LONDON (Reuters) - The new boss at G4S (GFS.L), the world’s biggest security group, will cut costs and push deeper into fast growing developing markets as he battles to restore the company’s image after a high profile staffing blunder at the 2012 Olympics.
Ashley Almanza addressed G4S’s annual shareholder meeting on Thursday after a roller-coaster start to life at the company, becoming chief executive six days ago having only joined as chief financial officer last month.
Almanza, a former finance chief at oil and gas firm BG Group BG.L, had joined G4S with a view to one day replacing Nick Buckles as CEO. Rather than years, however, that time came in just under three weeks when an embattled Buckles made his exit after a torrid 18 months involving a failed multi-billion pound takeover of Danish cleaning firm ISS, an Olympics staffing disaster, and a profit warning in May.
“One of my principal objectives is to try and put the Olympics and some of the setbacks behind us,” Almanza said, referring to G4S’s failure to provide 10,400 staff for the London Games, a debacle which cost the firm 88 million pounds.
“There is no question that our reputation has suffered on the back of the Olympics particularly.”
While that very public failure has hurt G4S, May’s profit warning is a much more immediate challenge. Pressure on group margins, which fell 0.6 percentage points in its first-quarter, is set to remain this year as a result of a lost prison contract in the Netherlands and squeezed pricing in the UK and Europe.
Shares in the firm have fallen 19 percent since it warned 2013 profit would fall short of analysts’ expectations.
“Let me reassure you that while the short term outlook is challenging the underlying business and the medium and long term outlook remain very strong indeed,” Almanza said.
“We are putting in place a number of business improvement plans to strengthen margins in 2014 and 2015,” Almanza said. These will range from operational and overhead cost savings to price rises in its under-pressure UK cash security business.
Almanza said the amount of cost savings in the business would take several months to identify.
He also backed G4S’s push into emerging markets where it wants to grow revenue from a third to half of its total by 2019, saying the strategy was “absolutely right” and that is was well positioned in South American, African and Asian markets.
As a taster of the challenges ahead for a firm with over 620,000 employees in some 125 countries, Almanza also saw the AGM halted twice for protests in part concerning the group’s business in Israel, which provides security systems at prisons where activists claim Palestinians have been tortured.
G4S, which says it always acts within international human rights laws, has said it will exit contracts involving security equipment servicing at a small number of barrier checkpoints, a prison and a police station in the West Bank area when they terminate in 2015, but will still have security work inside Israel after then. Protesters have called for the firm to exit all Israeli prison work.
Editing by Mark Potter