Capita Shares Fall on Profit Warning Due to U.K. Government Pension Issues

By Anthony O. Goriainoff

Shares in Capita hit a one-year low after the company warned of a hit to adjusted operating profit and a cash outflow this year due to challenges with its contract to manage pensions for U.K. civil servants.

Shares in early European trade were down 16% at 233.50 pence, a level not seen since June last year. They are currently down 42% over the year to date.

The London-listed outsourcing group said it expects a hit of between 25 million and 40 million pounds ($33.5 million-$53.5 million) to 2026 adjusted operating profit.

The company hadn't previously provided guidance for adjusted operating profit. The metric was 113.5 million pounds in 2025.

Analysts at RBC Capital Markets said the expected hit to adjusted operating profit cuts their forecast for 2026 earnings before interest, taxes and amortization to 64.8 million pounds. RBC said that, although this is expected to be a one-time hit, it was also bringing down its Ebita forecast for 2027 by 10 million pounds to 127.9 million pounds.

Capita also said that the issues will hurt free cash flow by between 35 million pounds and 50 million pounds. It had previously guided for free cash flow, excluding the impact of business exits, of between 20 million pounds and 40 million pounds.

Capita started managing the government contract late last year, having been awarded the 10-year 239 million pound contract in November 2023.

In January, the company said members had reported a number of issues, including difficulty logging into the portal and incomplete pension details. They also reported long waits on customer service calls and delays to pension quotes and payments. It said at the time that the company had inherited a backlog of 86,000 cases from the previous administrator.

Capita said it continued to work to resolve the operational issues. It added that it now had the processes, automation and technology in place to work through the backlog, and that it was committed to improving the service in the second half of 2026.

"We recognize the service on Civil Service Pension Scheme has not been good enough, we are working closely with the Cabinet Office on all aspects of the scheme, and this remains our number one priority," Chief Executive Adolfo Hernandez said.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

July 09, 2026 05:31 ET (09:31 GMT)