Serco Group PLC (LSE:SRP) has raised its profit and cash flow guidance for 2025, and forecast further growth in 2026 thanks to a slew of new defence contracts.
For the current calendar year, the government outsourcer said revenues are set to rise 2% to around £4.9 billion, or 3% at constant currency, with 1% organic growth.
Gains in defence, justice and citizen services offset lower immigration activity. The impact of the MT&S acquisition contributed around 2%.
Underlying operating profit is expected to be about £270 million, ahead of previous guidance for around £260 million.
Free cash flow is forecast at £170 million with cash conversion of around 90%. Adjusted net debt is expected to be £265 million, reflecting the MT&S deal and £50 million share buyback.
Order intake reached approximately £5.5 billion, with a book-to-bill ratio of at least 110%. Around two-thirds of awards were in defence.
For 2026, revenue is expected to increase to £5.0 billion with 3% organic growth. Operating profit is guided at £300 million, with a margin of 6.0%.
Chief executive Anthony Kirby said: "The group has demonstrated significant strategic and operational progress throughout the year, as we continue our focus on operational excellence, competitiveness and sustainable growth."
He added: "The global government services market is substantial, with high barriers to entry and strong growth prospects, particularly in the defence sector.
"Our significant order intake, of which around two thirds is in defence, and record pipeline further demonstrate the structural drivers of demand for our services, as governments face ever more complex challenges, and look to partners such as Serco to support them."