Profits dip at Mitie amid 'competitive and challenging' conditions
Profits at Mitie nudged lower in the first half, as the outsourcing specialist continued its overhaul of the businesses.
FTSE All-Share
4,411.80
11:05 26/04/24
FTSE Small Cap
6,458.73
11:05 26/04/24
Mitie Group
115.00p
10:54 26/04/24
Support Services
10,566.79
11:04 26/04/24
Revenues from continuing operations were ahead 4% at £1.04bn, but operating profits on the same basis were down £1.7m, at £38.4m. The company blamed an “adverse contract mix” in its cleaning and environmental services division, a decline in profits in its catering arm and mobilisation costs of £3.3m in care and custody.
Mitie is looking to cut costs and refocus on core divisions, and has already sold off businesses including its social housing arm and Mitie Pest Control, which was snapped up by Rentokil Initial in October for £40m. Acquisitions include a £14m deal to buy Vision Security from Compass.
The outsourcing industry has come under intense scrutiny following the shock collapse of Carillion earlier this year, and chief executive Phil Bentley conceded that “our industry remains competitive and challenging”.
But he added: “We continue our strategic focus on our core business and core clients. We are enhancing service delivery and margin by reducing our cost base, investing in customer service and deploying the distinctive technology our clients increasingly demand.
“We are making steady progress on all fronts. With recent disposals and acquisitions, we have begun the process of sharpening our focus on those business lines where we can secure a leading market position.”
In a note to investors, Canaccord Genuity UK, which has a ‘buy’ recommendation on the stock, said: “The transformation programme is progressing well and the board remains confident in achieving its 4.5% to 5.5% medium-term operating margins target.”
Shares in Mitie were down 2% at 154.2p by 1.30pm GMT.