Dubai Metro operator to shake up Middle East unit management

Serco, the UK contractor that operates Dubai Metro, yesterday said it would restructure the management of its Middle East division as it looks to cut costs.

The company also said that its regional chief executive, David Campbell, is retiring.

The London-listed Serco will abolish the headquarters of its Australasia, Middle East, Africa and Asia (AMEAA) region, which means this unit will report directly to the group chief executive.

“This change will simplify the management structure, reduce cost and give our important growth markets in the Middle East and Australia greater visibility,” said Rupert Soames, Serco’s chief executive.

The international public sector contractor has sought to cut costs as its profits were affected by a decline in business and a series of scandals in the UK.

Serco also provides air traffic control services to airports across the region. The company recently signed a £26 million (Dh161.8m) deal with Qatar’s defence ministry to provide postgraduate-level education to officers in the country’s armed forces.

Serco has been expanding its business in the AMEAA region, with revenues in this area growing 18 per cent, compared to 3 per cent in Europe, the company’s core market. Serco earned 24 per cent of its revenues from the AMEAA region in 2013.

The company posted revenues of £4.2 billion in 2013 and profit of £106m, a decline in profitability of 62 per cent from 2012, when it made £4.06bn in revenue and a profit of £281.1m.

Shares in Serco were yesterday trading at 360.30 pence, practically unchanged from Tuesday. Serco’s share price has dipped significantly, falling 27.8 per cent since the start of the year.

This followed controversy in the UK as Serco was referred to the Serious Fraud Office for overbilling on a contract for the electronic monitoring of prisoners. The company was temporarily suspended from bidding for government contracts in the UK – which, including the company’s European business, accounts for 59 per cent of Serco’s revenues.

In the company’s annual report, the chairman Alastair Lyons said: “It is hard for those outside the company to appreciate how disruptive were the events of last year to the normal conduct of our business.”

“Not only was our pipeline of contracts with the UK government impacted by the suspension of awardability last summer, but the associated reputational damage also adversely affected our ability to win contracts with the private sector.”

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