26th Jun 2025 11:57
(Alliance News) - Serco Group PLC on Thursday said it is confident in its guidance for 2025, and slightly raised its revenue forecast after growth in the first half.
Hampshire, England-based Serco is a government services outsourcing provider, focused on defence, justice & immigration, transport, health & other facilities management and citizen services.
It expects to report revenue of GBP2.4 billion for the first half of 2025, 2% higher than in 2024 with organic growth at around 2%. Acquisitions are expected to contribute 2%, with currency seen as a 2% drag.
It now expects organic revenue growth of around 1% due to higher than anticipated activity levels in the immigration sector. It raised its full-year revenue guidance to GBP4.9 billion from GBP4.8 billion.
"We have seen good growth from new and expanded contracts in defence, justice and citizen services sectors and a smaller than expected reduction in revenue in relation to immigration activities," Serco said.
It expects underlying operating profit of at least GBP140 million, in line with last year, with a margin of 5.9%.
The firm left its full-year underlying operating profit guidance of around GBP260 million unchanged. It said the first-half weighting reflects the anticipated impact of the end of the Australian immigration contract, a full period of higher UK national insurance contributions and seasonality in the North American case management business.
The firm said it has a "very strong" order intake, with around GBP3 billion of contract awards. This includes a high weighting of orders to the defence sector and "good progress" on replenishing the pipeline.
"Serco has delivered a strong first-half performance, with positive organic revenue growth, and good margins, despite known headwinds in immigration markets," said Chief Executive Anthony Kirby.
Kirby noted the completion of the MT&S acquistion, which he said has strengthened its position in defence markets at a time of increasing defence budgets.
"I remain confident in our outlook and guidance for 2025. In my first few months as CEO, I have seen at first-hand the structural drivers of long-term demand in our markets, most notably in defence, justice, migration and citizen services.
"With our strong financial position, I believe we are well positioned to pursue opportunities to enhance future growth and deliver continued value to our shareholders," Kirby added.
Serco also said it has appointed Keith Williams to the board as a non-executive director and its chair designate.
Williams will join the board at the start of August and become chair from the start of 2026, succeeding John Rishton who will step down at the end of the year after a nine-year tenure.
Williams is currently chair of Halfords Group PLC and was previously chair of International Distribution Services PLC. He was also previously deputy chair of John Lewis Partnerships PLC and chief executive officer and then executive chair of British Airways PLC.
"I look forward to working with the board and executive team to support its important work in the delivery of critical public services, continued growth, and the creation of value for all stakeholders," Williams said.
Shares in Serco were up 1.9% at 197.20 pence in London on Thursday morning.
By Michael Hennessey, Alliance News reporter
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