Serco Group (LSE:SRP) PLC upgraded profit guidance for 2022 as it announced better-than-expected interim results as the winding down of Covid Test & Trace was offset by growth in other contracts.
The outsourcer saw underlying trading profit grow 6% to £130mln in the first half to 30 June 2022, on revenue broadly flat at £2.17bn.
The FTSE 250 company said it lost around 10% of its revenue as a result of Test & Trace being wound down.
But this was offset by growth in other parts of the business - with increased demand for case management in North America, employment services in the UK and immigration services in Australia and the UK.
The interim dividend was hiked 18% to 0.94p.
The FTSE 250 company today raised its forecast for underlying trading profit for the year to £230mln to reflect forex movement and trading in May and June.
In May it also lifted its guidance to £225mln from a previous estimate of £195mln.
“We did much better in the first half than we expected in January, and as a consequence also expect to do better than we originally anticipated in the full year,” said chief executive Rupert Soames.
The order book “remains very strong” at £14.6bn, up £0.5bn over the prior year, Serco said.
The company said it will increase pay faster than budgeted as a result of the surge in inflation and will distribute an additional £9mln in the coming weeks in one-off payments to all colleagues outside management grades.
Shares were up 1.68% at 188.10p in midmorning trade.