Outsourcer Serco delivered a confident trading update today forecasting a 30-40 per cent increase in underlying profit for the year, despite the gloom that is gripping its rivals.
The company predicted profit in the range of £90 to £95m, it upgraded its earnings per share forecasts for 2018 and 2019 and said its leverage and net debt was lower than expected.
The strong performance comes as competitors such as Mitie and Interserve struggle in the wake of the collapse of Carillion at the start of the year.
Serco said its 2019 outlook was in line with market expectations of continued progress, with revenue forecast at £2.8bn to £2.9bn and underlying trading profit to grow by mid-single digits in the range of £95m to £100m.
It said its underlying earnings per share for 2018 and 2019 are likely to be a further five to 10 per cent ahead of current consensus, principally as a result of a lower effective tax rate.
It has also renewed a £250m revolving credit facility with its banking syndicate for five years on “substantially unchanged” terms.
Chief Executive Ruperts Soames said: “Profits have grown strongly in 2018 with margins increasing as a result of improved operational performance and cost reduction. With revenues no longer reducing, cash generation turning positive and the benefit of a strong balance sheet, we are pleased with progress, and we expect further improvement in 2019.”
Serco's share price rose nearly eight per cent this morning to 96p.