Capita slumps to full-year loss, shares plummet

6th Mar 2024 10:27

(Sharecast News) - Shares in Capita plummeted on Wednesday, after last year's cyberattack helped pushed the outsourcing giant heavily into the red.

Revenues in the year to December end fell nearly 7% to £2.81bn, while the pre-tax loss came in at £106.6m. That compares to a £61.4m pre-tax profit a year previously.

It also widely missed forecasts, with most analysts expecting a pre-tax loss of around £58m.

Capita, which provides services for companies as well as the NHS, military and local councils, attributed the loss to business exits, a cost reduction programme and 2023's cyberattack, which incurred net costs of £25m.

In March, a ransomware group hacked Capita's systems, gaining access to personal data of staff and clients. Around 90 organisations reported breaches of personal information held by Capital to the Information Commissioner's Office following the attack.

Contract wins totalled £3.04bn, driven by what Capita called a "strong" performance in its public service division.

But overall it remained cautious looking forward. It forecast 2024 revenues broadly in line with 2023 and only a "modest" improvement to the operating margin.

It also confirmed it would cut costs by a further £100m, on top of the net £60m annualised savings it announced in November. "We need to deliver a rapid reduction in our cost base," said recently-installed chief executive Adolfo Hernandez.

As at 1015 GMT, the stock had plunged 21% to 16p.

Hernandez said: "Our 2023 financial results have demonstrated some progress.

"However, we have yet to deliver the operational excellence that will enable us to create the right platform for future growth or achieve our full potential for the benefit of shareholders.

"Looking forward, we will focus on precision in execution, co-creating solutions with clients and accelerating the use of technology, and leveraging our technology partnerships to drive improvements in our operating and financial performance."

Hernandez, formerly vice president of telecommunications at Amazon Web Services, replaced Jon Lewis, who announced plans to step down last summer.