Capita sees H1 2025 profit dip as AI, public sector gains offset losses

LONDON, UNITED KINGDOM — Capita has reported steady progress in its strategic transformation, with its public sector business outperforming despite challenges in its contact center division. 

The UK outsourcing giant highlighted a 17% rise in contract wins, fueled by AI-driven solutions, while cost-cutting measures aim to deliver £250 million (US$332 million) in savings by year-end.

AI and public sector growth offset contact center declines

The division’s total contract value (TCV) surged 53% to £796.4 million (US$1.1 billion), reflecting strong demand for digital and AI-enhanced solutions.

However, the contact center unit saw revenue drop 20%, dragged down by declines in telecom sector volume and prior contract losses. 

The group’s overall adjusted revenue fell 4% to £1.15 billion (US$1.5 billion), but Chief Executive Officer (CEO) Adolfo Hernandez expressed confidence in meeting full-year targets.

“The operational performance and momentum we have seen in the first half of the year gives confidence in our delivery of the second half of the year and our full year outlook remains unchanged,” Hernandez said.

Cost-cutting and cash flow targets on track

The program, which includes property rationalization and offshoring, aims to offset rising National Insurance costs and reinvest £50 million (US$66 million) into technology. 

The free cash flow decreased further to a negative £26.1 million (US$34.7 million) outflow against £52.5 million (US$69.8 million) in the previous year, and a positive cash flow becomes predictable towards the end of 2025. 

Liquidity was boosted by extending Capita’s revolving credit facility to December 2027. In the meantime, it has fully financed its pension schemes technically, which has alleviated the long-term liabilities.

Despite a reported pre-tax loss of £9.5 million, down from a £60 million (US$79.8 million) profit in the first half of 2024, Capita reaffirmed its commitment and focus on adapting to the challenges they’ve seen.

Hernandez stressed, “Our focus on cost discipline continues to help Capita adapt to some of the challenges we have seen in the Contact [Center] business and we are on track to deliver £250m of cost savings by December 2025 and to deliver positive free cash flow from the end of 2025.”