Capita says making progress on long road to recovery

FILE PHOTO: A woman walks past a sign welcoming visitors to Capita offices in London, Britain, January 31, 2018. REUTERS/Toby Melville/File photo

EDINBURGH (Reuters) - British outsourcer Capita said it was on track to make the cost savings and full-year profits it has promised but warned it faced a long road to recovery following a string of profit warnings.

Capita, in the middle of a turnaround programme after raising cash from investors, said 2018 underlying pre-tax profit would now be between 250-275 million pounds versus 270-300 million pounds predicted earlier this year.

That takes into account 25 million pounds less profit following the agreed sale of units, it said.

“We have continued to make good progress on the plans we set out to simplify and strengthen the business (in April). It is still early days, but my team and I are very focused and confident in our ability to deliver those commitments,” Chief Executive Jon Lewis said.

It reiterated its long term guidance for a return to growth in 2020. Showing the scale of the challenge ahead, first-half pre-tax profit fell 59 percent on an underlying basis to 80.5 million pounds and it said it expected organic growth to be weaker in the second half than the first.

Its order book stood at 7.7 billion pounds at June 2018 compared to 8.2 billion pounds at December 31, 2017 “reflecting low levels of bid activity in 2017 and delays in decisions”.

Reporting by Elisabeth O’Leary; editing by Kate Holton