Serco set for profit bump on back of Covid contracts
Outsourcing giant Serco today said that it was on course for a 35 per cent jump in profit this year thanks to its role in supplying key government coronavirus programmes.
The FTSE 250 group said that profit would come in at £160m-£165m for the year, while revenue is also set to increase 19 per cent to £3.9bn.
Serco has been involved in supplying a number of coronavirus services, including the NHS’s much derided Test and Trace System.
The firm has come under fire for its role in the programme, which has been lambasted for not identifying enough transmission risks.
Serco also confirmed that it would pay back all the money it had received through the furlough scheme, as well as making a one-off extra payment to its 50,000 staff.
In combination, it said, these payouts will amount to £8m, or five per cent of its 2020 profit.
Today’s trading statement came with a flurry of other announcements, including new deals to run facilities and prison services in Australia.
Serco has been awarded a new contract to run Acacia Prison in Western Australia for five more years, worth up to £250m. The contract has the option of being extended for up to 10 years, which would give it a total value of £790m.
In addition, the outsourcer announced that it had bought Australian firm Facilities First for £43m.
Commenting on the update, chief executive Rupert Soames said: “In what will be remembered as one of the most challenging periods for businesses since the Second World War, Serco’s people have proved themselves to be resilient, flexible and dedicated to ensuring the delivery of public services.
“Across all our businesses it has been gratifying to see customers turning to Serco as a trusted and capable partner to help them deal with the enormous challenges they have faced.”
Although the firm is facing “unprecedented levels of uncertainty” in 2021, Soames added that Serco was targeting slightly higher revenue and profit next year due to the Facilities First acquisition.
However, the firm added that it was not yet the right time to restore its dividend payments.