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Interserve reports a ‘mixed’ first half year of trading

Interserve has reported stable overall revenues of £1.6 billion despite “challenging market conditions and an uncertain political environment” in its half-year results 2017.

Headline total operating profit however took a tumble from £64.3 million (H1:2016) to £46.1 million (H1:2017).

Support Services UK delivered a resilient performance despite the impact of higher operating costs driven by increased regulation. Strong performances were seen from its Equipment Services and Construction International divisions.

Interserve reported management actions in UK Construction are “gaining traction”, however says the results have been “impacted by underperformance on a small number of contracts and the continuation of tough market conditions”.

The business boasts a strong future workload of £7.1 billion with more than 95 per cent visibility of 2017 consensus revenues, with contract wins in Support Services and a narrower market focus in UK Construction. Notable wins in the period include contracts with the Defence Infrastructure Organisation, Ministry of Justice, Network Rail, BT Group, Stagecoach Group, Musanada (Abu Dhabi) and Liwa Plastics (Oman)

Chief Executive Adrian Ringrose commented: “Trading in the first half of the year was mixed. In the UK, Support Services delivered robust volume but margins were impacted by a number of anticipated cost headwinds, while in Construction the continuation of a long period of challenging market conditions, coupled with areas of underperformance in operational delivery, resulted in a small loss for the division. We expect the restructuring and cost reduction measures we have taken in recent months to benefit both divisions’ performance during the second half of the year.

“Internationally, our Construction businesses delivered a strong performance, while Support Services International benefitted from the actions we took on its cost base in the second half of 2016, delivering a profit despite seeing a further drop in volumes. In Equipment Services, the updated strategic focus and associated operational initiatives are delivering the anticipated results.

“Despite the increased political and macro-economic uncertainty following the UK’s EU referendum and recent General Election, our outlook for the current year remains unchanged.”

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