Serco sees 'record' orders and double-digit profit growth

Outsourcing firm Serco on Thursday said it expected "record" order intake to drive a surge in profit for 2019, with further strong growth expected in 2020.

The company forecast a 30% rise in underlying trading profit to around £120m for the calendar year, while order intake was expected to exceed £5bn.

Serco, which provides services from health to transport, said it expected a 14% jump in full year revenue, with 20% growth anticipated in the second half driven by two large contract wins in the UK and Australia.

Turnover also benefited from five months of contribution from the US Naval Systems Business Unit (NSBU), which was acquired for $225m in May.

Serco targeted 2020 revenue of £3.4bn to £3.5bn and total growth of 7-8%, while underlying trading profit was expected to climb by around 20% to roughly £145m.

Chief executive Rupert Soames said: "Once again, we see the advantage of having a broad international footprint, with excellent growth in both our North America and Asia Pacific divisions, and the ability to successfully execute acquisitions such as NSBU in the US.

"The UK also delivered a good performance, returning to organic growth in the second half, which is the first time since 2013."

Analysts from Shore Capital said: "Serco is still driven by sentiment from UK politics, as a government service outsourcer - though 60% of the business in now firmly rooted overseas, particularly in North America.

"Foreign exchange is thus a more important factor than the outcome of the UK General Election per se, though Serco is no doubt is lined up with others to tackle opportunities in border control and management etc. in a post Brexit environment."

At 1135 GMT, the shares were up 1.4% at 148p.

(Writing by Frank Prenesti; Editing by Michele Maatouk and Josh White)