Capita Group’s share price has tumbled this morning after the group warned its profits will come in lower than expected this year.
The group, which raised £700million from investors earlier this year, said full-year underlying pre-tax profit now look set to come in at around £250-275million, rather than the £270-300million predicted earlier.
The outsourcing firm’s underlying pre-tax profits for the first half of the year came in at £80.5million, down from £195million at the same point a year ago.
Falling shares: Capita, which manages London’s congestion charge, saw its share price fall by 10% earlier today
Earlier this morning, Capita’s share price fell over 10 per cent, but has since recovered slightly and is currently down 6 per cent or 9.72p to 152.28p.
Capita, which works with 80 per cent of NHS organisations and manages London’s congestion charge scheme, saw revenues fell by 4 per cent to £1.98billion over the period.
The group has also axed its interim divided for shareholders, having dished out 11.1p per share at this point a year ago.
Statutory profits before tax rose to £42.3million in the first half, up from £27.6million in the same period last year.
Jon Lewis, Capita’s chief executive, said: ‘In April we set out our new strategy and received the support of shareholders to strengthen the balance sheet.
‘Since then, we have continued to make good progress on the plans we set out to simplify and strengthen the business.
‘It is still early days, but my team and I are very focused and confident in our ability to deliver those commitments.’
Connections: Capita works with 80 per cent of NHS organisations across the UK
Capita said its aim to implement £175million worth of cost savings by 2020 remained on track.
In a bid to cut costs, Mr Lewis, who took on the top job at Capita towards the end of last year, has said the group will consolidate its operations within the UK and exit leases on properties.
Commenting on today’s Christopher Bamberry, an analyst at Peel Hunt, said Capita was on a ‘sound financial footing’ after its rights issue and that it was at the start of a restructuring programme which would take some time to complete.
Analysts at Jefferies said: ‘We remain cautious regarding Capita’s recovery profile because, after an initial period of euphoria, outsourcers have taken longer than expected to extract savings.’