(Reuters) - Xerox Corp (>> Xerox Corporation) reported higher-than-expected second-quarter earnings on Thursday on growth in its services division and reiterated its full-year targets as its restructuring efforts showed signs of paying off.

Known for its printers and copiers, Xerox last year kicked off a restructuring program focused on its services business, which now generates about 55 percent of revenue and manages anything from toll systems to healthcare programs.

Chief Executive Officer Ursula Burns said the total contract value of services signings was up 40 percent, while new business signings increased 10 percent. The renewal rate for business processes and IT outsourcing was 95 percent, she said.

Net income from continuing operations attributable to Xerox was $345 million or 27 cents per share, compared with 26 cents last year. The analysts' average estimate was 24 cents per share, according to Thomson Reuters I/B/E/S.

The company said it expected to take 2 cents a share in restructuring charges in the third quarter, with earnings before those items at 24 cents to 26 cents.

Revenue from the services business rose 5 percent in the second quarter, while document technology, which includes printers and copiers, was down 5 percent. Total revenue increased 1 percent to $5.4 billion, excluding discontinued operations.

Xerox recently sold its North American paper business to Canada's Domtar Corp (>> Domtar Corp) and has agreed to sell its European paper business to UK and Ireland paper distributor Antalis. With the second quarter, Xerox is reporting results from these businesses as discontinued operations, it said.

Those deals resulted in a net pretax loss of $23 million, primarily due to severance costs, Xerox said.

The company took $39 million of severance costs for staff cuts of about 1,300 employees, primarily in North America. As a result of the asset sale in Europe, it expects to cut some 300 jobs in that region.

Cross Research analyst Shannon Cross said it was a strong quarter and that Xerox's restructuring efforts were beginning to pay off.

"It's a combination of benefits from technology side, where they have really solid new products, and strong services," Cross said.

Xerox reiterated its forecast for full-year earnings per share of $1.09 to $1.15, excluding special items, and operating cash flow of $2.1 billion to $2.4 billion.

Based in Norwalk, Connecticut, Xerox moved into business services with its purchase of Affiliated Computer Services Inc for $5.5 billion in 2009 - the biggest deal in its 106-year history.

Smaller rival Lexmark International Inc (>> Lexmark International Inc) reported better-than-expected quarterly results on Wednesday and said revenue would fall less than anticipated in 2013 due to big contract wins in services and software.

Xerox shares were up 0.7 percent at $9.90 in early trading.

(Reporting by Nicola Leske; Editing by Jeffrey Benkoe, Sofina Mirza-Reid and Lisa Von Ahn)

By Nicola Leske

Stocks treated in this article : Lexmark International Inc, Xerox Corporation, Domtar Corp