Serco Group PLC (LSE:SRP) said sales and profits this year will be slightly better than previously forecast as demand for immigration services in the UK had offset a decline in Covid work by more than expected.
In a trading update, the outsourcer said it now expects revenues for 2022 of around £4.5bn compared to £4.3-4.4bn indicated, with underlying profits to be £5mln higher than previous guidance at £235mln.
Profits for the coming year (2023) would be flat, added chief executive Rupert Soames, who steps down at the end of 2022, with new contracts offsetting the loss of Covid work.
“2022 will turn out much better than we expected at the start of the year as strong growth across the business largely replaced Covid contracts,” he said.
Serco said that the second half of this year was the first period since 2019 with no test and trace work.
This reduction in Covid-related work has cut revenue this year by 11% (£480mln), Serco noted, though immigration-related business in the UK especially had continued to be strong.
“Excluding Test & Trace, the UK has delivered strong growth,” it said, though US profit margins have weakened in the second half due to the seasonality of case management work.
Shares dropped 1.6% to 155.3p.