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Friday 16 October 2020

Serco upgrades on strong Q3

SercoPublic Sector business process operations specialist Serco has upgraded its full year guidance to around £3.9bn in revenue (previous guidance £3.7bn) and underlying trading profit of £160m-£165m (previous guidance £135m-£150m), all off the back of strong trading in Q3.

Serco entered Covid in pretty robust shape, having spent the last few years successfully navigating a major turnaround exercise (see here and work back). As with most of its peers, Serco took measures to preserve cash and cut costs as we entered the pandemic, but a lower cost base is only a small part of the story. Sales performance has been very strong across all regions driving upticks in the US, Australia and the Middle East businesses. 

In the UK, Serco has been awarded extensions to its test sites and call handlers’ contracts for NHS Test & Trace.  They have also seen increases in the number of asylum seekers being looked after for the Home Office, and a new Prisoner Escorting contract is also now up and running.  Serco has also secured an extension to the Emergency Measures Agreement on the Caledonian Sleepers train service till the end of the year.

Serco used this morning’s update to also try and set the record straight on NHS Test & Trace for which it continues to take flak from all directions. Serco’s defence it is only responsible for part of the process, as one of five suppliers running fixed and mobile sites where people go to get tested and as one of two prime contractors (see A world beating approach to contact tracing?) responsible for contact tracing. Serco points to its contract extension for these services an indication of its customer's satisfaction with the quality of work delivered.

Whilst Test & Trace still clearly has a long way to go to be “world beating”, the blame game is the bane of the outsourcers’ life – when things go well the client steps forward to take the credit. When there are problems its the outsourcers fault – indeed, in many ways that is what the outsourcer gets paid for, to do the jobs that are difficult, that the client doesn’t want to do themselves. And it’s this that judging by the numbers is something that Serco is definitely getting right.

Posted by: Marc Hardwick

Tags: tradingupdate   covid-19  

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