Mears Group PLC (LON:MER) eked out an increase in half-year profits despite a decline in revenue.
The provider of support services to the housing and care sectors said it was confident of meeting full-year expectations after “a solid performance in the first half of 2018”.
READ: Mears shares edge higher as it reaffirms full-year guidance
Profit before tax and before the amortisation of acquisition intangibles and exceptional costs increased to £19.0mln in the first six months of 2018 from £18.3mln the year before.
Joint house-broker Peel Hunt had forecast profit of £18.5mln whereas the other house broker, Liberum, had forecast £19.5mln.
Group revenue declined to £435.5mln from £470.8mln the year before, although the group noted that the first half of this year saw an improvement in the second half of last year thanks to a stabilisation in revenues from the housing division, where revenues clocked in at £374.9mln.
Liberum had forecast group revenue of £449.3mln and housing revenue of £385.2mln. Operating margins increased to 4.7% (2017: 4.1%), driven by the improving profitability of the care division.
Strong bid pipeline
The group has a bid pipeline of more than £2.8bn for 2018, which it said is significantly higher than normal levels and includes two projects that are very large in scale. The average daily net debt was £102.1mln, which was slightly better than Peel Hunt and Liberum had been expecting.
Total net debt at the end of June was £74.5mln, up from £19.6mln a year before. The interim dividend has been nudged up 3% to 3.55p from 3.45p at the interim stage last year.
"Our financial and market position is robust as we seek to build on existing strengths and take advantage of new opportunities. We have sustained a high level of service delivery in Housing and improved the performance in our Care business,” said David Miles, the chief executive of Mears.
"Mears is evolving its services, especially in the areas of Housing Management and Development, to align fully with customer demand and to provide additional growth opportunities that will add to shareholder value over time," he added.
Liberum nudged its full-year earnings estimates up and reiterated its 450p price target, adding that it saw significant upside if the group converts more on its pipeline.
Shares in Mears were down 2.5% at 346p.