Serco shares spark on guidance lift

(Sharecast News) - Shares in Serco jumped on Wednesday after the UK government contractor lifted financial guidance on the back of contract wins and appointed a new finance chief. The company said it expected underlying operating profit of £270m, up from prior guidance of £260m, with a margin of 5.5%. It added that revenues would rise by 2% to around £4.9bn, with 1% organic growth.

"The global government services market is substantial, with high barriers to entry and strong growth prospects, particularly in the defence sector," said CEO Anthony Kirby.

"Our significant order intake, of which around two thirds is in defence, and record pipeline further demonstrate the structural drivers of demand for our services, as governments face ever more complex challenges, and look to partners such as Serco to support them."

The company also said it had appointed Proximus chief financial officer Mark Reid to the same role from March 6, succeeding Nigel Crossley, who is retiring after 11 years with the company.

Reid has been with the Belgian telecoms operator for five years where he also held the role of interim CEO of their international division while retaining group CFO responsibilities, Serco said in a statement on Wednesday.

He has more than 20 years of international finance experience and previously held senior roles at Liberty Global, Virgin Media, British Airways and Yahoo.

Looking ahead to 2026, Serco said it expected revenue of £5bnted, including improved organic growth of c.3%, weighted to defence.

Initial guidance for underlying operating profit was set at £300m, with expected margin of 6.0% at the top end of its medium-term range, driven by contract ramp-ups, MT&S integration and productivity improvements.

Reporting by Frank Prenesti for Sharecast.com