MITIE Group PLC - Trading update
During the trading period from
However, in the short term we continue to experience the effects of significant economic pressures. These include lower
Whilst we have seen some positive trends and contract awards in the year to date, it is our expectation that the pressures we are facing in our markets will impact our trading results during this financial year ending
When compared to the same period last year, in the first half we expect revenue to be modestly lower and operating profit to be very significantly lower. This is specifically due to a reduction in higher margin project work volumes and discretionary spend by clients, pricing and cost pressure, a deterioration in the trading performance of our local government facing Healthcare and Property Management businesses, and the in-period costs of implementing efficiency programmes of up to
For the full year, we continue to expect group revenues to show a small amount of growth compared to the prior year, in line with previous guidance. This is a result of the commencement of new contracts and seasonal factors in the second half offsetting revenue declines in the first half. For the year as a whole, we expect modest growth in the
Operating profit for the full year is now expected to be materially below management's previous expectations as a result of a continuation of the pressures experienced in the first half and further one-off costs of organisational change associated with our cost efficiency programmes, which are expected to total up to
Operating profit in the second half will reflect the expected improvement in revenue and associated gross margin in that period driven by factors such as the impact of contracts secured in the last 12 months and by seasonal services and maintenance programmes. It will also reflect the expected benefit of gross cost savings which we currently estimate to be in the region of
Current market conditions
However, we are finding that the recent economic uncertainty is currently driving clients to renew or extend larger contracts with existing suppliers including
We are making good progress in combining areas of our hard and soft facilities management infrastructure. This activity has been designed to enhance the efficiency of our FM delivery model, driving cost efficiency across our operational and back office functions. This programme of change has been designed to eliminate duplication, standardise and enhance processes, and align management structures across the business.
Our investment in technology to support our FM proposition is also contributing to the increased attractiveness and competitiveness of our proposition in certain FM markets and is expected to support revenue and margins into the medium term.
Our Property Management business has been significantly impacted this year by local authority budget pressures and particularly by the statutory social housing rent reductions that came into effect in April. This has reduced the funding available to local authorities and housing associations for repairs, maintenance and project works. Revenue and profits will be lower this year as a result, and start dates for some project programmes have been delayed this year. The pipeline for this business continues to offer interesting growth opportunities for the group for the longer term.
Trading and general market conditions in our Healthcare business remain challenging with reduced local authority social care budgets and further evidence of unsustainable pricing in some areas. Given this further deterioration during the first half of the year, we are now reviewing the long term plan and related options for our Healthcare business. We will update the market on progress at the interim results.
Recent contract awards
We have been awarded a substantial addition to a total security management contract with a major
Our contract with
Our cleaning business has been awarded new contracts with a major US bank and the
Catering has been awarded a contract with LinkedIn in
Whilst our current environment is challenging,
This announcement contains inside information.
Call with management:
International dial-in numbers: http://events.arkadin.com/ev/docs/NE_FEL_Events_International_Access_List.pdf
Pin code: 34084038#
Audio playback: +44 20 3426 2807
For further information, contact:
Group Corporate Affairs Director,
T: +44 (0) 203 123 8673 M: +44 (0) 7979 701 006 E: [email protected]
Investor and Public Relations Manager,
T: +44 (0) 203 123 8720 M: +44 (0) 7979 784488 E: [email protected]
Notes for editors
We work with people who want to perform better - now and in the future. We help our clients to run more efficient and effective businesses by looking after their facilities, their energy needs and the people they're responsible for.
We're all about developing our people to excel every day, challenge the status quo, and inspire change in the way people live and work.
Find out more at www.mitie.com
This information is provided by RNS
Quick facts: MITIE Group PLC
Market Cap: £307.39 m
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