MARKET REPORT: Security giant G4S soars 9.3% after it unveils shake-up plans that could see it axe 1,150 jobs
Investors piled into G4S after the security giant said profits would trump expectations and unveiled a shake-up that could see it axe 1,150 jobs.
First-half profits will be far higher than the £159million outsiders have forecast, G4S said, despite previously flagging revenues which fell slightly between January and May.
A short update to the stock market on the profit outlook sent its shares rising in early trading.
Rosy outlook: Security giant G4S said first-half profits will be far higher than the £159m outsiders have forecast
And they stayed high after it later emerged the company is planning to make sweeping changes to its UK cash handling business, which fills up ATMs and transports money from small businesses.
It could cut up to 1,150 roles in the division – or just under a third of its more than 4,000 employees.
People were already switching from paying for things in cash to electronic card and phone payments. But the pandemic has sped this up.
Staff across the business, from couriers to administrators, will be affected by the cuts, which the GMB union said marked ‘another worrying step towards a cashless society’.
Stock Watch – Luceco
Shares in LED lighting maker Luceco rose after it told investors it is likely to pay a half-year dividend.
The company will confirm this in September.
Profit in 2020 is on track to smash analyst expectations and, at the very least, be in line with last year’s £18million.
But Luceco – which has offices in Telford as well as Houston and Hong Kong – said if there are more lockdowns this year, it will cost the group £750,000 a month. Shares rose 18.6 per cent, or 19p, to 121p.
Yesterday was also the first trading day after it was announced late on Friday that G4S had agreed to pay £44million to the Serious Fraud Office to avert criminal charges after it was found to have overcharged the Government for electronically tagging offenders.
Jefferies analysts said it was less than they’d been expecting.
G4S’s shares were up 9.3 per cent, or 11.05p, to 130.5p by the close, making it the top gainer on the FTSE 250.
The mid-cap index as a whole started the week on an upbeat note, rising 1.2 per cent, or 205.12 points, to 17385.09.
As well as the helping hand from G4S, it was boosted by a 1.9 per cent rise in the Egypt-focused gold miner Centamin, which finished 3.6p higher at 191.5p.
Centamin produced more gold than it expected to from its Sukari mine between April and June – 130,994 oz in total – after it delayed plant maintenance shutdowns until later in the year as a pandemic precaution.
Mining stocks also drove the FTSE 100 higher. The Footsie rose 1.3 per cent, or 80.78 points, to 6176.19 trailing a rally in Asian markets as traders bet a slew of government relief packages would help the global economy to rebound.
Mining company shares tend to track economic growth, as countries consume and use more raw materials when things are on the up. Some might argue that optimism is premature, given recent increases in coronavirus cases.
The oil market is certainly being more cautious, because rising infection rates and the threat of more lockdowns could seriously damage demand for oil if transport grinds to a halt again.
Oil prices fell 1 per cent to $42.79 yesterday. Conference organisers had a mixed reaction after the Events Industry Alliance warned 30,000 UK jobs could be lost unless the Government pins down a go-to reopening date for the industry.
Hyve Group ended up 0.6 per cent, or 0.55p, to 90p while Informa fell 0.8 per cent, or 3.3p, to 437p.
Shareholders in student accommodation provider Unite Group were little moved by news the company has bought a 300-bed development site in Edinburgh.
The project is expected to cost Unite around £24million and it would bring in rent for the first time in the academic year starting in 2023. Its stock fell 0.3 per cent, or 2.5p, to 936.5p.
Among the small-caps, photo booth and coin-operated laundry machine provider Photo-Me sank 11.5 per cent, or 6.35p, to 49.05p, after reporting its operations chief, Eric Mergui, had left the board over the weekend.
Last week it said annual profits sunk 96 per cent after business was upended by the pandemic, warning recovery would take ‘some time’.