UK's Serco reiterates annual forecast despite US procurement delays
UK's Serco reiterates annual forecast despite US procurement delays June 24 (Reuters) - British outsourcing group Serco SRP.L on Thursday reiterated its annual revenue and profit forecast as growth in its UK home market and in Europe offset persisting procurement delays in the United States.
The provider of defence, security, immigration, healthcare and transport services to governments has benefitted from a surge in contract activity as countries boost defence spending amid rising geopolitical tensions.
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"While procurement delays in the U.S. have continued into the first half, we remain confident in the structural drivers of demand which have supported further expansion of our North American pipeline," the company said.
The Middle East business, which contributes roughly 4% to Serco's revenue, was partially affected by the regional conflict, leading to some reductions in activity and revised contracts.
For the first half of the year, Serco expects underlying operating profit to rise by 6% to around £155 million and revenue to be about 3% higher than in the same period in 2025 at £2.5 billion.
Serco forecast full-year revenue of about £5 billion, with organic growth of around 3%, and underlying operating profit of about £300 million, in line with the average analyst estimate of a company-compiled poll.
Shares of the FTSE 250 .FTMC-listed company have declined ~16% YTD, underperforming the midcap index which gained ~3% during the same time frame.
(Reporting by Neeshita Beura in Bengaluru; Editing by Ronojoy Mazumdar)
((Neeshita.Beura@thomsonreuters.com))