Serco starts the year with £4bn contracts win
OUTSOURCING firm Serco has won nearly £4bn of contracts so far this year, but said yesterday its revenues from the Americas had slumped.
The FTSE 100-listed group, which runs services from the Docklands Light Railway to prisons and air traffic control centres around the world, said it expected first-half revenue to grow by around six per cent, almost entirely from last year’s acquisitions.
Serco has signed contracts worth £2.9bn this year and been named preferred bidder on a further £1bn of work, which includes a £350m contract to operate the Lifeline ferry services to the Northern Isles of Scotland.
Shares sank two per cent to 539.5p, however, after it said its Americas division faced a difficult outlook because of US spending cuts.
“Conditions for the US federal market and hence our Americas division currently remain very tough, but for the year as a whole we anticipate that further strong growth in Africa, the Middle East, Asia and Australasia (AMEAA), the improving UK outlook, and the delivery of cost efficiencies will see us meet expectations,” said chief executive Christopher Hyman.
The group, which employs over 100,000 people in 30 countries, said it is on track to meet expectations. Analysts expect 2012 pre-tax profit to come in at around £275.84m.
Last week Serco agreed an extended deal worth about £1.5bn with the Ministry of Defence to provide and maintain Britain’s nuclear warheads. The new pricing agreement for the Atomic Weapons Establishment contract, reached together with Serco’s joint venture partners, Lockheed Martin and Jacobs Engineering, will run for five years from 2013.
In February Serco said it had identified £30bn of opportunities across the group, with more than a quarter coming from its AMEAA region where the firm is targeting expansion.
Jonathan Jackson, head of equities at Killik & Co said: “The strength of recent contract awards and progress on operational efficiencies reinforce the group’s optimism over the second half and its confidence in achieving full-year expectations.”