Serco’s share price soars after forecasting a sunny future with raised profit guidance
Shares at Serco soared almost 15 per cent in early morning trading, as the outsourcing giant trumped City expectations after lifting its full-year profit guidance.
The FTSE 250 group said it now expects underlying trading profit between £90-£95m, marking a stark rise from the previous estimates of around £69.8m reported last year.
Shares jumped more than 14 per cent to 88p this morning.
Today’s news comes after a nervy few months for Serco, which said earlier in the year that revenues would be hit by “challenging market conditions”.
Rival heavyweight Carillion’s collapse at the start of the year also raised concerns about the future of the outsourcing industry among investors.
Read more: Carillion redundancy payouts to hit £65m
However, the company said today that a combination of cost-cutting and improved operational performance had bolstered margins.
The group, which offers border security and ferry operation among many other provisions, also said that full-year results would be boosted by a number of non-recurring trading items, such as end-of-contract settlements.
Net debt is expected to be at the lower end of its previous guidance of £200m-£250m, boosted by an early repayment of a vendor loan note issued on its disposal of Indian business Intelenet in 2015.