Outsourcing firm Serco forecast higher full-year profit

Aug 4 (Reuters) - British outsourcing firm Serco Group Plc hiked its 2016 profit forecast for the second time this year, citing slightly higher-than-expected cost savings and the fall in the value of sterling increasing the earnings from its overseas contracts.

Serco said it was too early to say what the impact of Britain's decision to leave the European Union would be for the company, which relies heavily on British government contracts.

The company, making steps to recover from a string of contract problems and scandals, said it expected underlying trading profit of not less than 80 million pounds ($106 million) for 2016, higher than its previous forecast of at least 65 million pounds.

Serco forecast revenue of about 3 billion pounds, compared with a previous expectation of 2.9 billion pounds.

Serco said its expectations were unchanged for 2017, when onerous contract provisions are expected to be a drag on free cash flow. ($1 = 0.7517 pounds) (Reporting by Esha Vaish in Bengaluru and Elizabeth O'Leary in Edinburgh; Editing by Adrian Croft)