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Serco expects COVID boost to fade in H2

Stock Markets35 minutes ago (Jun 30, 2021 05:35AM ET)

(C) Reuters.

By Yadarisa Shabong

(Reuters) -Outsourcer Serco said on Wednesday it expects first-half profit to jump over 50%, bolstered by its COVID-19 services for the British and Australian governments, but said those revenues would ease in the second half.

The company, which has been supporting Britain’s COVID-19 test-and-trace programme with services such as test site operations, cleaning, security and contact tracing, expects underlying trading profit of between 120 million and 125 million pounds ($173.05 million).

Serco, whose roots go back to 1929, has been led by former British Prime Minister Winston Churchill’s grandson Rupert Soames since 2014 and employs over 55,000 people globally in defence, transport, justice and immigration sectors.

The issues that Serco and the broader world face include labour shortages. Soames said it was difficult to hire lorry drivers in the United Kingdom and workers in the custodial business in Australia, where the group has seen the tightest labour market.

“I think that it’s going to be very interesting to see as the furlough scheme ends in the UK and in the U.S.. In the U.S., the labour market is pretty tight but we’re not entirely sure how that is going to work through,” he told Reuters.

Soames has led the group through a turbulent time for the outsourcing industry, which in recent years has seen the collapse of Carillion and Interserve, and now faces Brexit and pandemic-related disruptions.

Order intake at Serco, which this week extended the COVID-19 testing contract, will be nearly 4 billion pounds in the first half, a record, it said.

The company, which this month raised its annual profit target by 15 million pounds to about 200 million pounds, kept 2021 outlook unchanged on Wednesday.

About 340 million pounds of its first-half revenue, which is estimated to be around 2.2 billion pounds, will come from its COVID-19 work, compared with 80 million pounds a year earlier.

($1 = 0.7223 pounds)

Serco expects COVID boost to fade in H2

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