LONDON— G4S reported a profit in the first six months of the year, lifted by strong demand in emerging markets and a return to growth in North America, as it maneuvers to overhaul its business and restore its reputation.
The world’s largest security company reported a pretax profit of $142.67 million for the six months ended June 30, compared with a pretax loss of about $157 million in the same period last year, the Wall Street Journal reports. Net profit came in at $130.2 million, compared with a loss of more than $343 million last year. Revenue rose to more than $5.6 billion, compared to about $5.4 billion last year.
“There remains much to be done to capture the full potential of our strategy and to strengthen the group’s performance,” G4S CEO Ashley Almanza said.
The return to profit follows a troubled period for the company. Last year, G4S and rival Serco Group were banned for six months on bidding for all new U.K. government contracts after they were found to have overcharged for tagging criminals, according to the Wall Street Journal. G4S was also severely censured in 2012 after it failed to recruit enough security staff for London Olympics, forcing the U.K. government to deploy Army to provide security.
The Olympics fiasco forced the company to incur a large exceptional charge in its 2012 results and led to the departure of then CEO Nick Buckles. Almanza at that time was the company’s finance chief.
Almanza is overhauling the business by cutting costs, selling businesses and shaking up the senior management. G4S has sold six businesses over the past year and has decided to discontinue a further 15 smaller businesses. It is also currently in the process of selling its U.S. government solutions business.
The company, which has operations in more than 120 countries, received $148.6 million in proceeds from divestments in the first half of the year. It expects to receive a further $61.8 million in the second-half from the sale of its business in Sweden.
Analysts appear to be divided over how long it will take Almanza to improve the company’s fortunes.
Analysts at Citigroup downgraded their full-year earnings forecast by 4% in response to the results, saying the turnaround would be a lengthy one, while J.P. Morgan Cazenove raised its price target on G4S predicting that the company’s recovery plan was set to gather pace.