EDINBURGH (Reuters) - British outsourcer Serco (L:SRP) kept its profit outlook unchanged on Friday but will make a greater cost-cutting effort to get there as a five-year restructuring plan starts to bear fruit.
Serco, which provides services to public defence, justice, transport and welfare departments in Britain and abroad lowered its range of expected revenues for 2018 to 2.7 to 2.8 billion pounds ($3.54-$3.67 billion) versus 2.8 to 2.9 billion pounds previously, while profit will be 80 million pounds.
First half revenue was expected at around 1.35 billion pounds with underlying trading profit seen at 35 to 40 million pounds.
Market conditions "are less than ideal, particularly in the UK," said Chief Executive Rupert Soames.
He noted that for the full year "there remains a wide range of potential outcomes reflecting the sensitivity of our profits to even small changes in revenues and costs, as well as further movements in currency."
Serco is in the latter stages of an overhaul started in 2014 after it ran into the kind of problems which led to the demise of rival construction and services outsourcer Carillion (L:CLLN) earlier this year. The biggest construction bankruptcy in British history has led to a major rethink of how the outsourcing sector operates.
Serco will now take on some of Carillion's contracts, and provided details of facilities management contracts it expects to take on in the coming weeks at six British national health hospitals. In total the contracts are worth around 70 million pounds in annual revenue for estimated trading profit of 4 million pounds.
The group's shares, down 16 percent over the last year, closed Thursday at 101 pence, valuing the business at 1.1 billion pounds.