Capita PLC (LON:CPI) shares slumped as the outsourcer cut its full-year profit guidance and warned that its turnaround plan would take time to deliver benefits.
Chief executive Jonathan Lewis announced a major overhaul of the business in April, which involves simplifying the business to focus on core areas. The group also launched a £701mln rights issue.
In the company’s first-half results statement on Wednesday, Lewis said he was making good progress on his strategy and repeated his guidance for a return to growth in 2020.
“It is still early days, but my team and I are very focused and confident in our ability to deliver those commitments,” he said.
Capita reported a 59% drop in underlying pre-tax profit to £80.5mln for the six months ended June 30. Underlying revenue fell 4% to £1.9bn with declines across all divisions including software, people solutions, customer management, government services, IT services and specialist services.
The order book stood at £7.7bn at the end of the period, down from £8.2bn at December 31, reflecting low levels of bid activity last year and delays in decisions.
For the 2018 financial year, it now expects underlying profits to be between £250mln-£275mln, compared to the £270mln-£300mln it estimated earlier this year.
The group said it was on track to deliver £70mln in cost savings this year and £175mln by 2020. Capita also expects to raise £415mln from the disposal of non-core businesses, including Supplier Assessment Services and ParkingEye.
Shares fell 10% to 145p in morning trading.