Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Facilities outsourcer Mitie has just completed the first year of its shift from traditional facilities management to a “facilities transformation” model. This involves moving towards tech-driven services such as robotic cleaning, remote monitoring and drone-based security, which promise higher margins than purely manual and labour-intensive services.
The pivot comes after a troubled few years for the company. Between 2017 and 2020, its shares tumbled by 80 per cent due to profit warnings, pandemic uncertainty and audit issues tied to a lossmaking healthcare business it has since offloaded. But chief executive Phil Bentley’s turnaround steadied the ship, and the shares are now back near all-time highs.
More recently, Mitie has focused on building up work with large clients, moving into new areas through acquisitions, and upselling by pitching more complex services to clients.
It continues to work towards its full-year 2027 targets, which include pushing operating margins above 5 per cent, up from the current 4.6 per cent. So far, the company is making solid progress.
Revenue and profit both rose by double digits in the year to 31 March, having secured a record £7.5bn in contract awards, with its total order book at £15.4bn. That is despite the renewal rate coming in at a significantly weaker level of 59 per cent, dragged down by the loss of two public sector contracts.
Mitie is also staying busy on the M&A front. The company confirmed a £366mn deal to buy Aim-traded compliance specialist Marlowe this month. The move boosts Mitie’s presence in the £7.6bn UK testing, inspection and certification market, where spending is expected to rise further due to rising regulatory requirements.
The group said the deal would generate £30mn of cost savings by the 2028 financial year. A planned £125mn buyback programme was shelved to fund it, which was likely to have contributed to the share price fall on results day. Incoming chair Chris Rogers took the drop as a buying opportunity, picking up 144,000 shares for £197,280 on June 6.
