Outlook - FY19
We have made a positive start to FY19 and, with 90% of FY19 revenue under contract, we are well positioned to meet our expectations for the full year.
The EMEA Services division delivered 3% organic revenue growth in H1 2019 and has 91% of FY19 revenue under contract. The division is expected to deliver modest revenue growth this year, although the lower baseline profit rate for single source contracts represents a continued headwind for operating margins.
The Group’s Global Products division has shorter order cycles than EMEA Services and its performance is dependent on the timing of shipments of key orders. The division delivered 25% organic revenue growth in H1 2019 with 86% of FY19 revenue under contract and is on track to meet our expectations for further organic growth this year. Full year operating profit margin is expected to be in line with previous years.
As we continue to invest in our core capabilities to support growth, we expect full year capex to be at the upper end of our previous guidance of £80-100m for FY19 and full year working capital outflows, excluding non-recurring items, of £15-25m.
Overall our expectations for Group performance in FY19 are unchanged.
Outlook - Longer term
Based on changes to the profit rate for single source contracts and a greater proportion of longer duration contracts, we expect a reduction in the SSRO headwind to our EMEA Services division’s profitability in FY20 and onwards, enabling growing revenue to deliver increased profitability.
Over the medium term, we expect to continue to invest in our organic capabilities and make strategic bolt-on acquisitions. We maintain a disciplined approach to investing, ensuring that we deploy our capital appropriately to drive returns for our shareholders.