Security firm G4S posts 63 per cent drop in profits after facing higher costs
Security firm G4S posted a 63% drop in profits on higher costs related to settlement of a lawsuit and a charge for pension equalisation regulation.
It comes after the company warned last November that revenue would be lower than forecast and that earnings were not expected to grow in 2018.
G4S made a pre-tax profit of £143 million in 2018 compared with £387 million the previous year.
This includes a £100 million provision for settlement of a class action lawsuit in California related to labour conditions, and a £35 million charge for equalising benefits for historical pension obligations between men and women in the UK.
Revenue fell 4% to £7.5 billion, which the company said was due to the “relative strengthening” of the pound and disposal of several businesses in Hungary, Israel, the United Arab Emirates and North America.
However, on an underlying basis, pre-tax profits fell just 1.1% to £272 million and revenue increased by 1.1% to £7.3 billion.
Revenue from the Cash Solutions division fell 9.3% following the mobilisation of a large contract in 2017.
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G4S is to separate its Cash Solutions business from the group and is aiming to start the process in the second half of the year, which may need shareholder approval.
It said it has received unsolicited expressions of interest to acquire the business.
The company is in the midst of an efficiency plan aimed at delivering up to £100 million in recurring cost savings by 2020, which will be reinvested in the business and expected to boost the bottom line.
Chief executive Ashley Almanza was positive about the group’s outlook.
He said: “Our sales wins in the second half of 2018 have underpinned a good start to the year and this, together with growing technology-enabled services in both our cash and security businesses, supports a positive outlook for 2019.
“We believe that the potential separation of the Cash Solutions business will provide G4S with the strategic, commercial and operational focus needed for the next stage of the successful development of both the Cash Solutions and Secure Solutions businesses.”