Serco’s revenues surge as UK ‘immigration contracts’ offset a tumble in Covid testing work
British contractor Serco said its revenues continued to grow in 2022 as surging UK government demand for its ‘immigration services’ offset a drop in Covid-related work.
Serco said its overall revenues increased by £109m to £4.53bn in 2022, despite a £480m drop in income from work surrounding Covid-19.
Higher revenues from Serco’s businesses running immigrations services for the UK government and administrative services in the US and Canada offset the £480m drop in Covid contract work.
However, profits from Serco’s UK & Europe business dropped by 25 per cent, to £72m, as lower profit margins on its citizens services contracts failed to match those available through its lucrative Covid work.
Serco’s overall profits, however, increased by four per cent, to £237m, as its earnings were bolstered by well-paid US government contracts.
Higher energy costs and labour shortages also hit margins on its immigration and prisoner services contracts as Serco was forced to pay out more to those driving its detention vans.
Serco currently runs two UK immigration detention centres in West Sussex and Bedfordshire, on contracts worth tens-of-millions each year.
Serco was awarded a £200m contract to run the UK government’s Gatwick immigration detention centre in West Sussex in 2020.
The outsourcing company was previously awarded an eight-year, £70m contract to run the UK’s Yarl’s Wood facility in Bedfordshire in 2014.
Serco also provides an array of ‘asylum support’ services to the UK government in providing accommodation to those waiting for asylum applications to be heard.
Serco’s UK government contract providing accommodation services to asylum seekers is now the outsourcers largest source of revenues.
However, a slowdown in work related to Covid-19 saw an end to Serco’s work running the UK’s testing centres, after the firm’s profits were buoyed during the pandemic.
The contractor also suffered from the UK government’s decision to take back control of its nuclear weapons programme, which Serco had worked on since 1999.
Serco won the contract to run the UK’s Trident programme in a consortium with Lockheed Martin and Jacobs Engineering, before the government regained control in 2021.
Income from work providing an array of ‘citizen services’ to the US and Canadian governments -administering patent applications, healthcare initiatives, and pensions schemes – also bolstered Serco’s revenues.
Serco last week won a $690m (£570m) contract to administer America’s public healthcare initiatives, including the schemes that were expanded under Obamacare.