Mitie shares fall as outsourcer predicts lower profits in “highly competitive” industry
Shares in outsourcing provider Mitie dropped this morning after the company reported slightly lower profits and warned the industry was “highly competitive”.
Mitie said profits would be flat to slightly down on the previous year as it continued to invest in its technology-based services, with revenue growth up 2-3 per cent for the first half of the financial year.
Its order book has declined in the past six months despite the loss of major rival Carillion and the availability of its contracts – as it focussed on delivering long-term contracts.
Despite the group saying the operating profit would be in line with management's expectations, shares fell almost 8 per cent.
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The company provides engineering, security and cleaning services for clients, such as Sainsbury's, Vodafone and Rolls-Royce and was awarded an eight-year Home Office contract for detention centres earlier this year.
It said good progress was being “held back” by a softer performance in social housing, an unfavourable contract mix in its cleaning business.
It also blamed £4m mobilisation costs on its Home Office contract, which has since been settled.
Mitie – a rival to Carillion before outsourcing giant collapsed – said its order book had declined since the financial year-end but that it secured a number of “significant” contracts wins across local authority, banking, industrial, transport, NHS and retail clients.
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It hoped to boost its public sector contracts after obtaining a government-backed Crown Commercial Service qualification.
Chief executive Phil Bentley said: “The environment in our industry remains highly competitive, especially when it comes to contract renewals.
“We see technology, especially in our core businesses, playing an increasingly important part in differentiating our service delivery and improving margins.”