Shares in Mitie dropped on Monday after it reported that its margins were “under pressure” from competition.
The share price of the support services firm fell 5.5p to 152p, even though pre-tax profit rose 22% to £22.5m for the six months to 30 September 2004.
The news prompted analysts at stockbroker Arbuthnot to downgrade their recommendation for Mitie from buy to hold.
Ian Stewart, chief executive of Mitie, said: “Our markets are still highly competitive with margins in the engineering sector still under pressure.”
He added that there were indications that levels of work in the South-east would increase over the next 12 months, “but given the project lead times in this sector, we do not anticipate this will have a material impact on our performance until the second half of the next financial year. The rest of the sector has seen consistent levels of activity”.
Turnover for the six months rose 30% to £411m and Mitie increased its dividend 45.5% a share to 1.6p.
Highlights during the six months included a 10-year cleaning contract with West Yorkshire Police, and another with the Scottish parliament.
Mitie’s property services division is hoping to increase its profile in the social housing sector and has won partnering and framework contracts with councils and housing associations. These are worth a total of £125m.