Mitie Group PLC (LON:MTO) has withdrawn its guidance for the coming year as a result of the coronavirus pandemic, saying it cannot provide forecasts “until the outlook becomes clearer”.
In a trading update, the facilities management firm said it expected “little change in demand” across the essential services provided to the public sector, including the NHS, which represent around 30% of its annual revenues.
Meanwhile, the company said demand for its cleaning and security services from food and online retailers was increasing.
However, Mitie warned that discretionary project work in its fire & safety and technical services arms was being “significantly deferred” alongside reduced demand from its transport & logistics, manufacturing, property managers and general office-based clients.
Despite this, the company said “almost all” of its front-line staff were continuing to work at client sites to provide essential services, and where there has been decreased demand it had so far been able to re-deploy workers to other areas.
In order to manage its finances during the crisis, Mitie said it is reviewing its cost base and deferred any non-essential expenditure, adding that it is also in conversations with the UK government to “seek additional support to bridge the downside impact on the business” and apply for the coronavirus job retentions scheme which will see the government pay 80% of worker salaries who are unable to work due to the pandemic.
“I am humbled by the unstinting commitment of our front-line colleagues, who continue to provide essential services to our clients at this most challenging of times”, said Mitie chief executive Phil Bentley.
“We welcome the support measures available to Mitie, as a strategic supplier to Government. The Board is therefore confident that the combination of its existing lending facilities, Government support measures and the current actions being undertaken, Mitie will be able to meet the challenges arising from [coronavirus] in the near term and be well placed - as financing markets normalise - to complete its transformation programme and build an enduring business", he added.
However, in a note on Friday analysts at Liberum, which rate Mitie at 'hold' with an 80p price target, said they saw "a dangerous combination of significant earnings risk and high levels of financial obligations" that will leave the equity "heavily squeezed".
Shares in the group fell 4.9% to 61.8p in early morning trading.