Construction and outsourcing group hit by slow trading
Mitie has posted a profit warning prompted by lower UK growth, a lack of public sector spending and uncertainty sparked by the EU referendum.
The construction and outsourcing group, led by chief executive Ruby McGregor-Smith (pictured), said these factors combined would lead to “very significantly lower” operating profit than expected over its first half, which runs to the end of this month.
Over the full-year to next March, Mitie said profit would also be “materially lower”, despite an expected uptick in revenue, due to the negative impact suffered in the first half and the impact of a futher £10m of restructuring costs.
Commenting on the reasons for poor trading over the last six months, Mitie said: “This is specifically due to a reduction in higher margin project work volumes and discretionary spend by clients, pricing and cost pressure, a deterioration in the trading performance of our local government facing Healthcare and Property Management businesses, and the in-period costs of implementing efficiency programmes of up to £5m.”
Mitie said it had picked up some recent major contracts, including a security contract for a major UK retailer worth more than £150m over three years, with an option to extend for an additional two years.
Mitie added: “Whilst our current environment is challenging, Mitie remains a strong business and has a leading market position in FM services in the UK.
“Mitie has an excellent customer base and order book, a substantial pipeline of opportunities and a portfolio of high quality, long-term contracts. These factors, combined with the quality of the services we provide, give us confidence for the future.”