Mitie Group third quarter disappoints as new contract win value drops

(Alliance News) - Mitie Group PLC on Thursday said third quarter revenue remained unchanged from a year ago as new contract win value dropped.

For the three months ended December 31, the Glasgow-based facilities management company reported revenue of GBP1.01 billion, unchanged from the same period last year, but up 3% from the second quarter, and 6% from the first quarter of financial 2023.

The company said third quarter revenue benefited from an increase in project revenue, acquisitions, business wins and effective cost inflation pricing.

New contract wins and contract renewals worth GBP163 million were also added in the third quarter. Mitie noted that it retained a renewal rate above 90%.

While the value of its contract wins and renewals was lower than usual, the company said it expects multiple client decisions on significant opportunities to be made in the fourth quarter.

During the period, Mitie won major contracts with Asda and Essex County Council, as well as a five-year contract with Dublin Airport.

Average daily net debt in the third quarter was GBP103 million, up from no debt a year ago. Mitie said this reflected planned capital deployment, including the close of its customer invoice discounting facility and a share buyback programme completed in September.

Net debt at the end of the quarter was GBP92 million, up GBP28 million from the end of the second quarter.

"Q4 is typically our strongest quarter, as project work increases, and we complete seasonal winter work in Landscapes," Mitie said.

"This, combined with the ramp up of margin enhancement initiatives and ongoing effective management of inflation, provides the board with confidence that the full year results will be consistent with the recently upgraded guidance for operating profit before other items of at least GBP145 million."

Mitie shares were up 1.3% trading at 83.89 pence per share on Monday morning in London.

By Harvey Dorset, Alliance News reporter

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