UK social housing maintenance company Mears Group PLC (LON:MER) reported a decline in 2017 profits as the Grenfell Tower disaster delayed customer decision making.
Profit before tax dropped 7% to £37.1mln and group revenue decreased 4% to £900.2mln.
Shares fell 2.4% to 356p in afternoon trade.
Mears had no involvement with Grenfell Tower but the June fire that killed 80 people caused delays to the timing of the company’s planned workloads as authorities focused on making sure all their properties were safe and compliant.
The disaster also prompted clients to review the commissioning and safety practices at their properties.
These delays sent housing revenues down 3% to £766.1mln.
READ: Mears Group shares fall as housing business continues to soften
The order book also fell to £2.6bn from £3.1bn as the company experienced a slow period of securing new contracts.
“The decline in housing revenues following the tragic events at Grenfell Tower has stabilised although there still remains some uncertainty as to the speed at which these revenues will recover,” said chief executive David Miles.
Care division returns to profitability
Revenue in the company’s home care division fell 12% to £134.1mln after closing down branches as part of a restructuring.
However, the overhaul of began to pay off with Care swinging to a £500,000 operating profit from a £1.2mln loss the previous year.
Miles said care division was the highlight for the group last year.
CEO upbeat on outlook
He added that the current pipeline of opportunities for Mears “has never been greater”.
“We anticipate competitively bidding contract values in excess of £2bn during the course of 2018,” he said.
Mears raised its dividend by 3% to 12p per share.
Liberum remains bullish
Liberum maintained its ‘buy’ rating on the stock but lowered its target price to 450p from 480p.
The broker said the earnings missed its expectations but the company’s restructuring efforts should save money, improve efficiency and bidding.
“The challenges in 2017 have led the group to review its central support structures. Management is targeting £5mln of savings, which is higher than our previous estimate of £3mln but should still be conservative,” it said.
Liberum added: “The review should also provide more support to help complete some of the new contract opportunities quicker.”