Capita shares jump on annual profit surge, 2025 guidance

(Sharecast News) - Shares in Capita jumped on Wednesday after the outsourcing group swung to a profit and guided to steady revenues in 2025 following a double-digit decline last year. The company said that adjusted revenues should be "broadly in line with 2024", as growth in the Public Service and Pension Solutions businesses is offset by a weaker performance from the Contact Centre unit, as well as a winding down of the closed book Life & Pensions as it looks to exit that business.

Adjusted revenue was down 8% at £2.4bn in 2024 due to the previous year's contract losses, volume reductions in the Contact Centre division and the cessation of lower-margin service lines.

Reported pre-tax profit totalled £116.6m, compared with a loss of £106.6m in 2023, helped by the disposal of its software business Capita One and environment research firm Fera which both completed last year.

On an adjusted basis, pre-tax profit improved by 22.2% to £50m.

Capita won just £1.51bn of contracts in 2024, just over half of what was achieved in 2023 (£2.95bn), which it said reflected a lower level of contract bidding activity and a focus on improving its cost competitiveness. However, the firm's renewal rate jumped to 92% from 51%.

"Our strategy strengthens our future prospects and confidence in our medium-term targets. We have leading market positions and are a critical supplier to the UK Government. We have long term customer focused relationships that are increasingly moving from transactional to more strategic," said chief executive Adolfo Hernandez.

Shares were up 8% at 13.92p by 0856 GMT.