Mitie added that it had secured new contracts in its facilities management business, and its long-term strategic positioning, order book and pipeline remained strong in this area.
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“These include lower United Kingdom growth rates, changes to labour legislation and further public sector budget constraints, and uncertainty both pre and post the European Union referendum”, Mitie said this morning.
A profit warning from Britain’s Mitie Group Plc sent shares in the outsourced services provider down by 25 percent on Monday. Most of Mitie’s rivals have so far only reported results for the period ended June 30, taking in just a few days after the Brexit vote. However, building support services company Carillion which derives less than 5 percent of its revenue from the United Kingdom housing market, said last month it was on track to meet expectations for its results in 2016.
Mitie, which has clients including Asda, Edinburgh University and HM Revenue & Customs, said fortunes would improve over the second half of the year on the back of more recent deals and plans to cut £10m in costs by April 2017. Operating profit for the full year is now expected to be materially below management’s previous expectations.
Liberum analysts cut their Mitie full-year earnings per share guidance by 8 percent, saying that management was guiding towards a 10-20 percent fall in core earnings.
The company, whose healthcare services range from home care for the elderly to hospital cleaning, said pricing and cost pressures would cause first-half operating profit to be “very significantly” lower, while revenue would be modestly lower.
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The apprentice levy, a payroll tax due next year, will lead to a £6 million cost burden for the group. Mears Group has already indicated its intention to exit “unsustainable” care contracts.
