Serco shares soar after it sticks to profit forecast

(Adds share price, details)

LONDON, July 1 (Reuters) - Shares (Berlin: DI6.BE - news) in British outsourcing company Serco jumped more than 13 percent on Wednesday after it reaffirmed its profit and sales forecasts for the current year.

The group, which tapped shareholders for cash in March after a spectacular profit collapse, said revenue for the full year was likely to be around 3.5 billion pounds and trading profit around 90 million pounds, reiterating an earlier forecast.

Shares in the company soared more than 13 percent in early trading, making it one of the biggest gainers on the mid-cap FTSE index. They were 11 percent higher at 131 pence by 0749 GMT.

The company, which is undergoing a mass overhaul after a disastrous period of contract problems and scandals that have strained its ties with the British government, had warned in March that it was unlikely to see a return to sales growth for another three years.

Serco said its current expectations did not include any adjustment for disposals and also said it expected a slowdown in first half revenue due to a reduction of work from previous contracts.

It said it expected revenue in the first half of its financial year to be around 1.7 billion pounds ($2.67 billion), compared to 2 billion pounds for the same period a year earlier.

Serco's trading update said it was making progress in managing its exit from loss-making contracts in the remainder of its private sector Business Process Outsourcing division and that losses from these contracts would be significantly lower next year.

"We have ended the first half in reasonably good order and are making progress in implementing our plans," Chief Executive Rupert Soames said in a statement.

"Whilst our recovery is at an early stage, and there will be bumps along the road, I am confident that we are doing the right things," he said.

The company said it had signed contracts with a total value of around 1 billion pounds in the first half, which was a relatively quiet period with few major bidding outcomes due.

The impact of foreign exchange movements had also been marginally positive in the first half, Serco said, with the strengthening U.S. dollar offsetting the weakening in the Australian dollar.

It will report half-year results on August 11. ($1 = 0.6370 pounds) (Reporting by Li-mei Hoang; editing by James Davey and Jane Merriman)