Capita shares slip as outsourcer’s strategy shake-up weighs on revenues

Capita shares fell after the group forecast a fall in annual revenues as it shifts away from contracts with smaller margins, amid an ongoing strategy shake-up

The outsourcer’s sales fell 9 per cent year-on-year to £1.2billion in the first half of 2024, reflecting previously announced contract losses.

But the group, which administers the BBC licence fee, still swung to a pre-tax profit of £60million, thanks to a savings boost and the sale of parts of the business.

It follows a strategy shake-up, announced in June, that will see the firm slash £160million in costs and refocus its energies on core segments to bolster financial performance and cash generation.

Capita told shareholders on Friday it now expects annual adjusted revenue to decline by a low to mid-single digit percentage, with the group also affected by ‘delayed operational go-live on certain contracts’.

Capita shares fell as much as 11 per cent at the open on Friday, but recovered ground to trade roughly 1.2 per cent lower at 18.9p. They are down just shy of 30 per cent over the last year. 

Capita has been selling off non-core business units, including software business Capital One and its majority stake in the Fera Science joint venture it ran with the Government.

The sales have helped the firm swing from a £10.6.6million loss for 2023, when it was hit by the cost of business exits, cost reduction expenses and the fallout of a major cyber incident.

Capita said on Friday it had already taken action to cut roughly £100million worth of its June 2025 cost reduction target of £160million.

Boss Adolfo Hernandez, who took over in January, said: ‘In my first six months I have been working with colleagues to identify and action many initiatives that will make Capita a better company.

‘We are implementing changes that will make us more competitive and drive growth, by becoming more efficient and spending less, digitising our offerings and leveraging technology partnerships.

‘This, together with more precision in delivery and evolving our culture, is enabling us to accelerate execution.

‘We have much more to do, but I am pleased that Capita is making encouraging progress in its journey to deliver its medium-term financial targets and create sustainable value for all its stakeholders.’

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