A Setback Too Far: G4S Chief Departs
After last summer's Olympics fiasco and a warning that 2013 would yield lower-than-expected profits, security firm G4S announced on Tuesday that chief executive Nick Buckles would step down at the end of May.
The firm's chief financial officer, Ashley Almanza, will replace Buckles. Shares of G4S rose 1.24 percent on Tuesday morning following the news.
Buckles, who was a key figure in the merger of Securicor and Group 4 Falck in 2004, ended his 28-year tenure at the firm after the world's largest security group issued a profit warning on May 7 that sent its shares tumbling 13 percent.
G4S blamed the weak trading conditions on difficult client relations in Africa and the closure of 30 prisons in the Netherlands, forcing it to cut 700 jobs.
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G4S became the center of a media storm in the run-up to the 2012 London Olympics when the firm failed to hire and train enough security guards for the Games. The government was forced to call in the army to shore up security. Buckles described the company's failure as a "humiliating shambles" and the firm was forced to pay 88 million pounds ($135 million) to the government.
Buckles had managed to ride out previous storms. In 2011, he survived a shareholder revolt, following the failure to buy ISS, a Danish cleaning services group.
Speaking to CNBC, Michael Van Dulken of Accendo Markets said it was evident that Buckles would have to depart eventually, with May's profit warning the final nail in the coffin.
"There were calls from very early on for a change with the Olympic fiasco, and those calls persisted for most of last year," Van Dulken said. "I think what sealed the deal really was the profit warning earlier in the month, that the margins would be lower for 2013."
Van Dulken argued that G4S needed to stop looking at newer ventures and focus on what it does best: security. In recent years G4S has expanded into facility services and electronic security systems.
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"There will need to be a bigger focus on change rather than trying to rescue it from where it stumbled last year and that may well lead to a restructuring and focusing on the business which it can do best, rather than diversifying into other things which other competitors can just do a little bit better."
Van Dulken was unsure what the response from investors would be to the fact that G4S looked at both internal and external candidates, and ended up with Almanza, G4S's chief financial officer.