Serco raises profit forecast amid immigration services and acquisitions
HOOK, UNITED KINGDOM — British outsourcing company Serco Group raised its annual profit forecast, driven by strong performance in international immigration services contracts and strategic acquisitions.
The company now anticipates a full-year adjusted operating profit of £270 million ($341 million), up from the previous forecast of £260 million ($329 million).
Immigration services boost performance, acquisitions fuel growth
Serco’s performance has been bolstered by its acquisitions in the immigration services sector, which have offset ongoing weaknesses in its medicare services division.
This includes European Homecare, a leading provider of immigration services in Germany, which was acquired for €40 million (£34 million). This acquisition is expected to enhance Serco’s capabilities and service offerings in the European market, further solidifying its position as a key player in the immigration services sector.
CEO’s cautious optimism
Despite the positive outlook, Serco remains cautious about potential impacts from upcoming elections in key markets, including the United Kingdom, France, and the United States.
CEO Mark Irwin emphasized the company’s vigilance, stating, “As we enter the second six months of the year, while mindful of a potential impact internationally from elections in 2024, we remain optimistic about the quality of our pipeline of potential new work to support our medium-term growth targets.”
Market response and future prospects
The market reacted positively to Serco’s announcement, with shares rising as much as 5.1% on the FTSE 250 index. The stock has seen an overall increase of approximately 11% year-to-date, reflecting investor confidence in the company’s growth strategy and financial health.
Looking ahead, Serco is optimistic about its growth prospects, which are supported by a strong pipeline of potential new projects.
The company aims to leverage its recent acquisitions and strong performance in immigration services to achieve its medium-term growth targets despite the potential challenges posed by international elections.
Serco’s strategic focus on expanding its immigration services and improving productivity across its portfolio has positioned it well for continued growth and profitability in the coming years.