Capita shares fall sharply on annual loss; plans $127 million cost-saving steps
Reuters
Published Mar 06, 2024 08:24
Updated Mar 06, 2024 09:18
By Aby Jose Koilparambil
(Reuters) -Shares of Capita fell more than 18% on Wednesday, after the British outsourcing group reported an annual pre-tax loss and wider cash outflows on costs related to a cyber incident last year and some business exits.
The company said it would take cost-cutting measures worth about 100 million pounds (about $127 million) after it reported a loss before tax of 106.6 million pounds for 2023, compared to a profit of 61.4 million pounds a year earlier.
Capita, which employs about 50,000 people in the UK, Europe, India and South Africa, said in November it planned to cut about 900 jobs or less than 2% of its workforce, saving 60 million pounds on an annualised basis from the first quarter of 2024.
CEO Adolfo Hernandez, who took over the top job this year, told Reuters that "everything is on the table" including potential job cuts in relation to the new cost-saving steps.
Hernandez said that more details about the incremental cost-savings plan would be disclosed during the company's capital markets day event in June.
Analysts at Numis lowered their 2024 earnings forecast for Capita by 11% to reflect the incremental one-off cash and higher interest associated with the new cost-savings plan, but added the measure would strengthen the path to positive free cash flow in 2025.
Capita had incurred net costs of 25 million pounds related to a cyber incident which rocked the firm in March last year.
The company said the annual results were also impacted by a 38.8 million pounds loss incurred on business exits during the year.
Shares in Capita were down 18.2% at 16.51 pence as at 0845 GMT, bottoming the FTSE Small Cap index.
($1 = 0.7862 pounds)
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