Markets: G4S shares slump on Olympic debacle

By GARETH MACKIE
Published on 17/07/2012 00:43

Pressure on security firm G4S continued yesterday following its admission that the Olympics debacle will cost it as much as £50 million this year.

In a session that saw the FTSE 100 Index close just 3.7 points lower at 5,662.4, G4S was comfortably the biggest top-flight faller, dropping 24.1p, or 8.6 per cent, to 254.6p.

Investors fear the group’s reputation has been tarnished by its failure to provide enough staff for the games, and it faces a period of uncertainty if chief executive Nick Buckles loses his job in the fiasco.

IG Index trader David Jones said: “For now there doesn’t seem to be an appetite to view this as a bargain, with investors concerned about what it will mean for any future public sector contracts for the company.”

There was also little cheer on the economic front after the IMF downgraded its UK growth forecast for 2012 to just 0.2 per cent, down from the 0.8 per cent it predicted three months ago, while next year’s estimate was also cut to 1.4 per cent from 2 per cent previously.

Software firm Sage, which provides accountancy, retail and payroll products to six million customers, fell 3 per cent after it said conditions in continental Europe remained tough, offsetting “good growth” in the UK and Ireland and improved trading in North America. Analysts including Numis Securities cut their earnings forecasts, pushing Sage down 9p to 276p.

Shares in FirstGroup, which fell last week after rival Stagecoach pulled out of a £2.8 million deal to buy its bus business in north Devon, got back on the right track, with a rise of 10.3p, or 5.4 per cent, to 200p. The Aberdeen transport giant is seeking to sell off around £100m worth of assets in its UK bus division to focus on “high growth areas”.

NEW YORK: A surprise decline in June US retail sales was the latest worrying sign from the economy, pushing Wall Street slightly lower last night, but Citigroup shares limited losses after it reported earnings.

The Dow Jones industrial average was down 49.95 points, or 0.39 per cent, to close at 12,727.14 while the broader Standard & Poor’s 500 Index closed down 3.17 points, or 0.23 per cent, at 1,353.61. The Nasdaq Composite Index ended down 11.53 points, or 0.40 per cent, at 2,896.94.