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Shares in Mitie Group were +5%, as the facilities management company reported that it narrowed its pre-tax loss by 58% (51% from continuing operations) as the costs of the year-old transformation programme were reduced.
While adj. operating profits were -6% due to higher investment in customer service and technology, the company saw adj. revenue +3% on the back of solid growth in Security, Care & Custody and Engineering Services sectors.
The company’s results were in line with projections, with operating profits reported in the top range of analyst expectations (£77m vs £73.6-78m est.), while revenue was bang in line at £2.2b.
With brokers watching cash flows (remember Carillion?) as the most important driver of Mitie Group’s share price, markets were rewarding the company for improving its supplier payment performance, as well as reducing invoice discounting practices, which should track well with the company’s goal of improving solvency going forward.
The past year has been challenging for Mitie Group, but it has managed to pass the test of improving financial stability with flying colours, with benefits of the multi-year transformation programme already apparent in cost savings and improved service delivery due to better engineer workflows.
Artjom Hatsaturjants, Research Analyst, 7 June 2018
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