Work to support governments in their response to the Covid-19 crisis prompted outsourcer Serco to hike its profit forecasts.
The firm now expects to rake in at least £225m in profits for the year, up from around the £200m set out in its previous guidance.
“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,” the company said in a trading update this morning.
Serco’s revenues were lifted by its work on the government’s test and trast programme lasting longer than it first thought. It provides around half of call handlers for the system in England.
Around one in five Covid-19 testing sites are managed by Serco. It was awarded a £322m contract in June this year to keep those services running.
Managing immigration-related activities for the British and Australian governments also boosted Serco’s bottom line.
Revenues are expected to come in at £4.4bn for the year, up around £100m from its previous forecast.
Russ Mould, investment director at AJ Bell, said: “Most of us will be mightily sick of the pandemic by now, but for Serco there has been a silver lining as it upgraded forecasts thanks to Covid-19 related work running for longer than expected.”
Health insurance services in America also performed well due to Joe Biden’s administration extending the enrollment period for registering for subsidised health insurance coverage until mid-August.
The firm announced it will distribute another one-off payment of around £100 per worker to reward them for their efforts in dealing with the pandemic.
“The fund provides cash and other support to colleagues who would benefit from a little extra help at this difficult time. Together, these initiatives will cost the company around £10m in the current year,” Serco said.
However, the outsourcer warned that the factors generating its stronger-than-expected performance were likely to peter out.
“We expect 2022 to see much lower demand for Covid-19 related services, partially offset by the impact of new work secured in 2021 and growth in our core non-Covid-19 related business,” it said yesterday.