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Serco 2022 FY sales and profits seen lower as Covid-19 contracts ease back

By Iain Gilbert

Date: Thursday 02 Dec 2021

Serco 2022 FY sales and profits seen lower as Covid-19 contracts ease back

(Sharecast News) - Contractor Serco warned on Thursday that 2022 full-year sales and profits were likely to take be lower year-on-year as government Covid-19 test-and-trace contracts were expected to ease back in the new year.
Serco has benefitted from multiple Covid-19 related contracts, with 2021 full-year underlying trading profits expected to jump 38% year-on-year to at least £225.0m in 2021 as revenues rose approximately 10% to £4.4bn.

However, Serco provided guidance for 2022 ahead of its capital markets event, with the group forecasting revenue to be slightly lower at £4.1bn-4.2bn, roughly 6% lower than projected for 2021.

Underlying trading profits were pegged to be roughly £195.0m, down from the aforementioned £225.0m expected for 2021 as profits were also expected to be impacted by the wrapping up of Covid-19 contracts and its Dubai Metro and Atomic Weapons Establishment deals.

Net finance costs were expected to be "slightly lower" in 2022, while free cash flow was predicted to be lower than in 2021 but remain strong at "around £100.0m", reflecting reduced profitability and "more normal working capital absorption" following the reduction of Covid-19 services with beneficial payment terms.

As of 0910 GMT, Serco shares were untraded at 133.80p.

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