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Investing.com -- Serco Group (LON:SRP) shares rose more than 7% Thursday after the British company reported interim earnings ahead of expectations and announced a £50 million share buyback, while full-year profit guidance remained unchanged.
Diluted earnings per share for the first half came in at 9.6p, about 12% above the consensus estimate of 8.5p.
Adjusted operating profit reached £146 million, ahead of the expected £140.1 million.
Revenue for the period was £2.42 billion, around 2% above the consensus forecast of £2.38 billion, with EBITA margins reported at 6%.
Free cash flow stood at £91 million. Adjusted net debt rose to £259 million, above consensus expectations of £233 million. The company’s net debt to EBITDA ratio was 0.9x.
Serco increased its interim dividend by 8% to 1.45p. The company also launched a new £50 million share buyback program.
Full-year 2025 adjusted operating profit is expected to remain at £260 million, unchanged from the company’s June guidance and slightly below the consensus of £262 million.
This represents a 5% decline from the previous year. The company maintained its EBITA margin guidance at approximately 5.3%, down 40 basis points year over year, citing ongoing foreign exchange headwinds and higher mobilisation costs.
Serco lowered its expected full-year tax rate to 23%, from a previously guided 25%, which supports earnings per share for the second half.
Organic revenue growth was 3% for the half, up from 2% indicated in prior comments.
Order intake reached £3.2 billion, with the order book rising 9% to £14.5 billion. The bid pipeline grew 6% since year-end to £11.9 billion.
The company’s book-to-bill ratio was 130%, reflecting strong contract performance, with approximately 80% of order intake attributed to the defence sector.