Upbeat outlook from Capita fails to address growth fears

POSITIVE first-half results and outlook from British outsourcing group Capita yesterday were overshadowed by uncertainty over when the company will return to organic growth.

Capita, which runs the Teachers’ Pension Scheme, TV licensing for the BBC and the Criminal Records Bureau, said underlying pre-tax profit rose seven per cent to £174m for the six months to 30 June, in line with market expectations and compared with £163m during the same period last year.

Capita said that after two reasonably subdued years, strong contract wins and a healthy bid pipeline painted a more promising picture for 2012, where the company expects revenue to swing back towards organic growth.

“The fact that we have had such a strong period of sales wins in the first half of this year will tend to be a good leading indicator for revenue growth in 2012,” chief executive Paul Pindar said.

Revenue growth rose by three per cent to £1.4bn, as cost savings and acquisitions helped offset a UK market recovering from a recession and contracts delayed by government austerity measures.

“The company talk a good game for second half prospects and beyond. However, we believe Capita will ultimately be judged on when organic growth will turn, which we do not think will materialise until the second half of 2012,”

Shares in the firm closed down 1.6 per cent at 686p, valuing Capita at £4.27bn.