Capita PLC (LSE:CPI) shares dropped 14.5% to 300.46p in early trading on Tuesday after the outsourcing group warned that margins would narrow this year.
This overshadowed a 34% jump in adjusted operating profit to £113.5 million in 2025, as a £250 million cost-cutting programme more than offset a further decline in revenues, with the outsourcing group declaring itself well on the way to becoming "the first AI-led business process outsourcer".
However, net debt more than doubled to £143.4 million, while the reported operating loss widened to £129.6 million from £9.9 million.
The company was hit by £56.1 million of restructuring costs and a £73.7 million goodwill impairment in the struggling Contact Centre division, which saw revenues fall 17.5% following contract losses in the telecoms sector.
The adjusted margin last year improved to 5.2% from 3.8%, helped by a £250 million cost reduction programme, but the group guided for a "small decrease" in margin in 2026 due to ongoing Contact Centre challenges and higher mobilisation costs in other divisions.
Chief executive Adolfo Hernandez pointed to a £19.8 billion pipeline and a contract win rate of 64%, up from 32% in 2024, as evidence that its transformation into what he called "the first AI-led business process outsourcer" was gaining traction.
Adjusted revenue fell 1.2% to £2.2 billion, an improvement on the prior year's 6.8% decline, and the group guided for low single-digit revenue growth in 2026 with free cash flow of between £20 million and £40 million.