Covid contracts drive Serco to bumper profits and revenues

The company saw shares rise after it upgraded its performance guidance on Monday, as it also benefited from increased immigration work.

Henry Saker-Clark
Monday 15 November 2021 12:19
Serco was boosted by Covid-19 test-and-trace contracts (Danny Lawson/PA)
Serco was boosted by Covid-19 test-and-trace contracts (Danny Lawson/PA)

Serco’s contracts running the Government’s Covid-19 test-and-trace system have helped the outsourcing firm to surpass revenue and profit targets.

The company saw shares rise after it upgraded its performance guidance on Monday, as it also benefited from increased immigration work.

It told investors that it now expects to see £4.4 billion in revenues for the current financial year, ahead of its previous £4.3 billion forecast.

Serco also said it is on track to report underlying profits of at least £225 million, up from its previous forecast of £200 million.

The Hampshire-based outsourcer said several factors helped drive the improved performance, including “higher than anticipated” volumes of Covid-19 support work in the UK and Australia.

A number of immigration-related contracts also performed “better than we expected”, it added.

The business also benefited from additional volumes across its healthcare insurance eligibility services contract in the US after the Biden administration extended its open enrolment period.

Serco said it will give further guidance at its Capital Market Day next month but said it expects next year’s figures to be broadly in line with current analyst expectations.

It said Covid-19 related revenues will reduce next year but it expects these to be offset somewhat by other areas.

The company said: “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.”

Shares in the business were 4.4% higher at 136.5p after early trading.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in