Outsourcing firms seems to be taking it in turns to spend time in the doghouse and this is definitely Mitie Group PLC’s (LON:MTO) turn.
The group issued another profit warning this morning – its third in four months.
It also announced that chief financial officer Suzanne Baxter has had enough, and is on her bike.
She will be replaced by Sandip Mahajan, formerly the group director of finance at Balfour Beatty – itself no stranger to profit warnings.
The group revealed that its Property Management and Technical Facilities Management divisions have been affected by clients reluctance to pull the trigger on contracts, which means a number of deals expected to complete in the first quarter are now expected to be landed in the second quarter.
Meanwhile, management has decided to clean house in its under-performing Cleaning division, implementing management changes.
The group now expects underlying operating profit for the full year to 31 March 2017 will be in the range of £60mln to £70mln, including ongoing healthcare losses, but before the previously disclosed £10mln one-off costs of change.
It was some consolation to shareholders that the company continues to operate within its banking covenants.
The board is undertaking a balance sheet review, and has taken a more conservative judgement on contractual positions, identifying an additional £14mln of one-off charges in the year.
Broker Peel Hunt said its forecasts are now under review.
Its forecasts of profit before tax of £74.4mln and earnings per share (EPS) of 16.5p for the current financial year are based on earnings before interest, tax and amortisation of £90.1mln, so the downgrade in MITIE’s guidance implies a downward revision of £20mln to £30mln to the profit forecast, and 9.7p to 11.9p off the EPS.
Peel Hunt reiterated its ‘sell’ recommendation.
Shares in MITIE tumbled 9 to 187p, and are down almost a third over the last year.