Mitie warns over job cuts amid ongoing overhaul
Outsourcing giant Mitie has warned of further job cuts as its sweeping turnaround continues “at pace”.
Speaking to the Press Association, chief executive Phil Bentley said there would “inevitably” be some impact on jobs as he set out the details of the next stage of his overhaul.
Dubbed Project Forte, the second leg of the revamp is focusing on Mitie’s engineering services business, which employs around 8,400 staff.
It will involve changes over the next two years to increase the use of technology, while also improving engineer productivity and delivering cost savings across back office operations.
The move is set to cost around £30 million, but will deliver annual run-rate benefits of about £30 million by March 2021.
This is on top of the £45 million-a-year cost savings made under the first stage of the restructure, which will rise to £50 million by March next year.
But Mr Bentley stressed that the focus is not on axing jobs.
He said: “Inevitably there will be some impact somewhere.
“That’s the reality. But that’s not the main story.”
He added: “Does it mean fewer jobs or does it mean we are more productive and win more business? I’d like to think the latter.”
The details came as the facilities management provider posted a better-than-expected 6% rise in annual underlying earnings to £88.2 million for the year to March 31.
Shares jumped 8% as it the result came in better than feared after Mitie had warned over earnings and falling orders in March.
But its results showed Mitie’s order book held steady at £4.1 billion, while its its pipeline of work increased to £10.2 billion.
Revenues lifted 9.4% to £2.2 billion over the year and Mitie forecast earnings to grow at “mid-single digits” over the next financial year.
Mr Bentley said: “Mitie’s transformation continues at pace.
“Change has been challenging at times, but our progress and performance to date are encouraging.”
Mitie is in the second year of an overhaul under Mr Bentley.
The first stage of the wide-ranging restructure – Project Helix – was launched after a string of profit warnings amid a torrid time for outsourcing firms following the collapse of Carillion in January last year.
Mitie is simplifying its corporate structure, outsourcing and automating some back office functions, merging its London offices into one, and investing to increase its technology capabilities.
It is also selling off unwanted businesses, agreeing last year to sell its social housing business to Mears Group in a deal worth up to £35 million.
In addition, the firm sold its pest-control business and bought Vision Security Group in the past financial year.
Mitie employs 52,500 people across the UK, with customer ranging from banks and retailers, to hospitals, schools and government offices.
Its operations span engineering services, security, professional services, cleaning and environmental services, care and custody and catering.
Neil Wilson, chief market analyst at Markets.com, said Mitie “looks in much better shape, putting some of the worst of the outsourcer troubles behind it”.