Serco shares soar after profit upgrade amid demand for immigration services

UK government outsourcer Serco lifted annual guidance on Thursday after a strong first half, driven by higher demand for its immigration services.

The company, said it expected full-year underlying trading profits of around £245m, 3% higher than 2022 and a 4% upgrade to prior guidance. Shares in the company, which provides security at immigration detention centres, surged by 11% on the news as as the demand from the British government more than offset a fall in sales related to the Covid pandemic.

Revenue guidance was lifted by around 4% to at least £4.8bn, 6% higher than the £4.5bn reported in 2022 with estimates for organic revenue growth to around 4% from flat.

However, the company's operations have not been without controversy. The UK immigration minister, Robert Jenrick, met Serco executives last month for talks over a riot at the Yarl’s Wood detention centre.

Sources working at Merseyside hotels run by Serco, which were used to house people seeking asylum last month, told the Observer newspaper they believed there was a culture of “institutional abuse”. Serco has strongly denied the allegations, saying they were “without foundation”.

Reporting by Frank Prenesti for Sharecast.com