LONDON (Reuters) - Britain’s Mitie (MTO.L) posted a small first half profit rise and said it was confident about growth prospects as governments and businesses seeking to cut costs sign up for its outsourcing and energy services.
Mitie, whose customers include Tesco (TSCO.L) and London’s Royal Opera House, said on Monday profit before tax and other items for the six months to the end of September was up 0.8 percent to 48 million pounds ($75 million) on revenue up 5.8 percent to 972 million.
The firm, whose services include maintenance and cleaning as well as baggage screening at London’s Heathrow airport, said its pipeline of potential bid activity stood at 11.7 billion pounds, with 65 percent of it coming from the public sector.
“The search for greater cost and energy efficiency is central to the strategies of governments and businesses in all our markets,” Chief Executive Ruby McGregor-Smith said in a statement.
The firm is currently bidding on a facilities management deal with Edinburgh council worth around 280 million pounds, as well as justice sector work which could include electronic tagging and prison management.
While rival outsourcers have turned to acquisitions to help offset a lack of organic growth this year, blaming contract delays and budget cuts, Mitie has won a number deals including facilities management work with south England courts, two prisons, Essex council and spirits group Diageo (DGE.L).
McGregor-Smith believes that its energy management business, supported by the 2009 acquisition of Dalkia, has helped the firm win contracts and has also allowed it to offer existing clients more higher margin services.
“I believe there are growth opportunities for all the outsourcers as the market grows and I think our particular differentiation around energy, which others do not have, is incredibly important,” Mitie’s chief later told Reuters.
“That is what is driving our organic growth.”
Mitie said its order book had risen 17.6 percent to 8 billion pounds, effectively securing 97 percent of this year’s revenue and 68 percent of forecast revenue for 2012/13.
Shares in the FTSE 250 group, which upped its interim dividend by 7.3 percent to 4.4 pence, were down 1.31 percent at 240.8 pence at 0903 GMT on Monday.
UBS analysts, who have a “Buy” rating on Mitie, said the firm’s outlook was rightly confident and that it was well positioned to benefit from future work.
“In the next 12 months there are more contract decisions due in public and private sector work as more customers work towards saving costs by moving towards integrated facilities management models. Mitie is very well positioned in that environment,” a UBS note read.
($1 = 0.633 British Pounds)
Editing by Rosalba O'Brien and Jane Merriman