G4S has provided an update on the organisation’s trading for the three months ended 30 September 2018. Strong organic growth rates in security services in North America and Asia and in cash technology solutions were partially offset by lower revenues in Benelux and conventional cash services. The business continues to exercise commercial discipline in markets where labour supply is tight and, while this is expected to constrain revenue growth in 2018, the mixture of new contract wins and a substantial, high quality pipeline provides good momentum into 2019.
Organic revenue growth for the G4S Group was 2.5% for the third quarter after a figure of 0.2% for the first six months, resulting in growth of 1.1% for the first nine months of 2018.
For the Secure Solutions division, organic growth in security revenues was 3.4%. This was partially offset by lower revenues in care and justice services, leading to 2.5% overall growth. All regions posted growth in security revenues.
In Africa and Asia, growth was 3.6% and 6.5% respectively. The business continued to maintain a strong focus on premium security segments in these markets and this is reflected in both the pipeline and sales achieved.
In Europe and the Middle East, security revenue was up 0.2% as growth in the UK and Middle East was partially offset by lower revenues in Benelux, reflecting self-constrained bidding in tight labour markets.
In the Americas, revenues rose by 5.7%, underpinned by a 6.5% increase in North America, where the combination of G4S’ security guarding and technology offers enabled Security Solutions to continue to generate a very positive response in the market.
Results for the Cash Solutions operation
Organic revenue growth was 2.9% as strong growth in technology enabled Cash Solutions, encompassing Retail Cash Solutions and Cash360, to more than offset lower revenues in conventional cash services.
“We continue to see strong interest in our technology and outsourcing solutions from both banks and retailers and, in October, we won another large retail store programme to implement G4S Retail Cash Solutions across circa 600 stores in the USA at the end of Q1 2019,” stated Ashley Almanza, G4S Group’s CEO.
“Our pipeline in this new service area remains strong and we firmly believe that this trend will accelerate as banks and retailers adopt new technology enabled cash solutions and increasingly outsource cash management to specialist service providers such as ourselves.”
According to Almanza, G4S is well-positioned to support and benefit from these changes with its strong market share, established national networks and “industry-leading” software and service solutions. “We are continuing to invest in proprietary software and service development and sales capability to support and stimulate this important industry-wide change,” added Almanza. “We believe this will fundamentally re-shape the way in which cash is managed across both developed and developing markets and fully expect that this will drive a positive change in our service and revenue mix over time.”
Outlook into 2019
revenue growth, A favourable sales mix and productivity programmes underpin the company’s PBITA for 2018 which, after investment in new products and services, is expected to be in line with 2017 on a constant currency basis.
“The Group’s new contract wins and substantial, high-quality pipeline provide good revenue momentum into 2019,” concluded Almanza.
The Group is scheduled to announce its Full Year results for 2018 on 12 March 2019.