Outsourcing giant G4S has seen shares leap higher after a better-than-expected first half thanks to a strong performance from its security business.
Shares in the group lifted 6% as its half-year underlying pre-tax profits fell by less than feared – down 4.6% to £187 million in the six months to June 30.
The company also said its shareholder dividend payouts would remain on hold until the “uncertainty surrounding the pandemic has reduced to an acceptable level”.
But investors focused on the better-than-expected profit result, which follows a robust showing from its core security business.
The figures come just a week after G4S announced it was cutting more than 1,000 jobs, largely at its cash solutions business, as part of an overhaul.
It said the restructuring would help it save £100 million in 2020.
In a sign of the difficulties faced amid the coronavirus pandemic, G4S said it estimated a cost hit of up to £25 million in countries where it took government support.
Europe and the Middle East was the worst-affected region, with underlying pre-tax profits tumbling 25% to £69 million after revenues fell 6.5%.
Its cash solutions arm was also hit hard, with profits plummeting by a third to £16 million.
But its secure solutions business – which now accounts for 93% of group turnover – delivered a 1.5% rise in underlying pre-tax profits to £202 million.
The firm is focusing on the security business, having sold off its cash handling division to US firm Brink’s Group.
G4S is at an important inflection point as we accelerate our transition to a highly-focused, global, integrated security businessAshley Almanza, G4S chief executive
Chief executive Ashley Almanza said: “G4S is at an important inflection point as we accelerate our transition to a highly-focused, global, integrated security business.”
On the dividend decision, he said: “The path of the Covid-19 pandemic and its economic impact remain uncertain.
“In these circumstances, and notwithstanding the resilient performance of the group in the first half of this year, the board has decided to prioritise the financial strength of the company in the near term whilst recognising the importance of resuming dividend payments in the future.”