FTSE moves higher but Capita drops as it warns on Brexit effect

Discussion in 'Market News' started by Lily, Jul 27, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Outsourcing group reports uncertainty and contract delays after EU vote

    Leading shares are in positive territory ahead of the US Federal Reserve’s latest interest rate decision and following reports of a major boost to the Japanese economy by the country’s government. Stronger than expected UK GDP growth of 0.6% in the second quarter has also helped support the market.

    But outsourcing group Capita is missing out, falling 22p or 2% to 967p after it warned the Brexit vote was having negative effects on its business. Chief executive Andy Parker said:

    While it is too early to know the impact of the recent EU referendum, it has created uncertainty, particularly in the financial services sector, and we are continuing to experience some delays in decision making in the short term.

    Headline numbers a touch ahead of consensus (2% beat at earnings per share level) with organic sales growth of 5%, return on capital employed stable and cash flow improving. However the outlook statement strikes a cautious tone for the remainder of the year noting increased uncertainty following the EU referendum and delays in decision making.

    [The] outlook statement highlights increased uncertainty created from the Leave vote resulting in delays in decision making in the short-term particularly in the financial services sector. The company expects this to be more than offset by increased medium-term incremental opportunities. We are more circumspect.

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