Serco shares have risen to a 10-year-high today after the government services contractor upgraded guidance for 2025, set out a stronger outlook for 2026 and announced a change to its senior leadership team.
In its scheduled trading update, the Hampshire-headquartered firm said it now expects revenue for 2025 of around £4.9 billion, up 3% at constant currency, including organic growth of about 1%.
Underlying operating profit is forecast to be around £270 million, ahead of previous guidance of roughly £260m, with a margin of 5.5%.
Order intake for the year is expected to total approximately £5.5bn, with around two thirds of contract awards being in defence, weighted towards the UK and North America. Its bid pipeline also expanded again to a new decade high.
The company highlighted progress across its portfolio during the year, including the successful integration of MT&S, the disposal of its Hong Kong business and the mobilisation of its Mubadala joint venture in the Middle East.
“The group has demonstrated significant strategic and operational progress throughout the year, as we continue our focus on operational excellence, competitiveness and sustainable growth,” said Anthony Kirby, CEO of Serco.
“I am pleased with the strong performance across financial and non-financial metrics, reflecting the hard work and dedication of all my colleagues around the world.”
Alongside the trading update, Serco also announced that Mark Reid will join the firm as group CFO in March, succeeding Nigel Crossley, who will retire after 11 years with the company.
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Reid joins from Proximus, the Belgian-listed telecoms group, where he is currently group CFO and previously served as interim CEO of its international division.
He brings more than 20 years of international finance experience, with previous senior roles at Liberty Global, Virgin Media, British Airways and Yahoo.
Kirby thanked Crossley for leaving Serco “in a great position” financially, citing a strong balance sheet, good cash generation and revenue, profit and margin growth in recent years.
Reid added: “Serco delivers important solutions for its customers and society on a daily basis and to have the opportunity to be part of that is an incredible privilege for me.
“I am thrilled to be joining the Serco team and look forward to being able to contribute to their important mission from February 2026.”
Looking ahead, Serco issued initial guidance for 2026, forecasting revenue of around £5bn with organic growth improving to approximately 3%, again weighted towards defence.
Underlying operating profit is expected to rise to around £300m, implying a margin of about 6% at the top end of its medium-term target range, driven by contract ramp-ups, the full-year contribution from MT&S and productivity improvements.
Following the updates, its share price has spiked by 6.9% to 269.6p – a 10-year-high. It has a market cap of £2.7bn.