Serco increases full-year guidance following ‘good progress’

The outsourcing firm reports that group revenue is in line with expectations at around £2.4bn, and underlying operating profit is ahead of plan at approximately £140m, with progress in improving productivity and the underlying performance of its portfolio delivering a margin of around 5.8%.

The company also adds it is in a strong financial position with adjusted net debt expected to be around £135m, leverage approximately 0.6x net debt to EBITDA. Approximately £60m of its £140m share buyback will have been completed by the end of June.

As a result of the first half performance Serco has increased its profit guidance for the full-year by £10m, or 4%. Second half profit is expected to be nearly 30% higher than the same period in 2023. Serco states the year overall will benefit from new contracts ramping up, operational efficiency improvements across the existing portfolio and a contribution from acquisitions. An underlying operating profit of approximately £270m is now expected, 9% higher than 2023, with margins increasing by around 50 basis points.

Mark Irwin, Serco Group Chief Executive, commented: “We have delivered a good performance in the first half, with progress in improving productivity and the underlying performance of our portfolio allowing us to increase our profit guidance for the full year by £10m, or 4%. We now expect underlying operating profit of approximately £270m, 9% higher than 2023, with margins increasing by around 50 basis points.

“We continue to explore new ways to bring together the right people, the right technology and the right partners to help governments around the world respond to the complex and difficult challenges they face. As we enter the second six months of the year, 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.”