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UPDATE 2-Capita names former Amec boss as CEO to lead turnaround
October 10, 2017 / 7:52 AM / in 12 days

UPDATE 2-Capita names former Amec boss as CEO to lead turnaround

* Jonathan Lewis to become CEO in December

* Analysts expect moves to streamline Capita

* Shares rise more than 2 percent (Adds CEO comments, new analyst quote)

By Elisabeth O‘Leary

Oct 10 (Reuters) - Capita has picked turnaround specialist Jonathan Lewis as its new chief executive, with a remit to overhaul the British outsourcing firm after a string of profit warnings.

Lewis, who ran oil services company Amec Foster Wheeler for more than a year, has also held senior roles at U.S.-based oilfield services provider Halliburton Co, including running a software division.

Capita offers IT-based services to public and private sector companies so they can cut costs, but has been hit by delays in spending decisions after Britain’s vote to leave the European Union and struggling to manage a diverse spread of activities.

Investors and analysts say Lewis is likely to streamline the company and try to protect its dividend, possibly by selling more businesses following the disposal of its asset management arm in June for about 888 million pounds ($1.2 billion).

“What we will go through is a very disciplined engagement process that I do in all of these situation so we ultimately develop a strong strategy that’s got legs,” Lewis, 55, told Reuters in an interview on Tuesday, adding it would be “inappropriate” to rule anything out.

He said he would listen to staff before setting a new strategy and took faith from the fact the company had long-term contracts with its clients.

“You can’t be effective at applying technology unless you have a really deep understanding of your customers’ business model, and Capita has that understanding perhaps better than many,” he said.

‘SHRINK TO FIT’

While he held the top job at Amec, Lewis cut costs to boost profitability before it was bought by John Wood Group in a 2.2 billion pound deal announced in March.

Capita shares were up 2.1 percent at 1105 GMT, as investors welcomed the appointment.

Barclays analysts said his record at Amec was a good sign, despite his inexperience in the business services sector.

“A dispassionate, sensible, no nonsense, ‘shrink to fit’ mentality is just what Capita needs, in our view,” they said in a note.

Former boss Andy Parker quit in March after Capita reported a bigger-than-expected drop in profit and said growth would not return until 2018. Since then, Finance Director Nick Greatorex has been interim CEO and will continue to be until December.

Last month, Capita reported a 3 percent fall in first-half underlying revenue, but its major contract win rate was one in two, up from one in three in 2016.

Capita employs over 70,000 people in more than a dozen business sectors from health and retail to transport with services spanning call centres, TV licence management for the BBC, recruitment and technical certification.

Half of its more than 4 billion pounds in annual revenue comes from Britain’s public sector. But the leaden pace of business and political decision-making while the shape of Brexit is settled has shaken Capita as well as peers such as Mitie , G4S and Serco.

$1 = 0.7583 pounds Reporting by Elisabeth O'Leary in Edinburgh and Sanjeeban Sarkar in Bengaluru; Writing by Alistair Smout; Editing by Jason Neely and Mark Potter

Our Standards:The Thomson Reuters Trust Principles.
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