UPDATE 1-Mouchel H1 profits up, eyes strong H2 results

(Adds CEO and analyst comment, background, shares)

By Golnar Motevalli

LONDON, March 31 (Reuters) - British infrastructure company Mouchel Group Plc (MCHL.L) posted a 17 percent rise in first-half profit on Monday, and said its focus on government contracts would help shield it from any private-sector slowdown.

Mouchel, which manages London's M25 motorway and helps IBM (IBM.N) run the city's congestion charge, said it was confident it would deliver strong results in the second half.

Mouchel said pretax profit before exceptional items was 16.8 million pounds ($33.4 million) for the six months to Jan. 31, just above analysts' average forecasts of 16.53 million in a Reuters Estimates poll

"We continue to win our share, and perhaps even more of our share (of contracts), and we've managed to generate very strong organic growth," Chief Executive Richard Cuthbert told Reuters on Monday.

By 0802 GMT shares in Mouchel edged down by almost 1 percent to 425.75 pence, valuing the company around 481 million pounds. The company has outperformed the FTSE all share support services index .FTASX2790 by about 20 percent in the past year.

Mouchel, which provides services mainly to local and central government, acquired two business support companies in its first half, helping to boost sales, which grew 49 percent to 308.2 million pounds.

Cuthbert said strong organic growth meant Mouchel was not actively seeking more purchases in its second half.

"We've spent nearly 100 million pounds on the two acquisitions and we're not deal junkies, our organic growth rate is very strong," Cuthbert said, adding he would like to see the company step up to bigger rival Capita (CPI.L) in the market for outsourcing business support services.

PUBLIC SECTOR BUFFER

Cuthbert said Mouchel's limited exposure to the private sector meant it was well-buffered from an economic slowdown and credit-market turmoil.

"One of the reasons we focus on the UK public sector is for its reliability. Sometimes you miss out on the boom time in the private sector but it means that you have a more reliable rate of growth," Cuthbert said.

Mouchel, which maintains thousands of miles of motorways across Britain, hopes to benefit from a recent government decision to open hard shoulders to ongoing traffic on congested motorways.

"We were instrumental in that work ... In the future we expect to be involved in design and management of new hard shoulder motorways," Cuthbert said.

Analysts at Panmure Gordon kept their "buy" rating on the stock. "Mouchel is delivering a healthy mix of organic and acquisitive growth. Its strong position in the government and regulated sectors provides some good visibility," they said in a research note. (Editing by Quentin Webb)