Debt key as G4S posts results

Results due this week
Results due this week

G4S is expected to update the City on the progress of its debt reduction plans on Wednesday when the outsourcing giant will post its half-year results.

The world’s biggest security company has been looking to shore up its balance sheet by winding down “onerous contracts”, disposing of loss-making businesses and driving down its debts, which hit £1.782 billion at the end of December last year.

However, the company may be in line for a setback if it takes a hit from the collapse in the pound following the Brexit vote.

While just over half of G4S’ debts are in sterling, the currency fall will make its debt in euros and dollars more expensive when converted back into pounds.

The company is expected to deliver a profit before interest, tax and amortisation (PBITA) of between £185 million and £205 million for the first half of the year, benefiting from a growing demand for security work following a spate of overseas terrorist attacks.

It comes after G4S said in May that it had recorded a positive start to the year after revenues rose 4.5% in the first quarter to £1.5 billion.

Graham Spooner, investment research analyst at The Share Centre, said: “The share price has remained under pressure over the last year, as concerns continue over the dividend, debt situation, exposure to Europe and movements in currency.”

He added: “Investors will be hoping that in an unsettled world demand for security work is unlikely to fall significantly.”

G4S saw its share price suffer a blow in June following the revelation that Florida nightclub shooter, Omar Mateen, had worked for the security firm.