June 30, 2017 / 6:52 AM / in a month

UK's Serco cautions markets more unpredictable

2 Min Read

A Serco flag is seen flying alongside a Union flag outside Doncaster Prison in northern England in this December 13, 2011 file photograph.Darren Staples/Files

LONDON (Reuters) - British outsourcing group Serco (SRP.L), restructuring after a string of profit warnings, cautioned on Friday that the environment in its markets had become more unpredictable, as it reported flat revenue and lower profit in its first half.

Serco, which provides transport, health, justice, defence and security services in public departments and gets half of its revenues from the UK, said it expected to report first half revenue of about 1.5 billion pounds and underlying trading profit of around 35 million pounds, down from 51 million pounds in the same period last year.

It said reported revenue will show an organic decline of about 8 percent, offset by a currency translation benefit.

"Over the last six months the environment in several of our markets has become markedly more unpredictable, so we remain sensibly cautious," said Chief Executive Rupert Soames.

Nevertheless he said the firm's views are unchanged for 2017 - revenue of about 3.1 billion pounds, underlying trading profit of 65-70 million pounds and net debt of 150-200 million pounds.

Soames highlighted Serco's order intake of 2.4 billion pounds in the first half, including a 1.5 billion pounds contract to operate Grafton prison.

"We continue to track to plan and make good progress," he said.

Shares in Serco, down 17 percent so far this year, closed Friday at 118.4 pence, valuing the business at 1.3 billion pounds.

Reporting by James Davey, Editing by Paul Sandle

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