Member Article

Brexit to blame as outsourcing giant Capita revises down profit forecast

London-headquartered Capita has announced it is revising down its profit forecast for the year blaming a range of factors that includes the EU referendum.

The outsourcing firm said that a slowdown in trading conditions in the second half of this year means that its previous profit before tax estimate of £614m would not now be met, with underlying profit up to December 2016 now expected to fall in the region of £535m to £555m.

It blamed ‘slow-down in specific trading businesses’, sluggish client decision making and costs incurred for the Transport for London (TfL) congestion charge contract which it won back last year.

Many firms have reigned in contracts or held off making big business decisions until the situation becomes clearer regarding Brexit which, as one of the UK’s biggest outsourcing companies, is likely to be having an impact on Capita’s business.

Furthermore, the FTSE-100 company admitted in a trading update to the London Stock Exchange this morning that its Asset Services division, which deals with financial administrative services, has seen less activity following the EU referendum.

Capita said that it still hoped to achieve 4-5% review growth by the end of the year, but that its new profit estimates did not include the cost of ‘potential restructuring actions’.

In a statement the firm said: “We remain confident of the strength of our business model and aim to return the Group to profit growth next year, excluding the benefit from TfL one-off costs dropping out.”