Serco lifts guidance but sees lower Covid-related work in 2022

Government outsourcer Serco on Monday lifted profits guidance after better-than-expected trading in Australia and the UK from Covid-related and other work.

The company also said it expected to see much lower demand for Covid-19 related services in 2022, partially offset by the impact of new work secured in 2021 and growth in core non-Covid-related business.

Serco, which also runs immigrant detention centres and the UK government’s controversial test and trace programme, said it now expected underlying trading profit to be at least £225m, up from £200m. Revenue guidance was lifted to £4.4bn from £4.3bn.

“In the UK and Australia, volumes of work related to Covid-19 support to governments have been higher, and have continued for longer, than we anticipated,” Serco said in a statement.

It added a number of contracts across the business had also outperformed “notably immigration-related contracts in the UK and Australia, and our healthcare insurance eligibility services contract (CMS) in the United States, where the decision of the Biden administration to extend the open enrolment period has resulted in additional volumes”.

Serco said a number of commercial discussions expected to complete in 2022 were anticipated to be finalised in the current financial year.