Mitie boss continues overhaul ‘at pace’ as earnings rise
The outsourcer posted a 6% rise in annual underlying earnings to £88.2m for the year to March 31.
The boss of outsourcing giant Mitie has pledged to continue restructuring “at pace” as he outlined the second stage of his sweeping overhaul.
Chief executive Phil Bentley said the second leg of the revamp – dubbed Project Forte – will focus on Mitie’s engineering services business, which employs around 8,400 staff.
The two-year programme is set to cost around £30 million, but will deliver run-rate savings of about £30 million by March 2021.
This is on top of the £45 million-a-year cost savings made under the first stage of the restructure, which will rise to £50 million by March next year.
Mr Bentley said: “Mitie’s transformation continues at pace.
“Change has been challenging at times, but our progress and performance to date are encouraging.”
Speaking to the Press Association, Mr Bentley said there would “inevitably” be some further impact on jobs as part of the ongoing overhaul.
But cuts are expected to be small, affecting “handfuls” of staff, and he said the overhaul will centre on introducing enhanced technology and upskilling staff to bring more engineering opportunities in house.
It will involve changes over the next two years to increase the use of IT, while also improving engineer productivity and making cost savings across back office operations.
On the jobs impact, Mr Bentley said: “Inevitably there will be some impact somewhere.
“That’s the reality. But that’s not the main story.”
He added: “Does it mean fewer jobs or does it mean we are more productive and win more business? I’d like to think the latter.”
The details came as the facilities management provider posted a better-than-expected 6% rise in annual underlying earnings to £88.2 million for the year to March 31.
Shares rose 2%, having jumped 9% higher at one stage, as the result came in higher than feared after Mitie had warned over earnings and falling orders in March.
Full-year figures showed Mitie’s order book held steady at £4.1 billion, while its pipeline of work increased to £10.2 billion.
Revenues lifted 9.4% to £2.2 billion over the year and Mitie forecast earnings to grow at “mid-single digits” over the next financial year.
On a statutory basis, Mitie swung to an annual pre-tax profit of £36.4 million against losses of £15.4 million the previous year.
Mr Bentley first launched his turnaround plan in June 2017 after a string of profit warnings and amid a torrid time for outsourcing firms, with the collapse of Carillion and recent woes at Interserve dealing a reputational blow to the sector.
Mitie is simplifying its corporate structure, outsourcing and automating some back office functions, merging its London offices into one, and investing to increase its technology capabilities.
It is also selling off unwanted businesses, agreeing last year to sell its social housing business to Mears Group in a deal worth up to £35 million.
In addition, the firm sold its pest-control business and bought Vision Security Group in the past financial year.
Mitie employs 52,500 people across the UK, with customers ranging from banks and retailers, to hospitals, schools and government offices.
Its operations span engineering services, security, professional services, cleaning and environmental services, care and custody and catering.
Neil Wilson, chief market analyst at Markets.com, said Mitie “looks in much better shape, putting some of the worst of the outsourcer troubles behind it”.