React Group shares surge 10% on higher demand

React Group shares (LON: REAT) surged over 10% on Tuesday morning as the group released a trading update for the year ended 30 September 2020.

The cleaning, hygiene, and decontamination company reported a 42% organic growth in revenue to approximately £4.4m – up from £3.1m.

React Group said the growth in revenue was partly due to underlying performance in the core business, and the growing demand of cleaning amid the Coronavirus pandemic.

Thanks to the increase in Corona-related decontaminations and other projects for the group, React expects pre-tax profit for the year ending 30 September to be ahead of market expectations.

The cleaning group saw a growth in demand from healthcare, rail, and facilities management sectors.

Shaun Doak, chief executive of the group, said: “We are pleased to have delivered another year of strong progress in which we saw accelerating organic growth and achievement of the Group’s first full year profit.

Whilst we have seen a level of disruption from COVID-19, we have also experienced incremental demand. Core sectors of the business performed well alongside net new customer relationships that have evolved in areas of development such as education and residential care homes. This was not true of every sector however, work declined at the height of lockdown in the judiciary where we sanitise and decontaminate courtrooms, cells, and custody vehicles. The sector has since been returning to near normal activity as restrictions have eased.

The new financial year has started well with momentum continuing. The immediate outlook is positive, although we are mindful that the seemingly ever-changing environment in which we work can bring with it both opportunities and challenges. As a management team we are reviewing tactics almost daily to ensure REACT remains an effective solution for our customers, our colleagues remain safe, and the business profitable.”

React Group shares (LON: REAT) are trading 5% at 1,26 (1050GMT).