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Serco shares climb on strong profit guidance

By Sean Farrell

Date: Wednesday 13 Dec 2017

Serco shares climb on strong profit guidance

(ShareCast News) - Serco shares made strong gains after the outsourcing group predicted annual profit at the top of guidance with strong growth to follow.
Underlying trading profit for 2017 will be at the high end of earlier guidance of £65m to £70m with second half profit up about 10% from a year earlier, Serco said in a trading update. Profit margins will be better than expected and net debt at the end of December will be near the bottom of earlier guidance for £150m to £200m.

Rupert Soames, Serco's chief executive, said: "2017 has been a good year for order intake. We will deliver underlying trading profit around the top end of our previous guidance, and we expect profits to grow strongly over the next two years."

Serco shares rose 12% to 106.8p at 08:19 GMT.

Soames said orders included a contract to run Grafton prison in Australia - the group's biggest ever contract win - and an agreement to provide cleaning and catering to Southampton NHS trust in the UK. He said orders will be boosted by the acquisition of health facility management operations from Carillion for £47.7m announced alongside the trading update.

Soames, who is the grandson of Winston Churchill, joined Serco in 2014 and has worked to revive the company's fortunes after it was found to have overcharged the UK for tagging offenders. He has repaired relations with the UK government, cut costs and pulled out of operations where Serco overextended itself.

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