SHARES in outsourcing group Xchanging took a battering yesterday after it announced lower-than-expected revenues for the year due to delays in big contracts.
The FTSE 250-listed firm’s shares fell 16.5 per cent after it said that procurement had been hit by continued client uncertainty, eventually closing down 12.5 per cent at 175p as the worst faller in the mid-cap 250 index.
The firm however reassured investors that pre-tax profit for the year should still hit consensus estimates of £74m, thanks to a pipeline of smaller deals and cost-cutting measures. Revenue growth is expected to be four to seven per cent higher than in 2009, down from previous forecasts of 10 per cent.
The company, whose clients include Deutsche Bank and BAE Systems, said operating profit for the six months to 30 June rose 2.1 per cent to £20.1m on revenue of £374.1m, a rise of 1.9 per cent.
Chief executive David Andrews admitted the firm remains on the back foot in the wake of the recession. “Although we’re probably at the back end of the downturn, management does remain cautious on pressing ahead with new initiatives and my guess is that that caution will begin to lessen as we move on in the year,” he said.
The company said it has delivered £5.8m of cost-savings so far this year, and was targeting a total of £14m for the year.
It also announced a deal to acquire a 51 per cent stake in Italian electronic payment company SIA-SSB. Andrews said the move “marks a major step forward in our European growth strategy. Italy will be our tenth country of operation”.
The deal is not expected to significantly impact Xchanging’s financials for the full-year.