|
Serco Group PLC on Thursday reiterated its full-year profit guidance after reporting a ‘resilient’ first-half performance, supported by growth in the UK and Europe, improving margins and a growing contract pipeline despite continued procurement delays in North America. The Hampshire, England-based government services outsourcing provider said it expects revenue for the first six months of 2026 to be around £2.5 billion, up 3% from £2.42 billion a year earlier, including organic growth of around 1%. Underlying operating profit is expected to be around £155 million, up 6.2% from £146 million in the first half of 2025. Serco said it expects first-half operating margin to exceed 6%. The company maintained its guidance for full-year revenue of around £5.0 billion, up from £4.87 billion in 2025, including organic growth of about 3%. It also confirmed its guidance of underlying operating profit of around £300 million, up from £272 million. Serco said it continues to expect a full-year operating margin of around 6%, at the upper end of its medium-term target range of 5% to 6%. Chief Executive Anthony Kirby said: ‘The group has delivered a good first half, with revenue and margin increases including strong organic growth in UK & Europe and progress in our Asia Pacific business. ‘While procurement delays in the US have continued into the first half, we remain confident in the structural drivers of demand which have supported further expansion of our North American pipeline.’ The company said its UK & Europe business benefited from contract mobilisations in Defence, improved performance in Justice, and higher-than-expected revenue from immigration-related services. North America delivered revenue growth, helped by the contribution from MT&S, although this was partly offset by procurement delays, Serco said. Its North American pipeline has continued to expand, it said. In the Middle East, revenue was hurt by the US-Iran war, which resulted in reduced activity and the ‘rescoping’ of some contracts. However, Serco said it secured several new facilities management and asset support contracts through its partnership with UAE sovereign investment manager Mubadala Investment Co. Asia Pacific revenue declined following the end of a major immigration contract, though the region secured more than £500 million of new orders, including five-year extensions for the Acacia Prison and Adelaide Remand Centre contracts. Across the group, Serco’s contract pipeline increased to £12.5 billion. During the first half, it secured more than £2 billion of contract awards and extensions, it said. Adjusted net debt is expected to be around £250 million at the end of June, with leverage below 1.0 times. The company completed the refinancing of its revolving credit facility during the period, increasing its size to £400 million from £350 million and extending its maturity to June 2031. Serco expects adjusted net debt to be reduced to around £165 million by year-end, supported by unchanged guidance for free cash flow of approximately £160 million. The company also announced that Michael LaRouche will step down as chief executive of its North America division to take up a chief executive role at another internationally listed business. He will remain in post until a successor is found, Serco said. Shares in Serco were down 0.8% at 231.72 pence in London on Thursday morning. Copyright 2026 Alliance News Ltd. All Rights Reserved.
|
