By Neil Maidment
LONDON (Reuters) - Security group G4S said increasing work and acquisition opportunities in emerging markets would drive growth in 2013 as it looks to recover from an Olympic staffing fiasco which hit performance in 2012.
The world's No. 1 security group, which sparked fury last year when it failed to provide a promised 10,400 venue guards for the London Games, is eyeing acquisitions in India and the Middle East to help it towards a target of growing emerging markets revenue to 50 from 33 percent of the group by 2019.
Revenue rose across the division, which consists of Asia, the Middle East, Africa, Latin America and the Caribbean, with G4S expecting work in oil and gas, mining and aviation sectors to push organic growth up over the 10 percent achieved in 2012.
G4S, which provides services ranging from manned security guards, to cash transpxortation and running prisons, said on Wednesday overall organic growth for the group rose 7 percent in 2012, helping operating profit rise 6 percent, excluding the Olympics, to 516 million pounds.
However, an 88 million pound loss related to the Olympics, saw pretax profit fall 32 percent to 175 million pounds.
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Shares in the firm, which reached a year high of 310.5 pence on Tuesday, fell 1.85 percent to 301.75 pence at 1018 GMT.
"As expected, losses in relation to the Olympics fiasco dominate the numbers, with pretax profit falling by nearly a third... Nonetheless, optimism in the group's ability to recover remains," Hargreaves Lansdown analyst Keith Bowman said.
G4S Chief Executive Nick Buckles described 2012 as "a tough year": "I think the market recognises we had an issue in the UK, but alongside that the business was still robust enough to grow at 7 percent organically, which is probably better than most other UK support services company, because of our strength across the whole globe," he told reporters.
Having severely dented investor confidence in late 2011 with the surprise and eventually aborted multi-billion pound takeover of Danish cleaning firm ISS, any hopes G4S had for a quieter 2012 vanished last July when it admitted to a staffing shortfall just weeks before the Olympics, forcing the British government to call on the military to fill the void.
Despite the bad headlines that ensued, the firm saw British government work rise 13 percent in 2012, and has won contracts worth 30 million pounds a year since the Olympics. Its new UK CEO has also spoken of government assurances that the Olympics will not hinder its chances of winning future work.
Group underlying revenue rose 8.1 percent to 7.3 billion pounds, as manned security contracts with Google and General Motors among others in North America boosted the business, although the firm said European markets remained tough.
The firm also cautioned that the high growth seen in the UK and North America from a large number of contract wins in 2012 would be difficult to maintain, although any slowdown would be offset by an improving emerging markets performance. A 2012 margin of 7.1 percent is expected to remain flat this year.
As part of its emerging markets expansion plans, G4S has also begun exiting lower margin businesses in European markets like Poland and Denmark, as well as its high-level government security arm in the United States, which has struggled due to federal funding cuts.
Buckles said proceeds from disposals would be combined with around 200 million pounds worth of funds earmarked for acquisitions, and would be invested mainly in emerging markets. Its contract pipeline now stands at 3.5 billion pounds, the firm added.
The firm also recommended an increase of its full year dividend by 5 percent to 8.96 pence and announced that its Chief Financial Officer Trevor Dighton would retire on April 30 to be replaced by Ashley Almanza, the former CFO of natural gas firm BG Group .
G4S also expects to appoint a new Chief Operating Officer within the next few months.
(Reporting by Neil Maidment; Editing by Kate Holton and Paul Casciato)