British outsourcing behemoth, Serco, has announced that its business opportunities pipeline is at its most robust in over a decade, thanks to a surge from North American defence contracts. This news led to a more than seven per cent spike in shares in early trading.
The FTSE 250 company informed markets this morning that the underlying operating profit for 2024 was £270m, marking a nine per cent increase for the full year. It reported a "much improved order intake" in the second half of the year, resulting in an expected book-to-bill for the full year of 100 per cent, as reported by .
Serco stated that its new business opportunities pipeline is set to conclude the year at its "highest level in more than a decade". The firm, which finalised a £140m buyback programme this year, now anticipates adjusted net debt to be around £145m – £20m better than previous guidance – and revenue to align with 2024 at approximately £4.8bn.
Despite a five per cent hit due to lower revenue on its º£½ÇÊÓƵ immigration contract, it has experienced strong organic growth in North America after securing new contracts in the defence sector. Mark Irwin, Serco's chief executive, commented: "We built stronger trading momentum in the second half of the year, particularly in our North America business, and delivered good margin gains through our relentless focus on performance improvement and disciplined execution. Our strong cash generation and balance sheet have enabled us to complete our largest ever share buyback during the year."
"The outlook for 2025 is positive, with continued momentum in North America and new contracts mobilising, mitigating previously announced higher º£½ÇÊÓƵ employment costs and lower revenues in immigration. Our European business has seen significant growth over the past two years, and we are optimistic about further growth opportunities across the EU."
Serco, a company with operations spanning industries from defence and health to transport and justice in the º£½ÇÊÓƵ, currently manages five adult prisons: HMP Ashfield, HMP Doncaster, HMP Dovegate, HMP Fosse Way, and HMP Thameside. In October, it initiated legal proceedings against the º£½ÇÊÓƵ government over a prison services contract.
The company operates in 43 states, four Canadian provinces and 14 countries globally. However, Serco's shares have underperformed in the last 12 months, falling by 12.77 per cent.
A significant drop occurred a month ago following an Australian contract loss and the impact of the Budget, particularly the increase in employers' national insurance contributions.
