Interserve is hit as profits dip by a third

Steve Dinneen
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Maintenance and outsourcing firm Interserve yesterday said first half pretax profit fell 31 per cent compared to last year, though the firm expects growth in overseas markets to help improve earnings in the coming year.

The company, which last year closed the majority of its pension scheme, said pre-tax profit for the first half of 2010 was £27.3m, against £40m for the same period last year.

Profits in the company’s support services division, which is significantly exposed to government spending, were down slightly, but Interserve’s chief executive Adrian Ringrose said the business was likely to bounce back.

He said: “What we’re doing is signalling we are at the low point in that we are expecting a much stronger performance in that division going forward.”

He added that in the next two to three years Interserve would benefit from helping the government meet efficiency targets, but lack of clarity over the contents of Downing Street’s October spending review provided uncertainty about the future.

“For us it’s more about helping our clients drive efficiencies. There may be pressures on volume short term, we’re ready for that. We’re ready to flex our business and look into other international markets,” Ringrose said.

Interserve has £4.5bn worth of orders for which the company has secured contracts. The firm increased its interim share dividend to 5.6p from 5.5p.

Analysts at Panmure Gordon were positive about the figures but kept their “sell” recommendation given concerns about public spending cuts.