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Serco throws US in the clink for wrecking cash targets

Outsourcer's H1 2012 propped up by rest of the world

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Outsourcing behemoth Serco missed its targets for the first half of this year as "challenging" US conditions weighed down revenue.

The IT company, which runs prison services in Britain and air traffic centres around the world, was still hoping in May to achieve six per cent growth in sales year-on-year for the first half of 2012.

But overall revenue rose 4.3 per cent from £2.245bn in H1 2011 to £2.341bn in the six months to June this year. Reorganisation cut into pre-tax profit at the firm although it banked a £31m exceptional profit from selling subsidiaries. Profit before tax finished up at £120.5m, rising 7.8 per cent from the same period last year when it made £111.8m.

Serco said it won £4.2bn of work in H1 2012, compared with £2.5bn a year ago. Sales in the US fell 16 per cent year-on-year and slipped one per cent in the UK. Its Africa, the Middle East, Asia and Australia (AMEAA) division scored a 22 per cent organic increase in revenue on the same period in 2011.

"Conditions remain very difficult and uncertain for US federal outsourcing market," Serco said. "[But] further excellent revenue growth in AMEAA and areas of improvement in the UK have provided balance."

Both the UK and the US have been trying to curb their governmental spending, hitting contractors including Serco, but the company said it was still optimistic about the rest of the year.

"Forecasts reflect a balance of risks and opportunities across our markets," the group said in a statement. "2012 is expected to deliver another year of good organic revenue growth for the group overall.

"Action taken this year will position the group well for future growth in revenue and profits."

Christopher Hyman, chief exec of the firm, added that new contracts Serco had won would help it to deliver on "the anticipated strong financial performance in the second half of the year". ®

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