Analysts have described Serco’s latest trading statement as the "strongest" business opportunities presented by the firm in a decade, as its underlying profit jumped by 25% in its second half.

The firm said in its trading update that its underlying profit reach £270m in its 2024 trading year, increasing by 9% year-on-year.

Its revenue fell by approximately 3% to £4.8bn in 2024. Despite the drop, the firm said that this was an improvement across the year, with revenue dropping by 5% and 1% in the first and second half of the year respectively.

Its order intake, like many of the results, improved in the second half of the year, which has resulted in an expected book-to-bill for the full year of 100%.

Serco has also completed a £140m share buyback programme, taking the total amount returned to shareholders through buybacks to £340m since 2021.

Chief executive at Serco Group, Mark Irwin, said: "We are proud of the progress throughout 2024, reporting a strong financial performance and delivering important services to our customers in a dynamic global environment. 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.

"Our strong cash generation and balance sheet have enabled us to complete our largest ever share buyback during the year. We have also seen significant improvement in safety outcomes and an increase in colleague engagement this year."

Looking ahead, Serco said that it expects revenue to be in line with 2024 at around £4.8bn. This is despite a 7% revenue reduction from immigration contracts in the UK and Australia, with "good organic growth" anticipated in US defence.

Its underlying operating profit is set to be around £260m, adding that it is “well positioned” to deliver potential new work in the face of “fiscal and geopolitical challenges” that are being presented to governments.

Irwin added: "The outlook for 2025 is positive, with continued momentum in North America and new contracts mobilising, mitigating previously announced higher UK employment costs and lower revenues in immigration. Our European business has seen significant growth over the past two years, and we are optimistic about further growth opportunities across the EU."

Investment director at AJ Bell, Russ Mould, concluded: "It’s been a difficult decade for Serco, which started with scandals, losses and a strained balance sheet and has seen an uneven recovery since.

"However, the outsourcing giant now reports a pipeline of business opportunities which are the strongest seen in 10 years.

"The company is doing well in North America, particularly in the defence space, and is starting to gain traction in mainland Europe. That’s helped to make up for a less happy time domestically. As a company which employs large numbers of people, some of which are on relatively low wages, it faces a big impact from the increase in employer national insurance contributions and the hike in the national living wage announced in the Budget."

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