G4S sees profits drop 36% after business disposals but cheers revenue ‘momentum’
The security firm is also implementing its efficiency programme meant to deliver cost savings.
Security firm G4S has reported a 36% drop in profits on the back of a raft of disposals, but cheered a “step change” in revenue growth that it said provided momentum for the rest of the year.
The company reported a drop in statutory pre-tax profits from £219 million to £139 million over the six months to June 30.
That was against a 7.5% drop in revenue to £3.67 billion over the period.
G4S said its bottom line results were hit in part by business disposals completed last year, which impacted comparable figures.
It included the sale of its businesses in Israel and Bulgaria as well as its Youth Services business in North America.
On an underlying basis, pre-tax profits fell 8% from £173 million to £158 million over the period.
The company highlighted new contract wins, with an annual contract value of £700 million, and said strong retention rates would help drive performance in the second half of the year.
G4S chief executive Ashley Almanza said: “As anticipated, the group delivered a marked improvement in revenue generation in the second quarter, with organic growth of 2.8% resulting in half-year organic growth of 0.2% against demanding comparatives.
“Our contract wins and strong retention rate in the first half of 2018 provide revenue momentum into the second half of the year.
“This, together with growing technology-enabled services in both our cash and security businesses, a favourable sales mix and planned productivity benefits, underpins the group’s positive outlook for the full year.”
In the UK, the company reported “good growth” in revenues, and said its efficiency programme would lead to “lean processes in its UK manned security business” in the second half of the year.
The company is undergoing an efficiency plan meant to deliver up to £100 million in recurring cost savings by 2020, which will be reinvested in the business and expected to boost the bottom line.
Around £20 million in savings has been reached through refinancing completed this year, which G4S said will start to “flow through to profits in 2019”.
It has also been working to reinvest in sales, business development and controls systems, but said savings in operations and overheads will start to make a net contribution to profits in the second half of 2018.
G4S added that its portfolio programme was “substantially complete” and said it now had a much more focused business in hand.
It follows the consolidation of its secure solutions business in regions including Africa, the Americas, Asia and Europe and the Middle East, as well as the creation of a global cash solutions division.