Mitie looking for deals as profits grow

FACILITIES manager Mitie said it had benefited from austerity Britain’s spending cuts as it reported a small rise in first-half profits.

The firm, which screens baggage at Heathrow airport and helps keep the Royal Opera House up to scratch, won contracts across the shrinking public sector, pushing it to a 0.8 per cent rise in pre-tax profits to £48m. Revenue rose 5.8 per cent to £972m.

“The search for greater cost and energy efficiency is central to the strategies of governments and businesses in all our markets,” chief executive Ruby McGregor-Smith said.

Mitie’s new facilities management contracts – with courts in the south of England, two prisons, Essex county council and drinks group Diageo – mean it has not had to splash out on major acquisitions to achieve growth.

Earlier this month security and support services group G4S abandoned a £5.2bn takeover of Danish cleaner ISS when it became clear the deal was too large and too risky for shareholders to stomach. Mitie wants to grow differently, McGregor-Smith told City A.M.

“We are looking to do small bolt-on acquisitions. It is difficult for me to gauge the reasons they [G4S] went that way.”

The energy management business, which bought Dalkia two years ago, has helped the firm win contracts and allowed it to offer existing clients more higher margin services.

“I believe there are growth opportunities for all the outsourcers as the market grows and I think our particular differentiation around energy, which others do not have, is incredibly important.”

Mitie said its order book had risen 17.6 per cent to £8bn, effectively securing 97 per cent of this year’s revenue and 68 per cent of revenue forecast for 2012-13.

Peel Hunt rated Mitie stock as a “hold” and said that “with improved visibility and the opportunities before the business... the risk to forecasts now lies firmly on the upside.” 

Shares in Mitie closed down 0.49 per cent 242.8p.