Servcorp Limited’s Share Price Sank 14% Today  

Servcorp Limited’s [ASX: SRV] share price is currently trading at $4.12, down from $4.78 yesterday.

Servcorp is the world’s leading provider of serviced offices, virtual offices, IT, communications and secretarial services, in 53 cities across 23 countries.

The share price drop of almost 14% came after the company downgraded their net profit before tax (NPBT) for FY18.

Why did Servcorp downgrade their NPBT?

The company downgraded their NPBT for FY18, from between $30 million and $35 million, in comparison to the previous forecast of $45 million to $55 million.

The reduction is due to current trading conditions, despite a substantial part of the business exceeding forecasts; there was a still significant losses from certain areas.

The US continues to be a major concern for the company, expecting a net loss before tax of $9 million. This is a significant drop in comparison to the forecast net loss before tax of $1 million.

Saudi Arabia and Singapore are also underperforming, with NPBT expected to come in $4 million below forecasts for FY18.

Due to the above, Servcorp has decided not to proceed with some of the investments announced in February this year. Meaning there will be no further expenses related to the strategic review initiatives.

What is next for Servcorp?

Servcorp has stated that they are continuing to reform their portfolio by modernising current fit-outs to enhance their co-working offerings.

They have also identified the issues in the US, Saudi Arabia and Singapore and are working on further strategies to turn the losses around.

PS: If you’re interested in learning about why a credit collapse could occur in 2018, check out our Analyst Vern Gowdie’s free report Global Financial Crisis 2018’.


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