UPDATE 1-Contract wins put outsourcer Serco back on track

Fri Nov 16, 2012 3:16am EST

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* 1.4 bln stg of new work won since July

* U.S. division to remain challenging

* Sees improvement in UK and BPO divisions

LONDON, Nov 16 (Reuters) - British outsourcer Serco Group said on Friday that it was on track to meet its full-year guidance after earlier contract wins kicked in to boost second-half revenue.

Reorganisation costs and delays in the award of federal work in the United States pushed group organic revenue down 2 percent in the first half of the year and while the firm said U.S. trading would remain tough, it anticipated a pick-up in UK and emerging markets.

Serco, which runs services around the world from air traffic centres to prisons, said it had won 1.4 billion pounds ($2.22 billion) worth of new work since the end of July, bringing its total for the year to date up to 5.4 billion.

New contracts include a $73 million deal to upgrade U.S. military vehicles in the Middle East, 140 million pounds to deliver NHS health services in Suffolk, England, and a 170 million pound BPO commission to provide customer support for life and pensions company AEGON.

Shares in the FTSE 100 firm were up 2.1 percent at 0812.

The group said it expected to see an improvement in its core British market, where the government is considering new ways to run public services at cheaper costs.

Paul Pindar, Chief Executive of rival outsourcer Capita , said on Tuesday that he sees a pick up in public sector work in Britain before the next election in 2015.

Serco said that it expected its global business process outsourcing (BPO) division, bolstered by last year's 385 million pound acquisition of Indian firm Intelenet, to perform particularly well in the second half.

The group said in early November that its BPO boss, Tom Riall is leaving to take up a new role at Priory Healthcare group, though will remain at the business in the near term.

Serco is expected to post a full-year pretax profit of 269 million pounds according to a Reuters poll of 21 analysts.

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