UK outsourcer Capita returns to profit after strategic restructuring
LONDON, UNITED KINGDOM — Capita, a major UK outsourcing company, has posted a sharp turnaround in its financial results and returned to profit for the year ending December 2024.
This change is explained by strategic cost reduction measures and by the divestiture of certain assets, such as Capita One, its software business, and Fera, a waste management advisory firm.
Financial highlights
Capita came in with a pre-tax profit of £116.6 million (US$150.3 million), compared to the loss of £106.6 million (US$137.41 million) reported in the previous year.
The company also made annualized cost savings of £140 million (US$180.46 million), more than it had planned, and has set its sights on £250 million (US$322.25 million) in cost reductions by the end of 2025.
This financial recovery has been reflected in the stock market, with Capita’s shares climbing 8.7% to 14.00 pence during the March 5th trading, as reported by Alliance News.
Strategic developments and new contracts
Capita has seen better contract renewal rates, having signed a total contract value of £1.51 billion (US$1.95 billion). This can be attributed to a shift in strategy to fewer but more competitive bids.
For instance, the company gained a £97 million (US$125.03 million) contract extension with the Royal Navy from May 1, 2025, which will run for almost eight years. The total value of the Royal Navy training contract is now around £1.3 billion (US$1.67 billion).
Adolfo Hernandez, Capita’s CEO, commented on the company’s performance: “Today’s results show progress on both fronts. We have accelerated our [cost-cutting] while nearly doubling our customer net promoter score. We have put in place a strong new management team dedicated to harnessing the transformative potential of AI and struck encouraging new collaborations with hyperscalers to bring [cutting-edge] technology to some of the most important challenges our customers face.”
Hernandez pointed out that Capita’s “Better Capita” strategy is effective and that the company will continue to work towards improving technology, delivery, efficiency, and overall company performance. He also mentioned that although there is progress, more needs to be done for the company to reach its full financial capacity.
This turnaround comes after a tough time for Capita, which made substantial job cuts as part of its restructuring. Nonetheless, the company looks forward to the future, especially with its plans to use artificial intelligence to improve customer contract wins. Capita’s comeback is a good sign for the outsourcing sector, which means that proper restructuring and technological enhancement may restore profitability.
