G4S demerger talk sparks recovery
TROUBLED security outsourcer G4S started to recover from a £600m plunge in value as City scribblers urged its management to consider a “radical” demerger to reboot its stuttering turnaround.
The FTSE 250 contractor’s shares plummeted 18pc following Wednesday’s profit warning and RBC Capital Markets said it was “throwing in the towel” on its “top pick” recommendation after a string of disappointments.
Analyst Andrew Brooke argued the sale or demerger of its secure cash transfer or prison services businesses could be needed to shake up the company. He ramped up the pressure on boss Ashley Almanza by pointing out he has taken home £15m in his five years in charge but failed to make “much progress as far as shareholder returns are concerned”.
G4S admitted on Wednesday that full-year profit before interest, tax and amortisation would be flat this year, just seven months after promising three years of growth in a bullish update to investors. More calls for a break-up from City analysts helped G4S claw away from a two-year low to regain 5.7p to 183.8p. Elsewhere, shares in satellite operator Inmarsat fell out of orbit after its maritime sales stumbled as its struggles to fend off mid-market competitors. Investors ruthlessly punished Britain’s biggest satellite operator for its maritime woes despite its aviation division beating City expectations.
The company is stuck in a “dogfight” for the maritime midmarket and yesterday’s 36p plunge to 424.4p “confirms that maritime trumps aviation when it comes to sentiment”, Giles Thorne at Jefferies told clients.
A profit warning sent waste management company Renewi sliding 5.1p to 50p as it revealed regulators have delayed the resumption of full production at a plant in the Netherlands. Aquis Exchange, a subscriptionbased challenger stock exchange, surged 67.5p to 525p after making further gains in market share. Debtcollection company Arrow Global soared 40p to 239p after a 10pc jump in underlying profit after tax.
BP slumped to the bottom of the FTSE 100 risers’ board as oil prices flirted with a six-month low ahead of Opec’s meeting. Brent crude slipped a further 1.4pc to $71.09 per barrel, while BP closed 15.3p lower at 529p.
The post-midterms rally on global markets ran out of steam as attention turned to the Federal Reserve’s policy meeting and rate-setters’ outlook for next year. Stocks drifted in lacklustre trading ahead of the decision, with the FTSE 100 held in positive territory by a trio of strong gains from AstraZeneca, Coca-Cola HBC and Burberry. The index closed 23.40 points higher at 7,140.68, outperforming its rivals in Europe.