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Sunday 22 July 2018

Serco’s sales hit as contractor prepares to take on Carillion work

The outsourcer provides health, defence, and transport services.

Serco is taking on some of Carillion’s contracts (Ian Nicholson/PA)
Serco is taking on some of Carillion’s contracts (Ian Nicholson/PA)

By Helen Cahill, Press Association City Reporter

Outsourcer Serco has taken a hit to sales in the first half of its financial year, and warned that profitability will be knocked when it adopts healthcare contracts from Carillion.

The firm has said revenues came to £1.35 billion for the first half of the financial year, down from £1.51 billion the year before – a drop of 10.6%.

Serco’s underlying trading profit will be between £35 million and £40 million, the company said, compared with £34 million in the previous year.

For the full year, revenues are expected to come in between £2.7 billion and £2.8 billion, with underlying trading profits of £80 million.

The company previously said revenues would be between £2.8 billion and £2.9 billion.

Serco has been working with Carillion’s liquidators to take on some of the contracts held by the firm, which collapsed in January.

The outsourcer expects to take on the service contracts for six NHS hospital sites, bringing in roughly £70 million in extra revenue for the firm.

The new contracts are forecast to add around £4 million to Serco’s underlying trading profit.

Serco said there will, however, be an impact on net profitability for 2018 because the company will bear the cost of taking on the contracts, although there will only be a trading contribution for part of the year.

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Serco has already taken over the contract for managing the Great Western Hospital in Swindon (Barry Batchelor/PA)

The contract for managing the Great Western Hospital in Swindon has already been transferred to Serco, with the rest set to pass over in the coming weeks.

The company took a £60 million hit to revenues due to currency movements, which also hit trading profit by up to £4 million.

Serco chief executive Rupert Soames said: “Notwithstanding market conditions that are less than ideal, particularly in the UK, we are responding appropriately and continuing to make progress in line with our strategy.”

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