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Outsourcer Mitie announces new finance chief as it issues another profit warning
January 18, 2017 / 7:56 AM / 8 months ago

Outsourcer Mitie announces new finance chief as it issues another profit warning

(Reuters) - British outsourcing firm Mitie issued its third profit warning since September on Wednesday, saying contract signings continued to be delayed by Brexit uncertainty, and announced a new finance chief in a further change to its top management.

The company’s shares plunged about 16 percent in early trade to 173 pence, the biggest losers on London’s FTSE midcap index.

The pest control to property cleaning, security and ancillary healthcare services provider said the impact of the contract delays had been felt in its property management and technical facilities management units, while its cleaning division was underperforming.

While most British support services firms have reported resilient trading since Britain voted in June to leave the European Union, Mitie and rival Capita have both issued profit warnings, forcing them to take cost-cutting measures.

Mitie said that it would book an additional 14 million-pound one-off charge for the year to March 31, 2017 to reflect a more conservative assessment of its contractual positions.

It announced it had hired Sandip Mahajan, most recently finance head at construction firm Balfour Beatty Plc, as its new finance chief to replace Suzanne Baxter, who will step down from the board on Feb. 10.

The move marks another reshuffle of the top management after Phil Bentley became CEO in December, taking over from Ruby McGregor-Smith who had been at the helm for over nine years.

Analysts say Mitie could underperform rivals in uncertain markets as it had not anticipated the additional costs from new UK labour laws on pay and training, as others had done last year, and discretionary spending in higher-margin businesses such as catering services were more vulnerable to clients seeking to cut their own costs.

Mitie said in November it had decided to withdraw from the low-margin home healthcare services market, while Capita announced the sale of its asset management services arm in December.

On Wednesday, Mitie said full-year underlying operating profit, including ongoing healthcare losses but before previously disclosed one-off costs of 10 million pounds, was now expected to be in the range of 60 million to 70 million pounds.

Ahead of the update, analysts had expected comparable profit of around 91 million pounds, according to a company-compiled consensus.

Reporting by Esha Vaish in Bengaluru; Editing by Susan Fenton

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