Serco issues profits warning
Troubled outsourcing giant Serco on Monday issued a profits warning, stating that it could downgrade its profits forecasts as the business conditions remained more challenging than expected.
It was the third time that Serco issued a profits warning since November last year. In January, the company warned that its profits in 2014 would be lower than that of 2013 because of underperforming contracts and higher costs.
The company also said that it might have to issue new shares to enhance its financial condition and strengthen its balance sheet.
Issuing the most recent warning, the company said, "This may in turn require a material downward revision. We will, therefore, be consulting with shareholders regarding the possibility of strengthening the balance sheet through an equity placing."
The statement was issued after the close of stock market on Monday. Serco shares, which traded at more than 680p apiece in July 2013, have slipped to around 400p apiece nowadays. The frequent profits warnings will likely drag the stock under heavier pressure.
The latest warning emerged just days before the arrival of ex-Aggreko boss Rupert Soames as chief executive officer of Serco. Soames, who quit power firm Aggreko in February this year, will fill the vacancy created by Chris Hyman, who stepped down from the top job in October 2013.