Mitie shares plummet after outsourcer issues new profit warning
Shares in Mitie have sunk after the embattled outsourcer issued its third profit warning since September in response to delayed contracts and a flagging performance from its cleaning division.
The firm said it expected full-year underlying operating profit to be in the lower range of £60 million to £70 million after pinpointing a further £14 million in one-off costs.
Shares crashed 16% in morning trading before paring to around 6%.
The company said its property management and technical facilities management arms had been blighted by contract delays, while it plans to make management changes to shore up its "under performing" cleaning division.
Mitie, which swung to a £100.4 million half-year loss in November, said the new profit range included healthcare losses, but was before one-off costs of £10 million.
The financial update came as the catering to cleaning services, waste management and pest control business took another step to freshen up its board, appointing Sandip Mahajan as chief financial officer from February 10 this year.
Mr Mahajan, an ex-finance chief at infrastructure group Balfour Beatty, will succeed Suzanne Baxter who will step down as group finance director.
Mitie's chief executive Phil Bentley was appointed in December.
He quickly moved to snap up £3.6 million in shares in the company.
Analysts have warned the FTSE 250 firm may endure further pain as it grapples with rising staffing costs and import prices from the Brexit-induced collapse of sterling.
Neil Wilson, senior market analyst at ETX Capital, said: "It's been hit by rising staff wages as well 'significant macroeconomic challenges' which are translating into clients delaying investment and spending.
"Staffing costs will only get tougher as the National Living Wage is set to rise along with pension costs and apprentice levies.
"Meanwhile a weak pound will drive up the cost of imported goods and services. Input prices for manufacturers have surged nearly 16% in the last year.
"All of this piles pressure on Mitie's clients, making them less likely to spend, apparently."