Mitie misses cue as Brexit and tighter purse strings trigger profit warning

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UK outsourcer Mitie was mopping up today after a Brexit-induced cut in spending by corporate customers and an overhaul of pay laws drove it head-first into a profit warning. 

Mitie, led by Tory peer Baroness Ruby McGregor-Smith, said operating profit for the half-year would be “very significantly” lower, sending the shares crashing nearly 25%.

The FTSE 250 group makes most of its money from facilities management services to big companies like Tesco.

Baroness McGregor-Smith said some of its customers were pulling back from forking out for one-offs such as catering and fix-and-repair jobs as they tighten the purse strings because of uncertainty over Brexit. 

“We see this as quite an unusual year,” McGregor-Smith said. “The short-term environment is challenging.”

The company’s span of offerings, from healthcare to property management, is also facing challenges from the introduction of the living wage and auto-enrolment pensions.

The apprentice levy, a payroll tax due next year, will lead to a £6 million cost burden for the group.

McGregor-Smith is spending £10 million to overhaul senior management layers, with savings of £15 million in the second six months of the financial year. 

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September 19, 2016 |
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