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On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its price target for Capita Plc. (LON:CPI:LN) (OTC: CTAGF), lowering it to GBP0.25 from GBP0.27, while maintaining a Buy rating on the stock. The revision follows Capita’s full-year 2024 financial results, which were consistent with the company’s pre-close guidance and Deutsche Bank’s forecasts.
Capita reported an 8.0% decrease in revenues; however, cost-saving measures bolstered operating margins by 50 basis points to 4.0%. This increase in margins led to a 5.5% rise in operating profit to £95.9 million and a 22.2% jump in profit before tax (PBT) to £50.0 million, slightly above Deutsche Bank’s £48.4 million projection. Earnings per share (EPS) were reported at 2.1p, aligning with the forecast.
The company’s enhanced divisional disclosure revealed varied performance across its sectors. Public Service revenues dipped by 0.9%, and Contact Centres saw a significant 18.4% drop due to volume reductions in the telecommunications vertical. On the positive side, Pension Solutions revenues grew by 5.1%, benefiting from increased volumes and indexation. Regulated Services revenues declined by 26.9% as the company exited closed book Life & Pensions activities, retaining only one larger customer.
Capita ended the year with a free cash outflow of £122.3 million, which was at the favorable end of its pre-close guidance range of £120 million to £140 million. The company also managed to reduce its net financial debt from £182.1 million to £66.5 million through disposals, resulting in a net debt to EBITDA ratio of 0.5x.
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