Mitie’s half-year operating profit might be “in line with management’s expectations,” but investors sold off its shares on Wednesday morning nonetheless.
Guidance that profits would be flat to slightly down on the same period a year ago, as the outsourcer spends to drive revenue growth, prompted a more than 7 per cent decline in Mitie’s share price to as low as 141.4p a share.
Chief executive Phil Bentley warned, “the environment in our industry remains highly competitive, especially when it comes to contract renewals,” in the company’s update ahead of its half-year results announcement on November 22.
However, he added that the majority of the group’s businesses were performing well, with bigger contracts “delivering solid growth in volumes and profitability”.
Revenue growth for the half is expected to be up between 2 and 3 per cent year-on-year. For the first six months of last financial year it was just shy of £960m.
Mitie also reiterated a “medium-term target” of boosting operating profit margins to between 4.5 and 5.5 per cent. But in the latest period, “good underlying progress” was held back by a poorer performance in its social housing operations, an unfavourable mix of contracts in its cleaning unit and the write-off of some costs in its care and custody business.
Half an hour into the trading day, shares in Mitie were 6 per cent lower at 144.4p.
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