Investing.com -- Shares of Capita plc (LSE:CPI) climbed 9% today, despite the company reporting mixed financial results that showed sales and adjusted EBITA slightly below forecasts.
The company posted sales of £2,369 million compared to the anticipated £2,376 million and an adjusted EBITA of £95.9 million, just shy of the £96.8 million forecast. However, Capita outperformed in adjusted profit before tax, reporting £50 million against the £48 million expected by analysts.
Capita’s stock movement reflects a market response to the company’s better-than-expected profit and lower net debt, which came in at £67 million versus the forecasted £72 million. The outlook provided by the company anticipates broadly flat revenues in 2025, with expected growth in its Public Service and Pension Solutions sectors balancing anticipated reductions in Contact Centre and Regulated Services.
Additionally, Capita forecasts a slight increase in operating margin and a free cash flow (FCF) outflow before business exits of £45-£65 million, which is more than the previously forecasted £37 million outflow.
In terms of year-on-year comparison, these results indicate a challenging environment for Capita, with organic growth proving to be elusive.
The company’s FCF generation is also not expected to turn positive until the following year, according to RBC’s analysts, who commented on the situation: "Whilst headline multiples remain low, there are still many moving parts at Capita – organic growth is hard to come by and FCF generation is not expected to turn positive until next year."
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