Mitie revenues growth hit by election and Brexit uncertainty
Outsourcing giant Mitie has warned revenue growth will be hit as clients put some projects and spending plans on hold amid election and Brexit uncertainty.
The group said full-year revenues are expected to remain “broadly” flat as clients are reluctant to commit to projects.
Phil Bentley, chief executive of Mitie, told the PA news agency it was already seeing this impact capital projects work, though he said “day-to-day projects carry on”.
“For decisions on new roofs, boilers, etc, we have seen that pushed back to the right a little bit,” he said.
The group warned revenue growth will be “held back” as result this financial year.
Shares in Mitie dropped 7% despite the firm posting a 5.4% rise in underlying operating profits to £33 million for the six months to September 30.
Statutory pre-tax profits lifted 21.7% to £14.6 million.
Mr Bentley brushed aside fears that election party pledges to invest in the public sector will impact outsourcing firms.
He said: “Promises around investing in the public sector is a net positive for us.”
He said Mitie was also very “supportive” of party pledges to increase worker pay.
“If we see minimum pay rising faster, we can push that on to our clients,” he said.
Mr Bentley – the former boss of British Gas and Cable & Wireless Communications – is halfway through an his overhaul at Mitie, dubbed Project Forte.
He said the firm is set to see faster growth under the second stage of the turnaround, with earnings expected to rise by mid to high single digits.
It has been on a cost-savings drive and selling off businesses to turn around its trading.
Recently Mitie announced a deal to sell its catering business to royal warrant holder CH&Co for as much as £85 million.
Mitie’s wider efforts to simplify its business have seen it outsource and automate some back office functions, merge its London offices into one, and invest to increase its technology capabilities.
It has also offloaded its social housing business to Mears Group and its pest control division to Rentokil.
Mitie’s turnaround plan was launched after a string of profit warnings amid a torrid time for outsourcing firms, with the collapse of Carillion and recent woes at Interserve dealing a reputational blow to the sector.