Capita’s shares slide after profits plunge
The UK outsourcer also axed its interim dividend to investors.
Capita’s shares have slumped after the company posted plunging profits and axed a handout to investors.
The UK’s biggest outsourcer said on Wednesday that underlying profit before tax fell by 59% to £80.5 million for the half-year, compared with £195 million the previous year.
Capita also scrapped its interim dividend, having handed 11.1p per share to investors at this point last year.
Shares fell by 6.5% on the news to 151.7p.
The outsourcer, which has tapped investors for millions of pounds to support a turnaround of the firm, had said underlying pre-tax profits would come in between £250 million and £275 million, having previously said profits could top £300 million.
This was due to the disposal of two businesses, which were contributing £25 million to the profit figure.
Underlying revenue was down by 4.2% to £1.98 billion.
Capita said in April that it was seeking £701 million from investors in a rights issue and that it would embark on a new strategy after booking a hefty annual loss.
Chief executive Jon Lewis said: “In April we set out our new strategy and received the support of shareholders to strengthen the balance sheet.
“Since then, we have continued to make good progress on the plans we set out to simplify and strengthen the business.
“It is still early days, but my team and I are very focused and confident in our ability to deliver those commitments.”
Capita said its aim to implement £175 million in cost savings by 2020 was still on track.
Mr Lewis has said Capita will centralise its procurement, consolidate its UK footprint and exit leases on properties as the chief executive seeks to cut costs.
Christopher Bamberry, analyst at Peel Hunt, said Capita was on a “sound financial footing” after its rights issue and that it was at the beginning of a restructuring programme which would take some time.
Analysts at Jefferies said: “We remain cautious regarding Capita’s recovery profile because, after an initial period of euphoria, outsourcers have taken longer than expected to extract savings.”