Capita (LSE:CPI) has cut its 2026 profit outlook, warning that failures on the Civil Service Pension Scheme contract will drag adjusted operating profit down by £25m to £40m and free cash flow by £35m to £50m, with positive free cash flow for the Group now pushed out to 2027.
The business process outsourcer said surge resourcing costs, remediation spending, KPI penalty exposure, and knock-on disruption to its higher-margin pension consulting work are all contributing to the shortfall, net of mitigating actions taken elsewhere in the group.
Chief Executive Adolfo Hernandez acknowledged the failures directly: "We recognise 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."
Against that, Capita reported first-half contract wins with a total contract value of £998m, up 15% year-on-year and the strongest first-half sales performance since 2021, including new scopes in defence and a significant Pension Solutions renewal.
Adjusted revenue grew 1.6% in the first six months of 2026, with the Public Service division up 2.4% and Pension Solutions up 24.7% on a like-for-like basis.
The group also extended its revolving credit facility to £325m through June 2029, and expects to complete the previously announced private sector contact centre disposal ahead of its half-year results, due on 4 August.
