International services firm Serco has seen its share price tumble after announcing that its profits will be lower than expected.
The company said its underlying profit would be around £50 million next year, compared with analysts' forecasts of £69m. Revenues are set to drop around 20% to £2.8 billion.
Serco's share price fell 13% to 99.5p per share, meaning the company has lost around a third of its value this year.
It makes around a quarter of its revenues from government contracts, but has lost a number over the past year. In September, Serco agreed to sell its business processing outsourcing (BPO) to allow it to focus on public sector contracts. And that is likely to hit profits by £20m next year.
Rupert Soames, grandson of Winston Churchill, who took over Serco earlier this year, said:
“We expect to deliver a better performance than we originally expected in 2015, which reflects the fact that we are beginning to make progress and are delivering on our promises.
“We said that we expected 2016 to be a further challenging year. We still expect this to be the case, caused in part by continued attrition of the contract base, and in part by the BPO disposal. 2016 and 2017 involves much work to rebuild our new business pipeline and become more cost efficient, but our view of the longer term recovery potential is unchanged.”
