Serco hit by tough markets in first half

Outsourcing group Serco was hit by tough markets and reorganising costs in the first half but said it expected a strong showing in the second.

Revenue was up 4.3% to £2.3bn, with adjusted pre-tax profit down 17.4% to £102.1m.

Organic revenue, which strips out acquisitions and currency effects, dropped by 2.1%

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Ignoring reorganisation costs, profits were down 4.7% to £117.8m, with the company citing challenging US market conditions.

Conditions remained very difficult and uncertain for US federal outsourcing market, it said.

But further excellent revenue growth in AMEAA - where revenues were up 22% -and areas of improvement in the UK provided balance, it added.

Serco said it expected to deliver a year of good organic revenue growth for the group overall in 2012, with first half decline of 2% set to improve off the back of strong second half growth driven by previously announced contract wins.

As a mark of this confidence the firm pushed up its dividend up 6% to 2.65p, in line with underlying earnings.