Tightening margins sees firm close its M&E businesses

Mitie worker

Outsourcing giant Mitie is quitting the M&E market, the second major firm to do so in a month.

In a statement accompanying its results for the year to 31 March 2013, the firm said it was exiting the M&E market, which was generating “margins well below the group average”.

It said it had incurred £22.1m in costs due to the closure of its M&E businesses.

Mitie’s move follows that of M&E giant Emcor, which last week announced it was pulling out of the UK construction market to focus on facilities management services.

Mitie said: “We are focused on markets where we see potential for growth and which meet our margin targets. To this end, we have taken the decision to further reduce our exposure to cyclical markets, in particular our mechanical and electrical engineering contracting businesses, which we are exiting.”

“These developments further strengthen our position in the facilities management outsourcing market as well as the fast growing healthcare and energy markets, and leave us in a strong position as we enter the new financial year.”

In November the firm said it would no longer target large one-off M&E installation contracts after conducting a review of its underperforming divisions.

In its results the firm reported revenue of £1.98bn, up 8% on the previous year, with pre-tax profit of £11m, up 5% on the previous year.

Ruby McGregor-Smith, MITIE Group chief executive said: “We have had another good year with success in achieving organic growth driven by new and expanded contracts, as well as completing a strategic acquisition in healthcare.

“Whilst the economic environment remains challenging, we have reshaped the business to focus on long-term facilities management opportunities, as well as higher margin healthcare provision and energy consulting, all of which will support our growth aspirations.

“We expect outsourcing opportunities will continue to grow, with a trend towards more clients seeking to access integrated services. We are positioned to build further on our long track record of sustainable profitable growth.”