Capita revenue plunges as outsourcing giant hit by contract losses
Outsourcing firm Capita saw its adjusted revenue drop eight per cent in the first 11 months of the year, as the firm struggled to replace a host of lost contracts.
In a trading update, the company revealed that the drop came largely from its experience arm, which fell a whopping 16.3 per cent over the last 11 months.
The company credited the plunge to the loss a Co-operative Bank contract, lack of Virgin Media O2 contract transition benefits in 2023, as well as lower volumes on a telecommunications contract, which it said it expected to remain subdued in 2025.
However, its public service adjusted revenue also dropped by one per cent, thanks to contract losses, the cutting of some lower margin services, and delays of two contracts, the latter of which it said should benefit the company next year.
“Looking ahead, we have strong alignment with the UK government’s priorities as outlined in the recent budget, particularly in areas such as healthcare and defence,” said Capita.
Capita held the longest streak of double digit annual revenue growth of any UK company, with 20 years straight of consistent growth until 2009.
Since its streak was broken, its stock price has dropped 96 per cent. Shares are down more than 20 per cent since the start of the year.
The company is currently progressing with its £160m cost-cutting programme, which did manage to push it back into the black in the first six months of 2024.
£140m has been saved so far, the company said today, and it actually pushed up cost saving targets to £250m by December 2025 thanks to the use of generative AI.
“As we head towards the end of my first year as chief executive of Capita, I am very encouraged by the progress we have made against our strategic priorities, despite the impact of prior year headwinds being larger than originally expected,” said Capita chief Adolfo Hernandez.
“Our focus is on becoming a better business, “getting smaller to get stronger and fitter to then grow” and being more selective in not pursuing and exiting existing lower margin contracts.”