Mitie ‘where it needs to be’ despite drop in underlying earnings
Outsourcer Mitie has insisted it is “where we need to be” amid a swingeing overhaul, despite reporting a drop in annual earnings.
The group, whose contracts in Scotland including cleaning and maintaining the Scottish Parliament building, reported a 6 per cent fall in underlying earnings to £77.1 million for the year to 31 March, although revenues rose 2.8 per cent to £2.2 billion. The figures come after a difficult time for the outsourcing sector following the collapse of Carillion, while Mitie itself has been forced to launch a wide-ranging turnaround plan following a string of profit warnings.
But chief executive Phil Bentley said Mitie was making solid progress with its revamp and cheered the group’s revenue performance, with further “modest” top-line growth expected in 2018 to 19.
He said: “We are one year into our transformation programme and we are where we need to be. It has been a year of discovery, simplification and significant change, all set against a challenging market.”
Mitie’s overhaul is seeing the group slash annual costs by £50m a year by 2020.
Under the plans, it is simplifying its corporate structure, outsourcing and automating some back office functions, merging its London offices into one and also overhauling its group-wide IT.
Mitie chairman Derek Mapp said: “The magnitude of the internal restructuring and the number of things that have needed to be ‘fixed’ are far more significant than was earlier anticipated.
“Much of the heavy lifting is now complete, and we are moving through each stage of our transformation methodically and systemically.”
He added that the demise of Carillion has sparked the need for a “wholesale sector recalibration”, saying: “We are pleased to see that this is already happening; as we engage with government, prospective customers and existing clients, the focus is moving subtly away from just cost and towards value.”
But Mitie is also under pressure from regulators after the Financial Conduct Authority (FCA) recently said it was launching an investigation into the preparation and content of Mitie’s financial statements for its last financial year, as well as the “timeliness” of a profit warning in September 2016. It confirmed in its annual results that it has provided “extensive material” to the FCA and continues to co-operate with the watchdog.
Neil Wilson, chief market analyst for Markets.com, said Mitie has reported “decent full-year numbers that point to some headway being made on the transformation journey”.