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Capita drops as first half underlying revenue declines although profits rise, restructuring on track

The FTSE 250-listed firm said its underlying pre-tax profit jumped by 46% to £195mln, while underlying revenue fell by 3% to £2.07bn as its major contract win rate was one in two, up from one in three in 2016
Outsourcing sign
Capita added that pre-tax profit before significant new contracts and restructuring was expected to rise modestly in the second half

Capita PLC (LON:CPI) saw its shares drop 10% today after the under-pressure outsourcing group saw its first half underlying revenue decline, although profits rise and it said its restructuring is on track along with its hunt for a new chief executive.

In early morning trading, Capita shares topped the FTSE 250 fallers list, down 10.5%, or 68p to 576p.

READ: Capita up after £888mln price for disposal of asset services business "better than expectations"

Reporting half year results for the 6 months to 30 June 2017, Capita said its underlying revenue fell by 3% to £2.07bn, while its underlying pre-tax profit jumped by 46% to £195mln and its major contract win rate was one in two, up from one in three in 2016.

Capita - which has been hit by a Brexit-induced slowdown -  added that pre-tax profit before significant new contracts and restructuring was expected to rise modestly in the second half, compared to the first half of 2017.

READ: HSBC provides pointers for any new Capita CEO as they upgrade their rating for the outsourcer to 'buy'

Nick Greatorex, Capita’s interim CEO, commented: “In the first half of 2017, we made good progress on executing the plans laid out at the end of last year to reposition the Group: we announced the sale of our Asset Services businesses, completed the disposal of our specialist recruitment business and commenced a number of cost initiatives.”

He added: “We remain confident that these actions are making Capita a simpler business, well positioned for the future under new leadership."

The group is paying an unchanged interim dividend of 11.1p.

 -- Adds share price --

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