LONDON (Reuters) - Serco nudged its full-year revenue target higher on Wednesday and said a decision on resuming the dividend was looming, after a recent run of contract wins helped the British outsourcer to shine in an otherwise troubled sector.
The group said full-year 2019 revenue was expected to be around the top end of the previously stated 2.9 to 3 billion pounds range, while its underlying trading profit guidance was maintained at around 105 million pounds.
Chief Executive Rupert Soames declined to comment on a failed bid to buy British engineering services group Babcock and said it was keeping its powder dry for future deals.
“Trading is rather good, and it’s not often you see an outsourcing company doing that,” he said.
The British company is at the tail end of a restructuring programme that has helped it to return to profit growth after it cut costs and focused on winning work abroad to weather a slowdown in a British market stymied by Brexit.
It said on Wednesday that while the pipeline for international work remained strong, it was now also seeing improvements in its home market, helped by acquisitions.
The improving sentiment, which has lifted Serco shares by 40% in the last six months, means the resumption of a dividend that was suspended in 2014 is now nearing and a matter of “when not if”.
“This year is important because we are going to be free cash flow positive in 2019 but we’re not going to make any decision until we see how the whole of 2019 plays out,” Soames told Reuters.
The outsourcing sector in Britain has been hammered in recent years by fierce competition that has driven down margins and a delay in decision making from customers due to the uncertainty around Britain’s exit from the European Union.
Reporting by Kate Holton; editing by Costas Pitas and James Davey