G4S Plc, the world's largest security company by market value, said first-half profit rose 21 percent after expanding in the Middle East and Asia and integrating purchases.
Net income through June advanced to 74.4 million pounds ($136.3 million) from 61.3 million pounds a year earlier, Gatwick England-based G4S said today in a statement. Analysts surveyed by Bloomberg estimated profit of 72.3 million pounds.
Chief Executive Officer Nick Buckles is reviewing acquisition targets, mostly in new markets including Serbia, Colombia and Thailand. G4S has spent about 520 million pounds on purchases this year, expanding in areas from landmine detection to insurance fraud investigation. The company raised 281.9 million pounds in a May 13 share sale, equal to about 10 percent of its market value, to finance the expansion and reduce debt.
G4S ``looks a safe port in a storm,'' Deutsche Bank AG analysts including Tom Sykes said today in a note. The company ``is more diverse than its peers and is managing well the transition to a more diverse multi-service revenue stream.'' He has a ``hold'' rating on the stock.
G4S, formerly known as Group 4 Securicor Plc, advanced 12.5 pence, or 5.9 percent, to 224 pence in London trading. That's the steepest climb since December, paring the stock's fall this year to 8.5 percent, which values the company at 3.15 billion pounds. Rival Securitas AB has fallen 5.8 percent in the same period.
Asia, Middle East
First-half revenue advanced 19 percent to 2.7 billion pounds, led by demand in the Middle East, Africa, and Asia, compared with an analyst estimate of 2.56 billion pounds. The U.K. company operates in 110 countries and gets about 21 percent of sales outside Europe and North America. Profit was 5.7 pence a share compared with 4.8 pence a year earlier.
G4S completed the 355 million-pound acquisition of Global Solutions Limited on May 9, after buying ArmorGroup International Plc for 43.6 million pounds in March. It made some 70 acquisitions from 2005 to 2007, and reported net debt of 1.13 billion pounds as of June, compared with 801.5 million pounds a year earlier.
``We don't believe our business is cyclical, it's easy for us to reduce staff and improve margins,'' Buckles said today on a conference call. The company is reviewing ``a number'' of acquisition targets, mostly purchases under 50 million pounds in emerging markets, he said.
Europe, Iraq
Sales excluding purchases increased 9.5 percent in Europe and 17 percent in emerging markets, where the company expanded in both guarding and armored-car services, G4S said. Middle Eastern revenue gained 22 percent, buoyed by contracts in Saudi Arabia and Iraq. The company expects to ``continue good performance'' for the full year, it said.
In Iraq, G4S provides paramedics and firefighters as well as convoy protection to the teams rebuilding the country. Buckles said he sees opportunities for the company in providing protection to oil exploration teams when the country becomes more commercialized.
Buckles said the company is coping with increased wage inflation, particularly in the Middle East. ``In Saudi and Dubai inflation is picking up to around the 10 to 15 percent mark, but we're pretty good at passing that on, we don't have any margin issues, '' Buckles said.
Olympics
G4S will also bid for security contracts at the London Olympics in 2012, he said. Preliminary discussions linked to the contracts have occurred, but none tendered, Buckles said. He estimated 10 million to 50 million pounds in revenue was made by the providers of security at the Beijing Games.
G4S, whose biggest clients are the U.S. and U.K. governments, guards courtrooms and nuclear power stations, as well as providing cash transit services to HBOS Plc and other private clients. The company was formed through the July 2004 merger of Group 4 Falck A/S of Denmark and Britain's Securicor Plc.
Securitas, the world's largest security company by sales, on Aug. 7 reported profit that beat analysts' estimates for the first time in 2 1/2 years after revamping its Loomis armored-car division to erase losses.
Bloomberg