Construction and support services firm Interserve believes public sector markets will open up for new work, despite spending cuts.
Chief executive Adrian Ringrose told CN that with clients such as the Ministry of Defence, Ministry of Justice and Department for Work and Pensions, the short term would see them controlling expenditure but opportunities would increase in the longer term.
Analysts agreed that the public sector could see some contractors benefit from selective tendering, but warned that bidding was tough for firms without a track record in the sector. Howard Seymour of Numis Securities said success rested on existing relationships.
“You have got to know these people for four or five years; quite frankly, once the things are at the bid stage it’s too late,” he said.
Andy Brown from Panmure Gordon predicted strong opportunities for building support services as the public sector makes efficiency savings. The strength of maintaining the construction business for Interserve lay in adding a complete services package for clients, he said.
Mr Ringrose said Interserve support services would continue to focus on supply chain efficiencies.
In its half-year results, Interserve support services revenue was flat at £538 million, but with a 76 per cent hike in operating profit, from £8.9m to 15.7m.
The firm announced pre-tax profit of £30.1m in its half-year results, up from £27.3 million in the same period last year. However, revenue was down from £944.5m to £928m.
Construction profits fell from £10.9m to £10.2m on £364.8m of revenue.
- Interserve saw support services margin recover from 1.7 per cent to 2.7 per cent
- Mitie says it will look for further acquisitions following the purchase of Service Management International last month
- Norland saw pre-tax profit of £13.3m, compared with £5.7m the year before
- Mears’ profit was up 7 per cent to £14.1m for H1 2011.