Thursday 18 April 2019

Capita shares plunge as it reveals 60pc slide in profits

Capita CEO Jon Lewis
Capita CEO Jon Lewis

Elisabeth O'Leary

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.



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