Austerity measures hit Serco

City A.M. Reporter
BRITISH outsourcing firm Serco yesterday warned of continued austerity headwinds in its core UK and US markets, sending shares down despite posting a 12 per cent first-half profit rise that was ahead of expectations.

Serco, whose UK and US business account for around 80 per cent of group revenue, said that austerity measures in the UK continued to slow down government work, while in the US the federal government’s protracted budget negotiations had significantly disrupted the industry.

Shares in the FTSE 100 listed firm, which raised its total dividend to 2.5p, closed down four per cent.

A growth rise of 44 per cent in its Africa, Middle East, Asia and Australasia region provided a more positive note for Serco, helping boost adjusted pre-tax profit for the six months to 30 June by 12 per cent to £123.6m on revenue five per cent higher at £2.2bn.

The US market saw revenue growth of around three per cent, with the UK market broadly flat.

Serco, which runs London’s Boris Bike hire scheme and the Dubai metro, has won several big contracts in Australia in recent months, including an £850m deal to provide non-clinical services to a new hospital near Perth.