Mitie slumps as it warns over full year revenue

Outsourcer Mitie slumped on Thursday after it warned that full year revenues will be below the current range of market expectations, although profit will fall within.

The company said it has experienced revenue shortfalls in the second half of the year as some work has been delayed or cancelled due to increased economic pressures and uncertainty.

Still, Mitie has been managing its cost based and focusing on maintaining margins while continuing to invest for the long term, so profits will be in line.

“Due to current macroeconomic factors, we anticipate modest growth in the next financial year. Our focus remains on generating profits backed by strong cash flows, whilst maintaining a robust balance sheet and margins within our target range,” the company said.

Mitie said it was encouraged by recent contract awards in its Facilities Management business, adding that it has mobilised a number of contracts towards the end of the final quarter, with other new contracts due to begin in the first half of next year.

It was a less cheery picture for the Property Management division, however. After a strong first half, growth in the business slowed in the second half on the back of changes in spending patterns by its local authority and housing association clients ahead of the statutory 1% reduction in social housing rents coming into effect next month.

As far as the healthcare business is concerned, Mitie said it was making progress with improving quality scores and more evidence of higher charge-out rates, although the homecare market remains challenging.

Following talks with its clients in relation to the regular annual increase in the minimum wage and the introduction of the National Living Wage in April, the FTSE 250 group was confident there would be no material impact on its future earnings.

At 0814 GMT, Mitie shares were down 7% to 246p.