Shares in outsourcing giant Serco soared over 11 per cent this morning after the firm raised its profit guidance for the year ahead on the back of rising demand for its immigration services.
In a trading update this morning, the company said it expects to see underlying trading profit of around £245m, a 4 per cent upgrade on its previous estimate.
It also upped its revenue guidance by 4 per cent for the year ahead, with the group now expecting to make £4.8bn.
By midday, its shares were up 11 per cent, the highest rise on the FTSE 250.
Serco said that the revised forecast came as a result of “strong demand for immigration services and the ramp up of contracts signed in prior years.”
“Governments around the world are increasingly looking to us to help them with the complex and difficult challenges they face and our enhanced focus on customers, colleagues and capabilities enables us to respond to their needs,” Mark Irwin, Serco’s chief executive, said today.
The company has benefited from numerous lucrative government contracts around the world, including from the Home Office to run accommodation for asylum seekers in the UK.
In March, it won a rebid for a contract worth $690m (£573m) from the US health department to assist the government in determining those eligible for health insurance.
Russ Mould, investment director at AJ Bell, said: “Serco has shown it is still possible to make a good living by offering contracted services to global governments and that’s reflected in today’s latest upgrade to earnings forecasts.
“Demand for its immigration and defence services, two big pressure points for lots of countries, have helped drive growth.”
Whilst benefiting from big state contracts, Serco has also come under fire over allegations of abuse by staff members at some UK asylum facitlites – claims Serco say are “without foundation” and “contain a number of significant inaccuracies”.