The new boss of outsourcing giant Capita, among the biggest beneficiaries of Government contracts, has promised a “rapid reduction” in costs after the business swung to a £107 million loss in 2023.
The business is one of the UK’s largest employers with a 43,000-strong workforce, offering staff for many crucial Government functions, including a large amount of NHS support staff.
It lost £106.6 million as revenue dipped to £2.8 billion in a year in which the business was hit by a major cyber-attack.
CEO Adolfo Hernandez took over at the start of the year from Jon Lewis. He said: “I am excited about the opportunity for Capita and can already see a range of areas where we can unlock value. 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 improvement in our operating and financial performance.
However, he added that the business was planning big cost cuts.A spokesperson declined to comment on whether jobs would go, but - given its business model - labour makes up a large amount of the cost base.
He said: “We need to deliver a rapid reduction in our cost base and are on track to deliver the net £60m annualised cost savings, from Q1 2024 as announced in November. Today we are announcing further material efficiency improvements of £100m to improve our competitive position.”
Capita announced 900 job cuts late last year.
The business expects this year’s revenue to be “broadly in line” with last, but with a “modest improvement” in margins.
The shares tumbled today, losing 21.1% to 15.9p. That leaves the business valued at only £270 million.
The shares are down by 62.7% in the last year, more than 90% since the start of 2020 and 98% since their peak in 2015.
