Serco, the support services and BPO giant, confirmed it is on track to achieve “good organic revenue growth” in FY11, and to meet its previously stated FY12 target of £5b revenue and adjusted operating margin of 6.3% (excluding acquisitions, disposals and currency effects). Consensus estimates put Serco’s FY11 at £4.6b (a 6.5% increase on FY10), and earnings per share of 37.7 pence vs. 33.7 pence. Serco is therefore expecting organic growth to pick up in FY12 – based on these numbers it will need to hit 8% in FY12 to achieve its £5b target.
Serco is going to have to deliver strong growth outside of its core UK market if it is to meet this target. The UK still accounts for 60% of its business, but unsurprisingly, this “remains challenging, with short-term headwinds resulting from government austerity measures, together with some uncertainties regarding public service reform.” Fortunately, Serco said it is “encouraged by the developments in [its] markets across the world”. Certainly its recent acquisition of Intelenet (see Serco buys Intelenet for offshore BPO entry), which is due to complete in the coming weeks, should drive cross-selling and up-selling opportunities for Serco, and help its organic growth prospects.