Mitie unveils record £4bn revenue amid ‘inflationary contract re-pricing’

Mitie reported record full year revenue after being boosted by contract wins, renewals, acquisitions and inflationary contract repricing.

Turnover reached a record £4.05 billion in the 12 months to 31 March, compared to £4 billion a year earlier, while operating profit rose from £72 million to £117 million.

But while high inflation has boosted the outsourcer’s results, one analyst thinks Mitie should be aware of the potential corresponding impact of further increases in the national minimum wage and the national living wage.

Mitie said: “Contract gains, renewals, acquisitions and inflationary repricing of contracts more than offset contracts that were not renewed and benefited from short-term Covid work the prior year.

“Since the beginning of the year, we have won and renewed a number of significant new contracts and we have a healthy pipeline of new opportunities combined with benefiting throughout the year from major contracts won and renewed in the closing months of FY23.”

Basic earnings per share before other items rose 3.3 percent to 9.5 pence, driven by debt refinancing and share repurchases.

The group recommended a final dividend of 2.2 pence per share, up from 1.4 pence last year, taking the total dividend up 61 percent to 2.9 pence from 1.8 pence a year ago.

But according to Louis Knight, analyst at Third Bridge, “The biggest threat to Mitie is the rise in the UK minimum wage due to inflation.”

He added: ‘As one of the UK’s largest outsourcers of workers, it will be a real test of Mitie’s ability to attract, retain and pay its employees, and to pass those costs on to its customer base .’

For anyone over the age of 23, the National Minimum Wage and National Living Wage is £1042. Rates go up every April.

Mitie shares were down 0.1 percent to 96.30 pence in late morning trading, after rising more than 56 percent over the past year.