G4S, the world's biggest security group, said it would increase provisions for under-performing UK government contracts by £45 million, overshadowing a better than expected rise in 2014 profit.
The British firm, undergoing a restructuring after a run of major contract problems hit its profits and reputation, said on Tuesday 2014 underlying operating profit rose 7.9 per cent to £424 million , ahead of a consensus forecast of £414 million.
Cost savings helped deliver the rise, with group revenues also up 3.9 per cent as strong growth in emerging markets and North America helped offset weaker trade in the UK and Europe. Britain is its biggest single market.
Shares in the group were up 0.6 per cent in early trading.
The £45 million provision made for legacy British government contracts comes after a £136 million provision taken in 2013. British rival Serco was forced to make a similar move on such contracts in November.
G4S hit trouble in 2012 when it failed to deliver enough guards for the London Olympics and last year had to repay over £110 million to the British government after it was found to have charged for electronically monitoring criminals who were dead, in prison or had not been tagged at all.
Under boss Ashley Almanza, who took charge in 2013, the firm, which runs services from moving cash to protecting ships from pirates, has overhauled management, moved to reduce costs, and cut underperforming businesses to help feed growth in more profitable emerging markets.
Eight businesses have been sold in the past 18 months for £248 million, with a further 20 up for sale or being shut. A big focus is also being placed on cost savings around IT and procurement as Mr Almanza looks to better integrate a sprawling empire that stretches across 110 countries.
“There remains much to be done to realise the full potential of our strategy and we expect to make further progress in 2015,” G4S said.
It said its sales pipeline stood at an annual value of £5.5 billion, with opportunities including care and justice work in Australia and New Zealand, oil and gas services in Africa and government work in North America.
Reuters
