Serco still on track for trading profit
Outsourcer Serco expects revenue to grow again in 2019 as it starts to see the results of an overhaul that began in 2015.
It comes as the firm delivered a confident trading update, forecasting a 30 to 40 per cent increase in underlying profit for the year, despite the gloom that is gripping its rivals.
The firm, which runs leisure centres in Shropshire and operates waste services in Sandwell, expects underlying trading profit to grow to between £90 million and £95 million in 2018, in line with analysts’ forecasts, and to between £95 million and £100 million in 2019.
It also expects revenues to rise to between £2.8 billion and £2.9 billion, from £2.8 billion pounds in 2018.
The strong performance comes as competitors such as Mitie and Interserve struggle in the wake of the collapse of Carillion at the start of the year.
Serco has been working with Carillion's liquidators to take on some of the contracts held by the firm.
Serco provides services for public sector departments in Britain and abroad, operating prisons and asylum seeker accommodation, organising health sector administration, running trains and ferries and providing IT support to the US Navy.
Chief executive Rupert Soames said: "As we predicted when we set out our five-year strategy in 2015, profits have grown strongly in 2018 with margins increasing as a result of improved operational performance and cost reduction.
"With revenues no longer reducing, cash generation turning positive and the benefit of a strong balance sheet, we are pleased with progress, and we expect further improvement in 2019.
"We expect to deliver another year of strong order intake in 2018, driven in particular by our international businesses, and our operations and transformation plans continue to deliver an organisation which is leaner, fitter and much stronger."
Shares in Serco were up 7.6 per cent at 96.20p, the second best performer in the FTSE 250 index after fellow outsourcer G4S.
Wolverhampton-based Carillion went into liquidation in January, and more than 2,700 have been made redundant since then.
At the time of the collapse, there were 460 people working at the Carillion House building in the city centre.
