Mitie issues second profit warning

Struggling outsourcing firm Mitie issued its second profit warning in two months today as it continues to battle the impact of higher staff costs and increased economic uncertainty

Outsourcer Mitie suffers second profit warning
Outsourcer Mitie suffers second profit warning

The company swung to a £100.4 million half-year loss from a £45.1 million profit in the same period last year as revenue for the period fell 2.6 per cent to £1.09 billion.

Mitie which carries out cleaning and maintenance contracts for clients in Scotland including the Holyrood parliament building, Royal Bank of Scotland and Standard Life, said it was suffering from “changing market conditions as clients adjust to rising labour costs and economic uncertainty”. It warned that full-year earnings are expected to come in below management's previous expectations.

Sign up to our daily newsletter

The company also announced that it is withdrawing from the domiciliary healthcare market, placing its healthcare unit under strategic review.

Mitie said: "Our healthcare businesses will continue to fulfil all obligations but there will be no investment in new areas of this market. Mitie will manage its withdrawal in an orderly and responsible manner.

“The board has changed its long-term view of this market. All healthcare goodwill and intangibles have been written off."

The firm has written off £107.1m of goodwill as a result of the move.

Outgoing chief executive Ruby McGregor-Smith said: “The first half of this year has been difficult but we are not alone in facing significant macroeconomic challenges.

“Second-half performance is expected to improve with our new operating model as we adapt to market conditions"

Mitie also cut its dividend from 5.4p to 4p.