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Global provider of government services, Serco Group, has reported a strong first-half performance and says it remains confident in its in full-year guidance for 2025.
The company’s scheduled trading update for the first six months of 2025 expects revenue of approximately £2.4bn, 2% higher than 2024. Organic growth is anticipated to be around 2%, with acquisitions contributing 2%.
Underlying operating profit is reported to be at least £140m with a continued strong margin of around 5.9%.
Serco has secured around £3 billion of contracts in the first half. The Group has seen good growth from new and expanded contracts in defence, justice and citizen services sectors and reports a smaller than expected reduction in revenue in relation to immigration activities.
On a regional level, North America is expected to deliver the strongest organic growth in the first half due to the high level of contract awards in the defence sector last year. Serco has also completed its acquisition of leading US Defence business, MT&S from Northrop Grumman, enhancing capability and scale in US and international defence markets.
The UK will also see good growth with contract mobilisations from new business wins in Serco’s citizen services and justice businesses.
Revenue in both Asia Pacific and the Middle East regions will be lower following the ramp down of ending contracts.
The outlook for 2025 expects that full-year organic revenue growth is expected to improve by 1% due to higher than anticipated activity levels in the immigration sector. Overall revenue guidance has been increased from £4.8bn to £4.9bn.
Underlying operating profit guidance remains unchanged at £260m with the first-half weighting reflecting previously disclosed impacts in the second half from higher UK national insurance contributions and the conclusion of the Australian immigration contract.
Anthony Kirby, Serco Group Chief Executive, said: “Serco has delivered a strong first-half performance, with positive organic revenue growth, and good margins, despite known headwinds in immigration markets.
“We completed the acquisition of MT&S in May, having received US Government approval, further strengthening our position and capabilities in both the US and international defence markets at a time of increasing defence budgets around the world.
“We have also delivered an outstanding period of contract awards, with strong win rates, securing around £3 billion of contracts in the first half, alongside strong client retention and replenishing our pipeline of opportunities.
“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.”
