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G4S slumps as it posts 36% drop in first-half profits after raft of disposals

But G4S hailed a “step change in revenue growth” after winning new contracts worth £700mln
G4S
Shares fell 5.8% to 265p in morning trading

Security giant G4S PLC (LON:GFS) shares slumped as it posted a 36% drop in first-half profits following a slew of disposals last year.

Pre-tax profit fell £139mln in the first six months of the year from £219mln a year ago, reflecting less profit from the sale of operations.

G4S made a net profit of £4mln on disposals this year, including the sale of businesses in Hungary and Philippines as well as its security data firm in Kenya. Last year it made £65mln on disposals including businesses in Israel and Bulgaria and the group's youth services business in North America.

However, the group hailed a “step change in revenue growth” after winning new contracts worth £700mln. Revenue rose 0.2% to £3.6bn, driven by a strong performance in the Americas and Asia.

"Our contract wins and strong retention rate in the first half of 2018 provide good revenue momentum and this, together with an improving sales mix and planned productivity benefits in the second half of the year, underpins the Group's positive outlook for the full year,” said chief executive Ashley Almanza.

G4S restructuring progress

In January, G4S reorganised the group to consolidate its secure-solutions businesses into the regions of Africa, Americas, Asia and Europe & Middle East, and to create a global cash solutions division.

It plans to deliver up to £100mln in recurring cost savings by 2020, which will be reinvested into the business. G4S has reached £20mln in savings through refinancing completed this year and expects this to flow through to profits in 2019.

READ: G4S sees revenues slip as it goes up against tough year-ago comparatives

Almanza added: "Since 1 January, the creation of a global cash division and consolidation of our secure solutions regions are providing us with the strategic, commercial and operational focus needed for the next stage of the group's development.

"Combining technology with our established security offering is strengthening our sales mix and contract retention, whilst the rapid development of our cash technology business has the clear potential to deliver profits greater than the global profits of our traditional cash business in the medium term.”

G4S declared an interim dividend of 3.59p each, in line with last year’s pay-out.

Shares fell 5.8% to 265p in morning trading. 

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