S has been reducing its dependency on Britain after it overstretched on sensitive loss-making government contracts. Britain and Ireland now provide 15 percent of G4S’s revenue versus 22 percent in 2013.
It also had problems earlier this year when the head of a G4S-run immigration unit in Britain resigned following allegations of bullying and abuse at the centre.
Reporting by Elisabeth O'Leary, Editing by Paul Sandle and Edmund Blair