Yahoo Finance Serco raises outlook as demand for immigration services in Europe and acquisitions drive growth
Serco has raised its outlook for profit and revenue this year, as demand for its immigration services and acquisitions drive growth.
Said in a trading update it is expecting to report an annual profit of around £245m for the year, a year-on-year increase of three per cent and alongside a seven per cent jump in revenue to £4.8bn.
Serco said demand for its immigration services in the UK and Europe and a successful ramp-up of new business signed in prior years had offset lower volumes in its Asia-Pacific business, and a seven per cent profit hit from a drop off in Covid-related work.
Mark Irwin, Serco’s chief said: “Our strong focus on execution has delivered good performance in the second half, resulting in full year outcomes that are better than those expected when we initially laid out guidance.
“For 2023, we will deliver growth in revenue, profit and cash, as well as an improvement in colleague safety and strengthened operational delivery of services to our customers.”
In a separate statement, Serco announced a new £34m deal to acquire European Homecare, a leading provider of immigration services in Germany.
Irwin added: “There are complex and growing requirements for immigration and asylum seeker support services globally and we have a strong track record of providing high standards of service underpinned by our commitment to ensuring that service users are treated with care and respect.
“Increasing our presence in Germany will expand the immigration support we already provide to government customers in the UK, Australia and across Europe.”
Annual cash flow is expected at £170m, a £20m jump on prior guidance and helping offset a £160m debt pile.
The company has benefited from a string of lucrative government contracts around the world this year, including from the Home Office to run asylum seeker accommodation in the UK.
In March, it won a rebid for a contract worth $690m (£573m) from the US health department to assist the government in determining those eligible for health insurance.
Shares have risen over 10 per cent in the last six months.
In a forecast for 2024, Serco said revenues were likely to level out, due in part to changes in its immigration contracts, as the UK government looks to reduce the number of asylum seekers accommodated in hotels.
The outsourcer said business opportunities are expected to be “strong” coming into the new year.
