AUS
NZ
UK
CA
USA
IND
Highlights:
- Serco projects 2024 revenue at £4.8 billion, reflecting a 3% decline but a 9% rise in operating profit to £270 million.
- Strong second-half momentum, especially in North America, supported margin growth to 5.60% and robust cash generation of £170 million.
- 2025 outlook includes stable revenues, mitigating challenges in immigration-related contracts with new contracts and regional growth opportunities.
Serco Group PLC (LSE:SRP) has announced its financial performance for 2024, revealing steady progress in profitability despite a slight decline in revenue. The outsourcing and services provider recorded revenues of £4.8 billion, down 3% year-on-year, while achieving an impressive 9% growth in underlying operating profit to £270 million.
Improved Margins and Cash Flow in 2024
The group’s operating margin increased by 50 basis points to 5.60%, reflecting Serco's focus on operational efficiency and performance improvement. The company also generated a robust free cash flow of £170 million, which enabled the completion of its largest-ever share buyback program during the year.
Chief executive Mark Irwin credited the stronger trading momentum in the second half, particularly in North America, for driving the company’s improved financial metrics. “We built stronger trading momentum in the second half of the year, particularly in our North America business, and delivered good margin gains through our relentless focus on performance improvement and disciplined execution,” he stated.
Order Intake and Regional Growth
Order intake surged in the latter half of 2024, bolstering confidence in the group’s medium-term prospects. Serco’s European business has experienced significant growth over the past two years, while North America has shown continued momentum, offsetting challenges in the UK and Australia related to reduced immigration contracts.
“Our European business has seen significant growth over the past two years, and we are optimistic about further growth opportunities across the EU,” Irwin added.
Optimistic Outlook for 2025
Serco expects stable revenue of £4.8 billion for 2025, with underlying operating profit projected at £260 million. The company’s strategy for the upcoming year includes mitigating higher employment costs in the UK and navigating lower revenues from immigration services, while leveraging growth from new contract mobilizations.
“Our financial position is strong, which leaves us well positioned to actively apply our capital allocation priorities,” Irwin said. These priorities include supporting organic growth, increasing ordinary dividends, pursuing value-enhancing acquisitions, and returning surplus cash to shareholders.
Positioned for Continued Growth
Serco’s robust financial performance in 2024 and strategic initiatives for 2025 highlight its resilience in a challenging market. By focusing on innovation, operational expertise, and disciplined execution, the company has positioned itself for sustainable growth, both in existing markets and emerging opportunities across Europe and North America.
