Mears Group profits hit by tower tragedy

THE GRENFELL Tower tragedy will hit profits at social housing and support services provider Mears Group this year as clients delay new projects.

The firm said the fire in West London has meant clients’ attention has “naturally been diverted towards ensuring their housing portfolios are safe and fully compliant”, rather than on beginning new work.

Mears operates across the North of England, covering South Yorkshire, North Yorkshire and West Yorkshire focusing on roofing, external and internal decorations, kitchens, doors and windows and one-off major projects.

Mears said landlords are delaying new contracts as they review safety measures following the deadly Grenfell Tower blaze.

The company, which does repair and maintenance work for properties belonging to local authorities and other social housing landlords, said that some authorities are holding off on signing new contracts while they conduct safety checks in the wake of the Grenfell Tower fire in June, in which 80 people died.

Mears said it now expects full year revenues from its housing division to be £800m, down from an original expectation of £830m. It said that would result in a lower than previously expected annual profit, although it has not disclosed a profit forecast.

The Government is reviewing building and fire safety rules after police said they believe cladding panels added during a refurbishment of Grenfell Tower may have contributed to the rapid spread of the fire.

Mears, which was not involved in work on Grenfell Tower, said the delays in procurement decisions by housing clients are expected to be temporary and will not impact its order book. While Mears did not work on the Grenfell Tower, it does provide cladding for tower blocks.

Chief executive David Miles said: “Whilst the likely revenue shortfall for the full year is frustrating... the group will be working closely with its partners and clients at this time to address their immediate priorities.”

Analysts at Liberum have cut their full year 2017 fully diluted earnings per share estimate for Mears to 30.8p from 33.8p, but continued to assume double digit earnings per share growth in 2018 and 2019.

“The recent tragic events at Grenfell Tower will impact the housing division later this year as clients review the commissioning and safety practices at their properties,” the group said.

“These unexpected events will inevitably impact the timing of our planned workloads as clients’ attentions have naturally been diverted towards ensuring their housing portfolios are safe and fully compliant.”

Mears made the announcement alongside half-year results, which saw revenue and profit broadly flat at £470.8m and £12.7m respectively.

Russ Mould, investment director at AJ Bell, said: “Delays to social housing contracts in the wake of the Grenfell Tower disaster mean that Mears will miss its budgets for the year.”