Another crisis strikes Capita
Profits plunge, shares nose-dive and then workers plot a walkout
CAPITA shares plunged by 11pc as it faced a profits slump and a revolt from angry staff over pensions.
The outsourcing giant said profits fell to £28m in the six months to the end of June, down from £37m in the same period last year. It was blamed on the company’s exit from specialist recruitment. It also shut its events arm.
Bosses had warned they did not expect to return to growth until 2018 but shares still sank 11.6pc, or 74.50p, to 569.50p after the gloomy update.
Hours later, union chiefs struck another blow when they threatened a staff walkout.
Dominic Hook, Unite’s national officer, said members had backed action because of ‘disgraceful’ plans to close the company’s defined benefit pension scheme and switch staff to defined contributions.
With a five- day walkout planned from October 5, Hook warned: ‘ These proposals will have far-reaching consequences for the retirement of many members. Some staff will lose a shocking 70pc of their retirement income. There is no justification for a highly profitable company to treat its workforce in this manner. Capita must urgently rethink these proposals to prevent action.’
He claimed the company’s pay- off to former chief executive Andy Parker – including a £645,000 ‘golden goodbye’ – was unjustifiable alongside the pensions overhaul.
Capita said the black hole in its pension fund increased to £381m in the first half of the year, up from £345m in 2016.
A spokesman said: ‘We are disappointed these employees are supporting Unite’s strike action. We have plans in place to ensure that any potential disruption to our clients’ services is mitigated.’
Although investors took a dim view of the half-year update, a 3pc rise in revenues to £2.1bn made for brighter reading.
Interim chief executive Nick Greatorex said: ‘We made good progress on executing plans laid out at the end of last year to reposition the group and we remain confident these actions are making Capita a simpler business, well-positioned for the future.’
The firm said the £888m sale of its asset services business to Link Group should be completed this year, a cost-cutting drive is set to save £57m by the end of 2018 and the hunt for a new chief executive continues.
Capita, whose contracts include collecting the BBC licence fee, running the London congestion charge and tagging offenders, has been gripped by turmoil in recent years. Its shares fell to ten-year lows in December after it posted two profit warnings in just three months.