Construction and outsourcing group hit by slow trading

Mitie has posted a profit warning prompted by lower UK growth, a lack of public sector spending and uncertainty sparked by the EU referendum.

The construction and outsourcing group, led by chief executive Ruby McGregor-Smith (pictured), said these factors combined would lead to 鈥渧ery significantly lower鈥� operating profit than expected over its first half, which runs to the end of this month.

Over the full-year to next March, Mitie said profit would also be 鈥渕aterially lower鈥�, despite an expected uptick in revenue, due to the negative impact suffered in the first half and the impact of a futher 拢10m of restructuring costs.

Commenting on the reasons for poor trading over the last six months, Mitie said: 鈥淭his is specifically due to a reduction in higher margin project work volumes and discretionary spend by clients, pricing and cost pressure, a deterioration in the trading performance of our local government facing Healthcare and Property Management businesses, and the in-period costs of implementing efficiency programmes of up to 拢5m.鈥�

Mitie said it had picked up some recent major contracts, including a security contract for a major UK retailer worth more than 拢150m over three years, with an option to extend for an additional two years.

Mitie added: 鈥淲hilst our current environment is challenging, Mitie remains a strong business and has a leading market position in FM services in the UK.

鈥淢itie has an excellent customer base and order book, a substantial pipeline of opportunities and a portfolio of high quality, long-term contracts. These factors, combined with the quality of the services we provide, give us confidence for the future.鈥�

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