Mitie warns on revenues as projects are cancelled

However, the company expects to hit its target for full-year profits, as it focuses on maintaining margins and investing for long-term growth

The outsourcing giant Mitie has warned of lower than expected revenues after concerns over the economy led to a spate of cancelled work.

The FTSE 250 company said revenues fell short in the second half of its financial year as economic uncertainty led to some projects being delayed and others taken off the table altogether. 

However, the company expects to hit its target for full-year profits, as it focuses on maintaining margins and investing for long-term growth.

It also shrugged off concerns about the impact of increases in the minimum wage and the new national living wage (NLW), saying it was confident that the pay hikes will not have a “material impact on future earnings”.

But its share price came under fire, falling by nearly 7 per cent. 

 Mitie argued that it was confident of achieving future growth and had a “track record of responding to changing market conditions and client needs”. It said: “Due to current macroeconomic factors, we anticipate modest growth in the next financial year.”

The group added: “We have a substantial order book and sales pipeline. We continue to see a range of good outsourcing opportunities across our key markets and we remain positive about... prospects.”

It said a strong first half for its property management business tailed off as it was hit by a change in spending patterns by local authorities and housing associations before the 1 per cent reduction in social housing rents on 1 April.

It said its facilities management business was buoyed by a string of contracts, including a deal with NHS Property Services worth £150m over the next five years. 

It also landed a five-year contract worth £80m with the betting giant Ladbrokes, providing cleaning, waste and pest control services to 2,000 betting shops and the company’s head office. 

Christopher Bamberry, an analyst at Peel Hunt, said Mitie was reacting to increasing employment costs by investing in technology to drive efficiency – which “reduces revenues but sustains profitability”. 

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