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Mitie's clients cut back on outsourcing

The outsourcer's shares slumped in morning trading after management warned on full-year profits
Mitie's clients cut back on outsourcing

Greater economic uncertainty and rising labour costs compelled companies to outsource less work to Mitie (MTO) in the reported period. Lower sales and higher costs resulted in a 39 per cent drop in adjusted operating profits to £35.4m, prompting management to warn that full-year underlying earnings could miss expectations.

IC TIP: Hold at 194.9p

Underlying operating profits shrank by almost a third in the main facilities management business, as robust demand for security was offset by fewer higher-margin projects and reduced spending on services such as cleaning. And they nearly halved in the property management division, as new legislation requiring social housing authorities to lower rents by 1 per cent a year for four years caused them to delay projects and reassess their medium-term budgets.

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