The end of 2018 capped off a rough 18 months for the outsourcing and energy services firm. In mid-2017 it hit £2.97; by the end of last December it was at £1.12, a 62% plunge that left the stock at its worst price since 2003.
Arguably there was only one direction it could go in 2019: up. Since the New Year began the stock has gradually gathered pace, though its rebound is yet to be tested by a trade update. Mitie Group (LON:MTO) now sits at a current trading price of £1.53,
The company’s last statement was all the way back in November, when it posted its half year results. Though revenue rose 4% to £1.04 billion, its first half adjusted operating profit slipped 4.2% to £38.4 million. This was due to a combination of a previously highlighted ‘adverse contract mix change’ in its Cleaning & Environmental Services division, and a £3.3 million hit due to ‘mobilisation-related costs’ in its immigration centre-managing Care & Custody arm.
Elsewhere the company said Project Helix, its portentously named turnaround plan, was still on track, and is expected to reduce Group operating costs by around £50 million on an annualised basis by the end of FY 2019/20.
As for the firm’s outlook, Mitie said that the outsourcing industry is ‘under much scrutiny’ with clients who expected ‘more, for less’ despite rising labour costs. However, it still expects to post ‘modest top-line growth’ this year, and is ‘confident’ in reaching its medium-term target of margin improvement to around 4.5% to 5.5%.
Investors will want to know if anything has changed when Mitie updates on Thursday, as well as its Brexit plans regarding the dual issues of labour availability and supply chain disruption – the latter of which may involve stockpiling – highlighted in November.
Mitie Group PLC(LON:MTO) has a consensus rating of ‘Buy’ alongside an average target price of £1.95.
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