- Final quarter exceeds guidance
- Operating profit up sharply
- Further £50 million buyback
Facilities management and business service firm Mitie Group (MTO) surprised the market with stronger-than-expected fourth-quarter results and a fresh £50 million share buyback.
The shares climbed 6p or 5.5% to a new five-year high of 117.5p on above-average trading volume.
STRONG DEMAND FOR SERVICES
In its third-quarter trading statement the group posted a 14% increase in revenue and guided to mid-single digit growth in the final quarter due to a strong prior-year performance.
In the event, the firm reported revenue of £1.24 billion, representing growth of around 10%, which means full-year revenue is set to exceed £4.5 billion against the consensus of £4.45 billion and project revenue will top £1 billion for the first time.
The firm said it had continued to see sustained demand from clients for transformational projects across their estates, driven by macro trends including decarbonisation, the modernisation of the built environment and changes in the regulatory landscape.
‘Our focus on technology, innovation and our people underpins our industry leadership in the UK, which is the largest and most dynamic FM market in Europe,’ commented chief executive Phil Bentley.
‘Our strategy for Facilities Transformation will see Mitie extend its market leading position by converting our record pipeline of opportunities into new Key Accounts; accelerating growth in projects as we work with our customers to transform their estates; and continuing delivery of cost saving initiatives.’
NEW BUYBACK SIGNALS CONFIDENCE
Operating profit for the full year is seen increasing by around 23% to over £200 million, meaning an operating margin of 4.5% although the second-half margin was more like 5%.
Thanks to the uplift in revenue, margins and free cash flow, the group announced a new £50 million share buyback on top of the £100 million of buybacks carried out since 2022.
Liberum analyst Joe Brent raised his March 2025 earnings per share estimate by 6% and his price target by 4% from 125p to 130p, describing the stock's current valuation as 'undemanding' given the momentum in the business.
