- Bunzl raises profit target again
- Capita and Serco orders grow
- Driver the day’s star turn
On a good day for markets in general, UK business services firms were feeling the love after posting positive trading updates.
Half a dozen firms, from FTSE 100 distributor Bunzl (BNZL) to FTSE 250 outsourcer Serco (SRP) and staffing firm SThree (STEM) all the way down to tiddlers Capita (CPI), Driver (DRV) and RM (RM.) found themselves in favour.
POSITIVE VIBES
Shares in Bunzl gained 3% to £32.12 in early trading after the company raised its full-year operating profit guidance for a second time despite predicting flat 2023 revenue as the benefits of bolt-on acquisitions are offset by lower Covid-related orders.
The firm said it expected ‘some’ revenue growth in 2024, despite economic and geopolitical uncertainties, while its operating margin would remain ‘substantially higher’ than pre-pandemic levels.
Meanwhile, shares in defense, mobility and migration services group Serco climbed 4% to 161p following an upgrade to its free cash flow guidance for the full year, which together with a reduction in leverage should lead to ‘significant surplus capital at year-end’ according to the company.
The firm also set out new financial targets for 2024, with new chief executive Mark Irwin flagging a further reduction in debt along with a ‘strong pipeline of new business opportunities and robust balance sheet’.
Fellow support services firm Capita saw its shares edge higher to 21p after it repeated its medium-term targets of doubling group operating margin and generating positive free cash flow, helped by a surge in new orders with a total contract value of £2.9 billion or almost 50% more than last year.
SMALLER-CAPS ALSO CHASED HIGHER
Shares in science and technology-focused employment firm SThree jumped as much as 20p or 5% to 437p on the back of resilient full-year trading, against a record 2022 performance and as it pivots towards more contract roles in some of its markets.
Educational and digital learning provider RM enjoyed a small bounce after it confirmed its full-year results would be in line with forecasts, despite the decision last month to close its Consortium business which brings in roughly 10% of revenue.
The star of the show, however, was micro-cap dispute resolution specialist Driver, whose shares jumped as much as 14% to 29p after it swung to an operating profit even as revenue dropped due to a restructuring of its Middle East and Asian businesses.
