Mitie slides to £100m half-year loss

Outsourcing giant Mitie has posted a half-year pre-tax loss of £100m and warned investors for the second time that profit for the full year will be lower than expected.

In the six months to September this year the firm slumped to a £100.4m pre-tax loss on reduced turnover of £1,093m, compared to pre-tax profit of £45.1m on revenue of £1,123m the previous year.

Mitie was hit by a £128m writedown caused by its decision to exit the domiciliary healthcare market - the provision of healthcare services in patients’ homes. It blamed the “downward pressure on homecare charge rates and a reduction in care volumes has resulted in increased healthcare losses”.

The healthcare business is now under strategic review and Mitie will explore options including a possible sale.

Mitie said it had been further hit by rising labour costs and economic uncertainty, a drop in high margin project work, reduced spending on facilites management, and a deterioration in local authority budgets. Mitie also reported restructuring costs of £6m

Mitie predicted that labour costs would continue to increase in the UK over the coming years on top of anticipated cost rises on imported goods and services, creating further pressures for clients.

The firm said it expected improvement in the second half of the year due to new contract awards, but warned it still expected underlying profit to be lower than previously expected.

Mitie chief executive Ruby McGregor-Smith (pictured) – who is stepping down next month – said: “The first half of this year has been difficult but we are not alone in facing significant macroeconomic challenges.

“The steps we have taken to counter these impacts include the restructuring of both frontline and support functions across FM and the decision to withdraw from the domiciliary care market. Second half performance is expected to improve with our new operating model as we adapt to market conditions.”