6th Jun 2024 10:25
(Alliance News) - Mitie Group PLC delivered a "strong set of full-year results" with "impressive" headline figures, analysts on Thursday said.
Mitie is a Glasgow-based facilities management company.
Its shares were up 0.2% to 120.20 pence each in London on Thursday morning. They had earlier traded as high as 124.94p per share, a new 52-week high. The stock is up 28% over the past 12 months.
In the financial year that ended March 31, pretax profit leapt 48% to GBP156.3 million from GBP105.5 million a year prior.
Basic EPS before other items rose 29% to 12.3 pence from 9.5p, reflecting higher operating profit, a reduction in net finance costs and the benefit from share buybacks, partially offset by a higher corporation tax rate.
Revenue rose 11% to a record GBP4.51 billion from GBP4.06 billion, reflecting growth in key accounts, projects upsell and M&A, offsetting the completion of certain short-term public sector contracts.
Mitie highlighted a "robust" total order book and pipeline of GBP11.4 billion, up 18% from GBP9.7 billion, and GBP18.6 billion, up 27% from GBP14.7 billion respectively, saying this underpinned future growth in key accounts and projects.
Chief Executive Phil Bentley said: "Our divisions are all performing well, with Technical Services, Central Government & Defence, and Communities delivering double-digit revenue growth, and Business Services more than replacing all of the revenue from certain short-term public sector contracts."
Bentley described the performance as "strong" delivering "record revenue, operating margin expansion and a good return on invested capital."
Operating profit margin before other items climbed to 4.7% from 4.0% a year prior. Return on invested capital improved to 26.4% from 25.4%.
"Mitie is a cash generative business with a robust balance sheet, and we are committed to investing in accelerated growth, as well as returning surplus funds to shareholders via share buybacks," he added.
As a result, Bentley pointed out Mitie "have met or significantly exceeded all of the financial targets set out in the previous three-year plan".
The plan covered the three years ending March.
Stifel noted profit was ahead of the estimate given in April.
"Headline figures are impressive, in our view reflecting the group's internal initiatives and technology differentiation," the broker said.
Revenue was underpinned by margin enhancement initiatives at Mitie, Stifel noted, while free cash flow generation at around GBP158 million is "exceptional".
"We are encouraged by momentum in the business as it enters its new three-year plan to [financial 2027], with Mitie having an GBP11.4 billion order book, record GBP18.6 billion pipeline and strong growth in Projects, a key strategic growth driver."
Mitie has now started to execute its new 'facilities transformation' three-year plan covering financial 2025 to 2027. The company expects this effort to accelerate growth.
Looking ahead to financial 2025, Stifel forecasts around 7% revenue growth, with margins broadly consistent with financial 2024. As a result, the broker raises its financial 2025 and 2026 adjusted operating profit forecasts for Mitie by 2.8% and 2.2% respectively.
Stifel thinks Mitie's balance sheet strength and FCF generation should enable it to continue undertaking buybacks and infill M&A.
"We remain buyers with a target price of 145p, and view the current valuation as attractive for a business than can consistently turn profit into FCF over the medium term, providing strategic options."
By Jeremy Cutler, Alliance News reporter
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