Capita on course for 2017 profit but signals difficult 2018

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EDINBURGH (Reuters) – British outsourcer Capita said on Thursday it was on track to hit its full-year profit target and hinted that its new chief executive would bring a sharper focus to its profitability and reach of its business services.

Capita <CPI.L> cautioned however that some upcoming work was unlikely to provide an immediate boost and signalled ongoing difficulties as the market for major contracts remained “subdued, particularly in the public sector”.

Capita, which operates primarily in Britain and is one of the nation’s biggest employers, issued a string of profit warnings in the second half of last year after a period in which it took on more work than it could profitably handle.

Its troubles came to the fore during a slow down in business decision-making following Britain’s vote to leave the European Union.

New Chief Executive Jonathan Lewis said he aimed to “focus the business and allocation of capital and resources on the markets which offer the best growth prospects”.

He said the group would also work to improve its cost competitiveness further; recharge its sales performance and demonstrate its value to its customers.

It stuck to 2017 guidance that underlying pre-tax profits, before significant new contracts and restructuring costs, would rise modestly in the second half of this year versus 195 million pounds in the first half.

Lewis arrived at Capita this month, having replaced Andy Parker who resigned in March.

(Reporting by Elisabeth O’Leary; editing by Kate Holton)

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