Capita shares plunge as it reveals 60pc slide in profits
Capita's shares fell by more than 6pc yesterday after it reported a 60pc drop in first half pre-tax profit, underlining the huge challenge facing the British outsourcing firm's new CEO Jon Lewis.
With IT-based business services for the public and private sectors ranging from managing London's congestion charge to paying National Health Service dentists, Capita has been hit by a slowdown in British business and tighter corporate budgeting. "Clients are very thoughtful about their investment decisions and the sales cycle is taking a little longer," Lewis, who is trying to simplify Capita's unwieldy structure, told Reuters in a telephone interview after the results.
Capita, which raised £700m from investors earlier this year, also said 2018 underlying pre-tax profit would now be between £250-275m (€281-309m), less than the £270-300m it predicted earlier this year.
This reflected an adjustment for the sale of businesses which had contributed around £25m, Capita said.
Shares in Capita were down 6.6pc to 151 pence at 08.56 GMT. They have gained sharply since April, but are still down 65pc year-on-year.
Capita repeated its long-term forecast of a return to growth in 2020 after reporting a 60pc decline in profit before tax in the first half to £80.5m. It also forecast organic growth would be weaker in the second half of 2018.
Lewis said profit had partly been sapped by long-delayed investment in new technology, although he was "encouraged" by the customer reception to Capita's progress and around £1bn in new orders in the first half. Capita's order book stood at £7.7bn at June 2018 compared to £8.2bn at the end of 2017.