Source: Sharecast
Updating on interim trading, the outsourcer - which provides defence, justice, health and transport services, among others, to governments worldwide - said revenues had grown by around 3% over the first six months of 2026 to £2.5bn. Underlying operating profits were approximately £155m, compared to £146m a year previously.
There had been strong organic growth in the UK and Europe during the period, it noted, boosted by higher-than expected revenues in immigration-related services and contract mobilisations in defence. The pipeline was £12.5bn as at the period end, following more than £2bn of contract awards and extensions.
Looking to the US, Serco confirmed that the procurement delays seen at the end of last year had continued into the first half. However, the contribution from MT&S had more than offset the impact, it added. Serco acquired Northrop Grumman’s mission training and satellite group network communications software business (MT&S) last year.
Looking to the rest of the year, Serco also reaffirmed guidance, for revenues of around £5bn and underlying operating profits of around £300m. The 6% margin forecast was the upper end of its 5% to 6% medium-term target.
Chief executive Anthony Kirby said: "While procurement delays in the US have continued into the first half, we remain confident in the structural drivers of demand which have supported further expansion in our North American pipeline.
"At a time when governments are navigating geopolitical tensions and conflict, our global footprint and sector diversity remains a core strength." Over half of the company’s profits come from Serco’s international business.
As at 1100 BST, the stock had shed 3% at 225.8p.
Jefferies, which has a ‘hold’ rating on the stock, said: "Overall this looks solid enough, given headwinds from flagged procurement delays in the US and disruption form the conflict in the Middle East. Earnings per share unlikely to move significant today, and overall we see results as largely reassuring, given weaker share price performance into the print."
See latest RNS on Investegate