Capita's IT division 'weakens further'

Capita invests in 'proprietary robotic solution' to automate some operations

Capita's IT division performance has "weakened further" since being held partly responsible for the firm's first-ever profit warning in September.

In a trading update, Capita said that its IT division, which acquired Trustmarque earlier in the year, has continued to struggle since the profit warning and a company restructure was announced - but claimed it expects to see an improved performance through 2017.

The statement said: "Since Capita last updated the market in September, trading has remained challenging across some of our divisional businesses.

"Specifically, performance in our IT Enterprise Services division has weakened further.

"We have made extensive management and structural changes across this division and expect to make progress on improving its performance over the course of 2017.

"Additionally, as a result of some clients' own cost-saving measures, we have recently experienced lower volumes of discretionary spend in a number of the company's other trading businesses."

To address trading issues across the whole company, Capita said it plans to move some of its IT applications support to India, and also invest in a "proprietary robotic solution" which will allow it to automate some of its operations.

The firm will also be ditching its Asset Services Division and a small number of other businesses.

Andy Parker, CEO at Capita, said: "I am confident that the markets Capita addresses offer long-term structural growth.

"We are however currently facing some near-term headwinds, which continue to make 2016 a challenging year and will affect trading performance in the first half of 2017.

"Our long-term contracts provide us with good revenue visibility across the year and the structural and cost-reduction actions we are taking now will support progress in the second half of 2017 and into 2018. We therefore currently expect a similar trading performance to 2016 in the full-year 2017."

Last month Capita announced a restructuring of both the company into six divisions and a reshaping of the management structure, cutting out the COO level.

The changes were spurred on by the firm's first-ever profit warning, issued in September, which it blamed partly on its reseller business.