Serco profits set to rise 50 per cent, bolstered by Covid contracts demand
Outsourcing giant Serco today said it expects profit to reach up to £125m in the first half of the year – up more than 50 per cent from the first half of 2020.
Serco, which has outperformed the wider UK outsourcing space, said in a trading update this morning that it expects stronger demand for its Covid-19 services this year than last, but that demand in the second half of the year will taper slightly as some contracts finish.
The outsourcer also stuck to its raised full year profit outlook of £200m – up £15m from its original forecast, and representing nearly 30 per cent growth in constant currency.
The firm’s organic growth has been driven by stronger demand for Covid-19 work this year than last, and it reported that it has won increased volumes of pandemic contracts.
Serco reported revenue growth of 20 per cent to £2.2bn, up from 19 per cent in the first half of last year – boosted by its focus on the public sector.
The firm also reported it had received a record almost £4bn orders in the first half of the year – a book-to-bill ratio of around 170 per cent, and just under 120 per cent on a rolling 12-month basis. Serco said this included “large new contracts” with the UK Ministry of Defence, the Department of Work & Pensions and the Royal Canadian Airforce.
It comes just a day after the firm announced it has been awarded a new £322m contract with the Department of Health and Social Care (DHSC) to continue providing Covid test and trace services.
Serco runs a quarter of the test and trace testing sites and half the “tier 3” contact tracers that phone the contacts of people who have tested positive.
Rupert Soames, Serco Group chief executive, said: “Serco’s performance in the first half underlines the trust governments around the world place in us, and our ability to respond at scale and pace to rapidly-changing requirements.”
“Profits will be weighted to the first half, and will include contributions from the WBB and FFA acquisitions, which will enable us to absorb the impact of the end of the AWE contract, the mobilisation costs of the recently-signed DWP contract and an expected reduction in Covid-19 related activities,” he added.