Capita shares tumble as boss warns of declining margins
Shares in one of the UK’s biggest outsourcing firms have plummeted after its boss warned of declining margins in the year ahead.
London-based Capita, which offers support services in areas such as education, health and defence, warned markets it expected a “small decrease” in its operating margin after it swung to a pre-tax loss of £171m in 2025, down from a profit of £117m the previous year.
The loss was exacerbated by a £74m impairment from the company’s call centre business, which has seen a slump in demand as customers turn to AI chatbots.
“The division has seen a material impact in recent years from contract losses and volume reductions on clients,” Capita said.
“We are unsatisfied with the financial performance of the business and we have not seen the level of improvement and contract wins we had hoped to deliver.”
Shares tumbled 12.5 per cent in early morning trade, falling further still later in the day to close the session down 21.3 per cent 277p. The stock is down by around a third since the start of the year.
London-listed Capita reported a group-wide decline in turnover of 4.5 per cent to £2.3bn for 2025, but insisted that it would see growth of “low single-digits” in the coming year.
The company has undergone a major restructure as it seeks to cut costs and pivot towards becoming an AI-driven business.
“We are well placed to help drive the required societal improvements in productivity and efficiency that AI and technology can unlock across both the public and private sectors, guided by our rigorous governance and AI charter,” chief executive Adolfo Hernandez said.
Despite slashing hundreds of jobs, the company insisted that it was “committed to our human in the loop principle and do not see AI as a headcount reduction tool”.
Capita fined for data breach
In October, Capita Capita was fined £14m by the Information Commissioner’s Office (ICO) after millions were affected by its data breach.
The fine follows a cyber attack in 2023 in which the personal information of 6.6m people was stolen, from pension records and staff records to the details of customers of organisations Capita supports.
For some, this included sensitive information such as details of criminal records, financial data or special category data.
The ICO said its investigation found that Capita had failed to ensure the security of personal data processing, leaving it at significant risk, and lacked the appropriate technical and organisational measures to respond to the attack effectively.
Hernandez said the company had “hugely strengthened our cybersecurity posture, built in advanced protections and embedded a culture of continuous vigilance.”
“Following an extended period of dialogue with the ICO over the last two years, we are pleased to have concluded this matter and reach today’s settlement,” Hernandez said.