(Alliance News) - Serco Group PLC on Thursday pleased shareholders after it lifted its financial guidance in an impromptu update due to "stronger than expected trading" in the first four months of 2022.
Shares in the FTSE 250-listed outsourcer were 8.9% higher in London on Thursday morning at 166.43 pence each.
Serco now expects underlying trading profit at actual currency rates for 2022 of GBP225 million, up about GBP30 million from prior guidance and with favourable currency movement contributing GBP10 million of that.
This result would represent a 1.7% reduction from GBP229 million in 2021.
"Trading in the first four months of the year has been stronger than we expected, with all regions performing above their budgets, and three of the four delivering higher profits than last year. Our work on the UK Test & Trace programme ended in April and, as a result, related revenues are likely to be about GBP220 million lower than in the first half of 2021," Serco said.
"However, we now expect to be able to largely replace this with other government work around the world, so group revenues in the first half are likely to be at similar levels to last year, at a little over GBP2 billion."
Revenue for 2022 is expected to land between GBP4.3 billion and GBP4.4 billion, up from previous guidance between GBP4.1 billion and GBP4.2 billion. It now expects an organic sales fall of 5%, better than previous guidance of a 10% decline.
Revenue in 2021 amounted to GBP4.4 billion and organic sales then surged 10%.
It added: "Serco is well protected against inflation. Although it is hard to forecast the precise impact on revenues and costs, the nature of our contractual arrangements with our customers means we do not expect costs to increase faster than revenues, although there will be timing differences between indexation and cost increases."
By Paul McGowan; paulmcgowan@alliancenews.com
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Serco (SRP)