Mitie to book higher cost savings as turnaround continues
Boss Phil Bentley said that the liquidation of rival Carillion raised ‘some fundamental questions’ about the outsourcing industry.
Outsourcer Mitie has said that its turnaround plan remains on track and it will deliver higher cost savings than previously thought.
The group, which has been under pressure following a string of profit warnings, said that its transformation plan will now see it trim costs by £50 million a year by 2020.
It marks a 10% increase in cost savings as Mitie moves ahead with simplifying its corporate structure, outsourcing and automating some back office functions, merging its London offices into one and also overhauling its group-wide IT.
Mitie said that revenue is expected to grow up to 2.5% to £2.2 billion this year, as it pointed to a 10-year contract with the Home Office worth more than half a billion pounds.
The outsourcing firm is set to start supplying immigration services to the Home Office starting in May after winning in a contract worth £525 million.
However, operating profit is expected to come in “slightly down” on the previous year due to investment, the group added.
Boss Phil Bentley said that the liquidation of rival Carillion raised “some fundamental questions” about the outsourcing industry, but insisted that Mitie is still valued by its clients.
He added: “We are one year into our transformation programme and we are making progress.
“The year ahead will remain challenging as we continue to transform Mitie, but we expect to see modest revenue growth with improved profits and cash flow generation.”
The company recently came under the spotlight around its accounts, after the Financial Conduct Authority said it was launching an investigation into the preparation and content of Mitie’s financial statements for its last financial year, as well as the “timeliness” of a profit warning announced in September 2016.