Thursday 6 August 2020 8:24 am

Serco profit jumps on crisis demand but shares fall flat

Outsourcing firm Serco said profit jumped 53 per cent in the first six months of the year, as demand for its services boomed during the coronavirus crisis.

An additional need for the back office and IT services that Serco provides to the government offset the lack of demand for its transport and leisure services, the firm said.

“Covid-19 has had little effect on profits; although there have been some dramatic impacts, positive and negative, on individual contracts, in aggregate the ‘ups’ on profits have balanced the ‘downs’,” Serco chief executive Rupert Soames said in a statement.

Read more: Serco boss defends ‘remarkable’ coronavirus test and trace system

However shares in Serco fell more than 10 per cent in morning trading.

Serco, which provides defence, security, immigration, health and transport services for governments in more than 20 countries, also continued to benefit from the acquisition of a US naval systems unit last year.

Underlying trading profit rose to £77.6m, up from £50.6m a year earlier.

Revenue from contracts that were related to Covid-19 came to about £130m, the company said.

Read more: The City View: Rupert Soames, CEO of Serco, says private sector has ‘proven itself’ during crisis

Serco provides drive-through test centres in the UK and sources and maintains quarantine accommodation for travellers to Australia, among other services.

Serco had recently declared its first dividend since 2014, but later withdrew the move due to the uncertainties caused by the coronavirus pandemic. It said today it would decide later this year whether to reinstate the dividend.

Its shares jumped in June after it confirmed it would be able to provide guidance for its full financial year, a metric which many firms have had to retract due to the pandemic’s uncertainty.

Serco reiterated that forecast today, predicting full-year revenue to be around £3.7bn, and a profit of between £135m and £150m — both increases on last year’s figures.