Capita shares have plunged by 50 percent after the outsourcing firm issued a profit warning and announced a major restructuring
Chief executive Jonathan Lewis said the company had become “too complex” and “driven by a short-term focus” and needed to change its approach.
This is the second year in a row Capita has issued profit warnings. This time it has revealed plans to raise £700 million by issuing new shares.
Life should be good for Capita after its outsourcing rival Carillion collapsedlast month, but it seems to be suffering from similar problems.
Capita operates the London congestion charge, runs the government’s Jobseekers Allowance helpline and administers the teachers’ pension scheme. It also collects the TV licence fee on behalf of the BBC.
A Cabinet Office spokeswoman said as a “strategic supplier” Capita was always monitored by the government and called for the government to make sure that it does not go the same way as Carillion.
The firm employs 70,000 people, about 50,000 of whom are in the UK.
CEO Mr. Lewis, who took over two months ago, said a review had found the company worked across too many markets and services, meaning it was difficult to “maintain a competitive advantage” in every business.
Capita had relied too much on acquisitions to drive growth and had also seen weakness in new contracts, he added.
The company does have some financial strengths. It can call on £one billion in cash and credit facilities, has a significantly higher profit margin than Carillion did and has been taking steps to reduce its debt burden.
