Serco Group PLC (LSE:SRP) saw stronger trading momentum in its second half as it told investors its full-year revenue for 2024 will amount to £4.8 billion, which be a 3% decline for the year
The outsourcing and services provider expects underlying operating profit will be up 9% year-on-year to £270 million, supported by a 50-basis-point increase in margins to 5.60%, whilst order intake improved significantly in the second half.
Free cash flow is anticipated at around £170 million.
“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," chief executive Mark Irwin said in a statement.
“Our strong cash generation and balance sheet have enabled us to complete our largest-ever share buyback during the year. We have also seen significant improvement in safety outcomes and an increase in colleague engagement this year.
Irwin added: “The outlook for 2025 is positive, with continued momentum in North America and new contracts mobilising, mitigating previously announced higher UK 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.”
Looking to 2025, Serco said it projects stable revenue at £4.8 billion, despite challenges from reduced immigration-related contracts in the UK and Australia. It expects an underlying operating profit of £260 million.
“We are confident in the group's outlook, built on the innovation, expertise and efficiency we bring to our partnership with governments,” Irwin said.
“Our financial position is strong, which leaves us well positioned to actively apply our capital allocation priorities of investing to support organic growth, increase ordinary dividends, pursuing value-enhancing acquisition opportunities and to return surplus cash to shareholders."