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G4S shares fall on warning of tough trading in Europe G4S shares fall on warning of tough trading in Europe
(about 4 hours later)
Shares in G4S have fallen 12% in early trading after the world's largest security firm warned about continuing tough trading conditions in Europe. Shares in G4S have fallen more than 13% after the world's largest security firm warned about continuing tough trading conditions in Europe.
The company said profit margins in 2013 would be lower than expected after a difficult first quarter in Europe.The company said profit margins in 2013 would be lower than expected after a difficult first quarter in Europe.
The "margin trends are expected to continue for the full year", G4S said.The "margin trends are expected to continue for the full year", G4S said.
G4S, which is trying to increase business in emerging markets, also took a £6m charge to cover non-payment of fees by some clients in Africa.G4S, which is trying to increase business in emerging markets, also took a £6m charge to cover non-payment of fees by some clients in Africa.
Price pressuresPrice pressures
G4S said group margins in the first quarter were down by about 0.6%. However, overall revenues compared with the same period last year rose 7.5%.G4S said group margins in the first quarter were down by about 0.6%. However, overall revenues compared with the same period last year rose 7.5%.
The company also said in a statement: "The proposed closure of 30 prisons and other cost reductions by the Netherlands Ministry of Justice will have a significant negative impact on the group's Dutch business which provides staff to the prisons."The company also said in a statement: "The proposed closure of 30 prisons and other cost reductions by the Netherlands Ministry of Justice will have a significant negative impact on the group's Dutch business which provides staff to the prisons."
G4S had also been hit by "ongoing pricing pressure in the UK and Ireland cash solutions businesses, the mix effect of new contracts starting up in UK Government and the impact of a £6m charge in the African region relating mainly to the write-off of receivables", the statement said.G4S had also been hit by "ongoing pricing pressure in the UK and Ireland cash solutions businesses, the mix effect of new contracts starting up in UK Government and the impact of a £6m charge in the African region relating mainly to the write-off of receivables", the statement said.
G4S is seeking to recover after being criticised for the way it ran its contract for the London Olympic Games.G4S is seeking to recover after being criticised for the way it ran its contract for the London Olympic Games.
It came in for heavy criticism when it emerged it had failed to recruit enough security guards for the event, and British troops had to brought in to cover the shortfall.It came in for heavy criticism when it emerged it had failed to recruit enough security guards for the event, and British troops had to brought in to cover the shortfall.
Keith Bowman, equity analyst at Hargreaves Lansdown, said: "In the wake of a bad 2012, the current year is looking equally challenging. European austerity is taking its toll, whilst pricing pressures for its UK and Irish cash solutions business continue to hurt.Keith Bowman, equity analyst at Hargreaves Lansdown, said: "In the wake of a bad 2012, the current year is looking equally challenging. European austerity is taking its toll, whilst pricing pressures for its UK and Irish cash solutions business continue to hurt.
"Hopes of a return to business as normal following its Olympics fiasco today look premature. G4S appears to be suffering a dose of its own medicine, with both government and corporate desire to save costs now impacting at the group itself.""Hopes of a return to business as normal following its Olympics fiasco today look premature. G4S appears to be suffering a dose of its own medicine, with both government and corporate desire to save costs now impacting at the group itself."