The Week Ahead: Olympics woe puts G4S back in the spotlight

By DOMINIC JEFF
Published on 28/08/2012 00:00

The boss of the under-pressure security group G4S will be back in the spotlight today, with the fallout from the firm’s bungled Olympics contract set to dominate the agenda when it reports interim results.

Chief executive Nick Buckles has been fighting to save his career since agreeing with MPs that G4S’s failure to provide enough personnel for security at the games had been a “humiliating shambles”.

Analysts at Panmure Gordon said the Olympics loss was expected to be listed as an exceptional item in the half-year results and predicted a small hit to underlying earnings. The market will be looking for reassurance on G4S’s contract pipeline amid fears that the Olympic debacle has hurt its bidding prospects for outsourcing work.

UBS analysts said they believed G4S had dropped out of bids for government contracts as management attention was diverted to the Olympics contract. “We wonder if there has been any further fallout in terms of bidding activity?” the broker asked.

But G4S may offer some contract cheer after recent reports that it extended its deal to protect the British Embassy in Afghanistan’s capital Kabul. The deal is understood to be worth £72 million and will see G4S guard the high-risk embassy for a further two years.

Recruitment firm Hays is likely to lay bare the challenges in the UK jobs market when it reveals full-year figures on Thursday.

The group has reported increasingly-poor numbers for its loss-making UK arm as the double-dip recession takes its toll. Hays – which employs 7,600 staff in 31 countries – reported a £3m half-year loss for the UK in February and said UK net fees fell by 5 per cent in its third quarter, accelerating to a 9 per cent fall in the fourth quarter, to 30 June.

Car insurer Admiral is set to drive profits higher on Thursday as it continues to grow its share of the market, while the bodily injury claims that blighted last year’s results are expected to ease.

The group, which is the second largest insurer in the UK with 2.9 million customers, has been aggressively expanding in recent years after it put up prices by less than rivals to attract more customers. 
Admiral’s profits for 2011 came in weaker than expected after the owner of Elephant, Bell and the comparison website Confused.com was hit by a rising tide of injury claims. This forced it to price its premiums less competitively and slowed the rate at which it won new customers.

The group’s last update showed that UK new vehicle growth continued to slow in the three months to the end of March. But it also offered some encouragement, saying that claims trends were unchanged after easing in the final quarter of 2012.

Christopher Esson, an analyst at Credit Suisse, expects the group to report a 10 per cent rise in pre-tax profits to £176m in the first half of 2012.

Communications giant WPP will give its latest outlook on the advertising industry when it reports interims on Thursday. The group put in a resilient performance in its last financial year, shrugging off the eurozone crisis and UK double dip recession to post record sales of £10 billion and profits of £1bn.

Its most recent update suggests the positive momentum has continued into the new year, with like-for-like revenues up 4 per cent in the first four months.