G4S' 'BBB-' rating affirmed by S&P, outlook stable

LONDON (ShareCast) - UK based global security provider G4S (Copenhagen: G4S.CO - news) had its 'BBB-' rating reiterated on Wednesday, as analysts at Standard & Poor's (S&P) ratings agency deemed the company's outlook stable and in line with forecasts. "We expect G4S will continue to improve its operating performance backed by strong performance in emerging markets and continued strong growth in North America, slightly offset by continued below-average growth in Europe and the impact of electronic monitoring contract termination in the UK," S&P said.

G4S performed mostly in-line with expectations in 2014, with revenue growth of 3.9%, customer retention of 90-95% and a flexible cost base that facilitates stable operating margins and cash-flows.

The company also launched a new productivity plan, including improved labour efficiency and route planning, as well as a bolstered IT department.

S&P predicted dividends of about £160m in 2015, and £180m in 2016. It also estimated capital expenditure of about £170m in 2015, and £190m in 2016.

"While the prospects of an upgrade are remote at present, we could raise the ratings if G4S established a track record in its enhanced risk review process," S&P concluded by saying.