19th Sep 2016 06:17
LONDON (Alliance News) - Facilities management firm Mitie Group PLC on Monday said it anticipates operating profit for the full year will be materially below its previous expectations due to ongoing challenges across the business.
The FTSE 250-listed firm said it has taken a hit from lower economic growth rates in the UK, changes to labour legislation, notably the introduction of the National Living Wage, and further constraints on public sector spending. Mitie has attempted to counter this with cost-cutting moves, but it expects these issues will weigh heavily in trading in the year to the end of March 2017, most sharply in the first half of the year.
Mitie said it expects revenue in the first half to the end of September will be "modestly lower" year-on-year, but said operating profit will be "very significantly lower", mainly due to a reduction in higher-margin contract work and a fall in discretionary spending by clients. It has also been hit by pricing pressures, higher costs, restructuring expenses and a deterioration in the performance of its local government-focused Healthcare and Property Management businesses.
Operating profit for the full year is now expected to be materially beneath its previous expectations due to these issues faced in the first half and due to an expected GBP10.0 million in restructuring costs that the firm expects to book in the financial year.
By Sam Unsted; [email protected]; @SamUAtAlliance
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