Conflict in Iraq and other markets continued to drive interim sales growth at ArmorGroup, the UK-based private security force provider, although profits fell because of expansion costs in Afghanistan and Nigeria.

ArmorGroup said on Wednesday that profits would be “heavily weighted toward the second half of the year as significant new contracts won in the first half, and those we continue to win in the second, mobilise as expected”.

The “onerous” requirements of a new contract to guard the US embassy in Afghanistan helped lower group profits to $2.7m (£1.3m) in the six months to June 30, compared with $3.7m last time. The contract, worth $189m over five years, commenced on July 1.

ArmorGroup said it was having to accept narrower margins to win large government contracts.

When its $38m-per-year contract to guard the foreign and commonwealth offices in Afghanistan came up for renewal this year, the company “took a strategic and proactive decision to retain it, knowing full well we would have to trim margins,” said David Seaton, chief executive.

The company, which has identified Afghanistan and Nigeria as the two fastest-growing security markets outside Iraq, said non-Iraq revenues rose 26 per cent in those countries.

“In a country like Nigeria, the market is expanding dramatically on the back of high oil prices and troubles in the Niger Delta,” Mr Seaton said.

Convoy services in Iraq, however, continued to provide the largest portion of group sales. Mr Seaton expected Iraq turnover in the region to outstrip others for the foreseeable future.

First-half sales edged up from $134.4m to $137m.

ArmorGroup’s comments on the prospect of markets outside Iraq came less than a week after Blackwater, a US competitor, allegedly shot 11 Iraqi civilians, prompting Iraqi officials to suggest a review of the legal status of private security companies.

“The situation still seems to be evolving very quickly,” ArmorGroup said. “If the Iraqi government carries out a review, we will take part in it as much as we can.”

Shares in ArmorGroup closed down ¼p at 72p.

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