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UPDATE 1-Britain's Capita pins hopes on second half of 2017 to improve fortunes

Published 2017-06-13, 02:49 a/m
© Reuters.  UPDATE 1-Britain's Capita pins hopes on second half of 2017 to improve fortunes
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LONDON, June 13 (Reuters) - Britain's troubled outsourcing group Capita CPI.L said it hoped to improve its profitability and secure more contract wins in the second half of 2017 as it slowly rebuilds from a string of profit warnings.

Capita, which specialises in providing IT-enabled business services to banks and investors, the National Health Service, retailers and utilities, has been hit in the last year by clients delaying major deals in the wake of Britain's vote to leave the European Union.

In March, it announced the departure of its chief executive and a bigger than expected drop in profits, and said it would take until 2018 before it could return to growth.

"As previously stated, Capita expects 2017 will be a transitional year for the group," it said on Tuesday.

While it is seeing improving profitability in its IT Services division and better trading in Germany and Switzerland, the firm said trading across its property, employee benefits and learning services operations was yet to improve.

It said Britain's Ministry of Defence was reviewing how it worked with Capita on issues such as its estate and basing programme, which may result in lower than expected profits from the contract in this year and in the future.

It said the contract could terminate in June 2019 and it would then enter any retendering process.

Capita is trying to become "leaner and simpler", after years in which acquisitions were the main driver of revenue growth and its structure was considered by many analysts to have become unwieldy.

The company is pressing ahead with a decision to sell its prized asset management services arm Capita Asset Services, and it said this was on track to conclude in the second half of 2017.

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