BUSINESS LIVE: Capita cyber incident to cost £25m

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

‘Technology spending, especially in the US, has slowed, leading to a dent in performance from the group’s substantial integrated creative agencies.

‘This outcome is unwelcome but not wholly surprising, given that corporations are in wait-and-see mode when it comes to splashing the cash and handing margin over, at a time when demand is very tough to profile.

‘While demand for WPP’s suite of services hasn’t been totally washed out, it has faded this half, and investors will be wanting to see a clear path to return to full colour. Harnessing AI correctly, and swiftly, could be one way to propel large amounts of growth, but change of this magnitude always comes with risk.’

WPP, the world’s biggest advertising group, has downgraded its full-year like-for-like growth forecast to 1.5 to 3 per cent from 3 to 5 per cent, after lower spending from tech clients caused its revenue in North America to decline in the second quarter.

Mark Read, chief executive:

‘Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects. This was felt primarily in our integrated creative agencies.

‘China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year.’

Shares in online shopping giant Amazon surged last night after it became the latest tech giant to smash Wall Street forecasts.

The world’s biggest online retailer posted sales of £106billion for the three months to June, 11 per cent higher than in 2022 and above the £103billion predicted by analysts.

It made a £5.3billion quarterly profit, after a £1.6billion loss in the same period of 2022 as its dominance of online shopping staved off declines caused by a downturn in consumer sentiment amid the cost of living squeeze.

Capita expects net exceptional costs of £20million to £25million related to the cyber incident which rocked the British outsourcing firm in March.

The group, however, has retained its full-year earnings outlook.

‘I am pleased with the good progress we continued to make at Capita during the first half of the year as we accelerate our financial performance.

‘Our strategy, focused on two core, growing markets is working. We have delivered increased adjusted revenue growth for the fourth successive reporting period, improving profitability, winning an increasing amount of work with new clients, and remain on track to deliver on our full-year expectations.

‘We have seen an improvement in our employee net promoter score alongside reduced levels of attrition; and I would like to thank all our people for their continued hard work, commitment and professionalism.

‘Our strong client relationships, long-term contracts, increasingly competitive and digitised solutions, engaged colleagues and reputation for delivery mean we have a resilient business, well positioned for further growth.’