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UPDATE 1-Serco avoids sector turmoil with reiteration of outlook
December 1, 2016 / 8:10 AM / 10 months ago

UPDATE 1-Serco avoids sector turmoil with reiteration of outlook

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LONDON, Dec 1 (Reuters) - Britain’s Serco reiterated its forecasts for the rest of this year and next, avoiding the turmoil hitting the wider outsourcing sector, helped by a long-term turnaround programme.

Serco, which provides security, traffic, defence and education services for governments across the world, said it had continued to trade in line with the improved outlook given in August, avoiding the problems that have recently hit sector peers Capita and Mitie.

For 2016 Serco expects to report an underlying trading profit of not less than 80 million pounds. For 2017 it expects to report a dip, with profit coming in between 65 million pounds and 70 million pounds, although it cautioned that the range of outcomes was significantly wider than normal.

“Our view of the underlying outlook for 2017 remains unchanged, which means that we are continuing to make good progress with the execution of our strategy for the long-term turnaround of Serco,” CEO Rupert Soames said ahead of a capital markets day on Thursday.

Serco, which is in the middle of a turnaround programme after years of setbacks, said it expected to move into a “growth” phase at some point in 2018.

The whole outsourcing sector has been hit in recent months by warnings from Capita and Mitie which both reported that trading had slowed due to client indecision following the vote to leave the European Union.

Shares in Serco, which have risen 24 percent over the last six months outperforming Britain’s midcap index which traded 3 percent higher in the period, opened up 0.9 percent at 134.4 pence. ($1 = 0.7974 pounds) (Reporting by Kate Holton; editing by Sarah Young)

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