Serco lifts profit guidance as outsourcer is boosted by takeovers

Serco has upgraded its annual guidance following a robust performance over the first six months of 2024.

Performance has been strengthened by Serco's immigration services contracts,which offset weakness in medicare services thanks to sector takeovers. 

The outsourcing giant now anticipates achieving underlying operating profits of £270million this year,9 per cent more than in 2023 and £10million above previous guidance.

It forecasts reporting a lower first-half profit of around £140million,owing largely to adverse currency impacts,reduced immigration-related work in Australia,and a new contract with the US Centers for Medicare & Medicaid Services (CMS).

Forecast: Serco now anticipates achieving underlying operating profits of £270million this year,9 per cent more than in 2023 and £10million above previous guidance

However,the FTSE 250 firm said improvements in its portfolio's productivity and underlying performance had led to margins exceeding expectations during the period.

Serco also believes second-half profits will be about 30 per cent better than in the prior year,partly thanks to recent acquisitions and the 'ramping up' of new contracts.

Among the deals recently won by the company include one from Buckinghamshire Council to run five leisure centres and a £200million decade-long contract to manage HMP Ashfield in South Gloucestershire.

RELATED ARTICLES

Previous 1 Next

Serco ordered to stop scanning leisure employees' faces and...

Serco eyes 2024 profit growth despite flatlining revenues

Serco sales handed £804m boost from immigration spending

MIDAS SHARE TIPS: Put outsourcing company Serco on your...

Share this article

Share

Just before then,Serco agreed to acquire German immigration business European Homecare from Korte-Stiftung for €40million (£34million).

The group noted that the takeover helped bolster its immigration services platform and somewhat offset reduced trade in other areas,including lower revenue from the new CMS contract.

At the same time,the Hampshire-based company said full-year adjusted net debts and free cash flow would be better than expected,with the former closing the year at approximately £165million.

Mark Irwin,chief executive of Serco,remarked: 'While mindful of a potential impact internationally from elections in 2024,we remain optimistic about the quality of our pipeline of potential new work to support our medium-term growth targets.'

Irwin was promoted to CEO at the beginning of 2023,having previously run Serco's UK and Europe division.

He succeeded Rupert Soames,the current president of the Confederation of British Industry,who stood down after an eight-year spell successfully turning around the business.

During his tenure,Serco sold off multiple divisions,expanded into Asia and North America,and began focusing on winning public-sector contracts.

The company was also a major provider of coronavirus testing sites across England and Northern Ireland and call handlers operating on the NHS Test and Trace programme.

Serco Group shares were 4.75 per cent up at 181p on Thursday morning and have increased by around a third in the past 12 months.

DIY INVESTING PLATFORMS

Easy investing

Stocks & shares Isa

£1.50 fund dealing

0.25% fee on fund holdings

Investment ideas

Free fund dealing

Free fund dealing

0.45% account fee capped for shares

Flat-fee investing

No fees

From £4.99 a month

Trade shares and funds for £3.99

Social investing

Social investing

Share investing

30+ million global community

No account fee

Investment account

Free share dealing

Free fractional share*

Affiliate links: If you take out a product This is Money may earn a commission. This does not affect our editorial independence. *T&Cs apply.

> Compare the best investing platform for you

Disclaimer: This article is reproduced from other media. The purpose of reprinting is to convey more information. It does not mean that this website agrees with its views and is responsible for its authenticity, and does not bear any legal responsibility. All resources on this site are collected on the Internet. The purpose of sharing is for everyone's learning and reference only. If there is copyright or intellectual property infringement, please leave us a message.
©copyright 2009-2020       Contact Us   SiteMap