Capita on track with $203Mn cost-cutting plan
LONDON, UNITED KINGDOM — Capita, a major outsourcing contractor in the UK, has announced that it is “on track” with its ambitious £160 million (US$203 million) cost-cutting plan.
The company initiated the rapid cost-cutting measures late last year and has already made significant strides, including reducing around 900 jobs.
Cost-cutting measures yield results
Capita recently informed its investors that it has successfully cut approximately £100 million ($127 million) as part of its £160 million ($203 million) cost-saving target, which it aims to achieve by June 2025.
This milestone marks a significant step in the company’s ongoing transformation efforts.
Capita also reported a pre-tax profit of £60 million ($76 million) for the first half of 2024, a substantial turnaround from the £67.9 million ($86 million) loss recorded in the same period last year. This positive shift has been attributed to both cost savings and the strategic sale of parts of the business.
Strategic divestments bolster finances
The company’s financial boost included the sale of its majority stake in the Fera Science joint venture, operated alongside the Department for Environment, Food & Rural Affairs (Defra).
Additionally, last month, Capita secured the sale of its Capita One software business, which is expected to provide net proceeds of £180 million ($229 million), further strengthening its financial position.
Revenue decline amid contract losses
Despite profitability, Capita reported a 9% decline in adjusted revenues for the past half-year, bringing in £1.2 billion ($1.5 billion). This decrease was primarily due to previously announced contract losses, which impacted the company’s overall revenue.
Adolfo Hernandez, Capita’s Chief Executive Officer, expressed optimism about the company’s progress.
“We are implementing changes that will make us more competitive and drive growth, by becoming more efficient and spending less, digitizing our offerings, and leveraging technology partnerships,” he said.
Hernandez emphasized that while there is still much work to be done, the company is making “encouraging progress” toward its medium-term financial targets and the creation of sustainable value for stakeholders.
Capita’s ongoing efforts to streamline operations and enhance efficiency underscore its commitment to achieving long-term financial stability and growth.
The company’s strategic initiatives and cost-cutting measures appear to be yielding positive results, positioning it for a more competitive future.
