Government cuts drive record order book at Mitie
Tuesday 16 August 2011
Public sector cuts are good news for Mitie, the outsourcing company, whose record order book was boosted by local councils and health trusts looking to cut costs.
The company said yesterday it had secured 85 per cent of its budgeted annual revenues only four and a half months into its financial year. Public sector contracts include £10m of cleaning, catering and helpdesk work for St George's NHS Trust over five years and £40m of home improvements over five years for Lewisham Homes.
Ruby McGregor-Smith, the FTSE 250 company's chief executive, said: "Existing contracts are getting bigger as clients look to achieve more efficiencies through economies of scale. Local authorities' challenges with costs have come in quicker."
She said it was difficult to judge how much work Mitie would get as cuts take effect elsewhere in the public sector but added: "We are bidding on large numbers of opportunities which we hope we will be awarded."
Capita, the outsourcing giant, warned in November that sales would be hit by austerity measures but was more upbeat in May.
Ms McGregor-Smith said the impact of the cuts depended on whether outsourcers relied on big transformational programmes or the many smaller-scale projects that are Mitie's bread and butter.
Private sector business included a three-year contract to provide baggage screening at Heathrow Airport for £17m. Ms McGregor-Smith said she hoped to get more work from Lloyds Banking Group, which announced at the end of June that it was slashing its number of service providers to cut costs.
Mitie shares rose 5.5p to 222.8p.
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