G4S PLC (LON:GFS) shares were higher on Thursday as the security firm reported only a slight decline in its profit as the growth of its secure solutions business in the Americas and Asia offset the impact of the coronavirus pandemic on its operations in Europe and the Middle East.
For the six months ended June 30, the security services firm reported an adjusted profit (PBITA) of £187mln, down from £196mln in the prior year, while revenues declined 1.5% to £3.35bn.
G4S said it had delivered "good organic revenue growth" in the Americas of 5.4%, driven by demand for additional services and a resilient performance in its existing business. Revenues also grew 1.4% in Asia, while Africa declined 1.5% alongside lower demand in the mining sector.
The firm said the impact of coronavirus was greatest in its Europe and Middle East markets, where revenues declined by 6.5%, as they had a higher weighting to customer segments most impacted by the pandemic including sectors such as aviation, tourism, leisure and sporting events and oil and gas.
The company also recognised £522mln in proceeds from the sale of its cash business, which it said “further strengthened” its strategic focus and financial position.
“Our investment in integrated, technology-enabled security solutions is providing our customers with valuable solutions to their security needs and this, together with the implementation of our productivity programme, has been instrumental in strengthening our competitive position and reinforcing the resilience of our Secure Solutions business. Our success in key markets and continued growth in technology-enabled revenues (up 5%) provides increasing confidence in the group’s performance and prospects”, said G4S chief executive Ashley Almanza.
Looking ahead, the company said it had decided that it will not pay an interim dividend for 2020 due to the uncertainty of the pandemic’s economic impact, although it stressed its “intends to resume dividend payments once the uncertainty surrounding the pandemic has reduced to an acceptable level”.
“The group’s transition to a focused, global leader, delivering integrated security solutions, is accelerating. The benefits of G4S’s strategy and focused execution are beginning to be realised and in the first six months of this year the Group produced substantial revenues, profits and cash flows strengthening further our financial position”, Almanza said, adding that the company was “very well positioned to emerge from the pandemic as a leaner and more focused market leader in the global security market”.
G4S shares were 5.5% higher at 144.1p in early trading on Thursday.