Companies roundup: Capita & Bunzl

Shares at Capita (CPI) tumbled by as much as 9 per cent this morning after the company warned that lower than expected revenues would result in a free cash outflow of as much as £140mn for the current financial year. 

In a trading update, the outsourcer revealed that adjusted revenue for the eleven months to 30 November would be 8 per cent lower after failing to replace contract losses from last year and exiting low-margin service lines. 

Capita now expects a high-single-digit adjusted revenue percentage decline for 2024, compared to prior guidance for a low to mid-single-digit drop. The operating profit outlook remains unchanged.

The company said its cost savings target would be increased from £160mn to up to £250mn by December 2025 thanks to voluntary staff exits of around 21 per cent and efficiencies from the use of AI.

Capita added the majority of the up to £50mn additional cash restructuring costs would contribute to these savings and only impact free cash flow for the first half of 2025. The company expects “positive and consistent” free cash flow from the end of next year. VM

Bunzl shares deflate on update

Bunzl (BNZL) said deflation in product pricing “is likely to be more persistent than previously expected” as it reported that underlying revenue would be lower than last year and that there would be a “slight impact” on adjusted operating profit. The profit figure will still be well ahead of last year, though, with its operating margin expected to be “moderately higher”.

The company also said it expected “robust” revenue growth next year driven by acquisitions, as it committed to spending about £700mn a year on deals back in August (it has already spent £840mn this year). It also said margins would be maintained at a level that remains well above pre-pandemic norms.

RBC Capital Markets analyst Karl Green warned that the deflationary comments could lead to a low-single-digit adjustment to consensus profit forecasts, though, and the shares fell by 5 per cent. MF

Carlsberg’s £3.3bn Britvic bid is approved

Danish brewer Carlsberg’s (DK:CARL.B) £3.3bn bid for soft drinks maker Britvic (BVIC) has been cleared by the Competition and Markets Authority. The deal is expected to be finalised following a court hearing next month. MF

Goodwin shares jump as orders flow in  

Shares in Goodwin (GDWN) rose by 15 per cent in early trading, after it reported that operating profit had increased by almost 50 per cent and new technologies had come to fruition. 

Demand from nuclear decommissioning and naval vessel markets are driving up sales, profits and orders at the FTSE 250 engineer. Nuclear waste storage boxes, which are regularly delivered to Sellafield, are proving particularly lucrative. Revenue increased by 9 per cent to £106mn in the six months to 31 October, and operating profit rose by 46 per cent to £18.2mn. 

Looking ahead, Goodwin’s radar business has signed a “significant contract” to supply an airforce customer with extra surveillance systems. Meanwhile, its Duvelco business – which makes high-tech polymers – has reached a “significant milestone” with the successful production of polyimide resin powder at its purpose-built facility. The group’s total order book now stands at £296mn, compared with £266mn last December. 

Over the past three years, Goodwin’s profits and order book have more than doubled. JS