Shares in outsourcer Mitie Group PLC (LON:MTO) jumped higher on Thursday after the firm’s operating profits for the year beat its previous forecasts.
For the year ended 31 March 2019, the company reported an operating profit before other items of £88.2mln, 6% higher than the prior year and just above the £84-£87mln range the company had predicted in a trading update in late-March.
READ: Mitie weak as Jefferies cuts rating to ‘hold’ from ‘buy’ after reducing its target price and estimates
Meanwhile, revenue rose by 9.4% to £2.2bn, with organic growth at 5.5%, reflecting a strong performance from the group’s “top strategic accounts”.
The final dividend for the year was 2.67p, with the total dividend maintained at 4p per share.
Mitie said that its order book had remained “stable” at £4.1bn, with the pipeline expected to grow to £10.2bn on the back of inclusion into the Crown Commercial Services Framework, an executive agency of the UK cabinet office tasked with improving government procurement.
Looking ahead, Mitie said it expected revenues to grow organically at between 3-4% in the medium term, while for the current financial year operating profits were forecast to rise by mid-single digits.
Phil Bentley, chief executive, said that that the group’s Project Helix restructuring project had provided “solid foundations” for future growth and the company was expecting “continued improvement” in its profits.
He added that at the same time the firm was making “good progress” in strengthening its balance sheet.
In a note to clients, analysts at Peel Hunt increased their pre-tax profit estimates for Mitie’s 2020 financial year by 3% following the earnings beat, adding that the group was “making progress” with its transformation plan but was not being supported by an “unhelpful market backdrop”.
Peel Hunt kept a 'hold’ rating on Mitie shares with a price target of 125p.
In early deals, Mitie shares were up 7.8% at 150.4p.