Shares in G4S fall on FTSE 100 as possible profit taking sets in after strong results

The group said that its turnover in the year ended 31 December increased 7.4 per cent to over seven billion pounds. Group profit increased 10 per cent to £500.3 million.

G4S said that it would be recommending a final dividend of 4.16 pence per share, up 13 per cent from the previous year and a total dividend of 7.18 pence per share, up 11.7 per cent.

During 2009 G4S invested £153.2 million on acquisitions in order to increase its presence in the government, financial institution, port and nuclear power outsourcing sectors.

Nick Buckles, Chief Executive Officer of G4S, said, “The group achieved an excellent performance in 2009, with businesses performing well across all markets, service lines and customer segments. The global economic downturn was a major challenge for the business community as a whole in 2009, with rapid declines in GDP and inflation rates across the world. That G4S was able to report a further improved performance for the year demonstrates both the breadth and international diversity of our business mix. It also demonstrates our increasing ability to deliver innovative, outsourced solutions to our customers, helping them drive efficiency and reduce costs in their businesses.

“Although low inflation has limited the ability to increase prices which has affected organic revenue growth, sales volumes have held up well. This, combined with continued focus on cost control, and debtor and cash control, has helped to increase margins and substantially exceed our cash conversion target.

“We expect organic growth in 2010 to be broadly similar to 2009 whilst continuing to maintain our discipline on margins and cash generation.

“We are confident that our strategic plan, which is enhancing our ability to meet increasingly sophisticated customer needs by adding new capabilities and technologies to our offer, has put the group in a strong position to maintain our longer term growth momentum as we pursue attractive global opportunities in our key target sectors.”

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, “G4S shares continue to offer something for everyone – exposure to dependable government contracts, supplemented by a growing emerging market business. Profits have again materialized at the high end of analyst expectations, driven by strong cost control and an improving business mix.

“On the downside, organic revenues have slowed, impacted by the downturn in the global economy, although this has been largely offset by the significant decline in the pound.

“All in all, these are solid results, although a 16.7pc outperformance against the wider FTSE-100 index over the last 6 months does leave the shares vulnerable to some potential profit taking. Management outlook comments provide reassurance, whilst the progressive dividend policy continues to provide support in a low interest rate environment. As such, market consensus opinion currently denotes a buy.”

By 10:29 shares in G4S were down 2.76 per cent to 270.90 pence per share.