(Alliance News) - Serco Group PLC on Thursday upgraded its annual guidance following a strong start to the year.
The Hampshire-based outsourcer said it expects annual revenue to rise by around 6.0% to GBP4.8 billion from GBP4.53 billion in 2022. This is ahead of February's guidance of GBP4.6 billion.
On an organic basis, it expects revenue to grow around 6%, after previously guiding for flat growth.
Shares in Serco rose 11% to 157.80 pence each in London on Thursday morning.
"We have had a strong start to the year, including robust demand for immigration services supported by the effective integration of ORS into our global platform, growth in defence services, and our successful rebid of the CMS contract," said Chief Executive Mark Irwin.
The CMS contract refers to the contract with the Centers for Medicare & Medicaid Services of the US Department of Health & Human Services. It won a rebid for the contract worth USD690 million in February.
Underlying trading profit is now expected to be GBP245 million for 2023, which would be up 3.4% from GBP237.0 million in 2022. It is also up from guidance of GBP235 million earlier this year.
"Profit is expected to be lower in the second half than the first because of the usual workflow cadence of our CMS contract and the commencement of the new agreement, our previously disclosed contract exits, and the strengthening of sterling," Serco explained.
For the first six months of the year, Serco expects revenue to climb 13% to GBP2.5 billion from GBP2.18 billion a year before. Underlying trading profit is expected to be at least GBP140 million, rising 8.1% from GBP129.5 million in the first half of 2022
"Governments around the world are increasingly looking to us to help them with the complex and difficult challenges they face and our enhanced focus on customers, colleagues and capabilities enables us to respond to their needs. This is driving growth in a number of areas of our international business and enables us to upgrade our guidance for the year," CEO Irwin continued.
Irwin took over from former CEO Rupert Soames around the turn of the year.
By Elizabeth Winter, Alliance News senior markets reporter
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