Serviced and virtual office provider Servcorp (ASX:SRV) has reported a 95.8% decrease in pre-tax profit, blaming slower than expected global economic recovery.
The company specifically attributed the decline to worse than expected performance in financial markets including the USA – where as a result openings have taken longer than planned and it has been a “challenge” to acquire new teams.
But performance in Australia and Greater China continued to be strong, and there was evidence its Virtual Office product was back on track after six months of delays, Servcorp said.
Virtual Office revenue grew 19% in constant currency terms during the half-year.
The company also opened office floors in three new countries – Lebanon, Turkey and the Philippines – and is on track to open 16 new floors in the second half.
Servcorp's profit had already fallen 94% to $2.8 million in FY10, from $47.2 million in FY09.
Despite the declines, the company reaffirmed its guidance of profit of $30 million for the whole of FY11. But this figure only refers to pre-tax profit from mature floor space – of which Servcorp earned $13.3 million in the first half.
SRV shares dipped 1.69% in Wednesday's trading to $2.900.