Brexit Sees Heathrow-Cleaner Mitie Drop on Second Profit Warningby
Shares of Mitie plunge as much as 21% as projects delayed
To close in-home carer service at cost of 100 million pounds
Mitie Plc slumped more than 20 percent in London trading on Monday after the maintenance company issued its second profit warning in two months in a sign that Brexit is hurting the U.K.’s dominant services industry.
Mitie, which cleans Heathrow Airport, predicted full-year earnings will be below management’s prior expectations, the company said in a statement Monday, without being specific. It also announced it will pull out of the home healthcare market, at a cost of 107 million pounds ($124 million) in writedowns. The shares dropped as much as 21 percent, and were down 10 percent at 188.10 pence as of 9:44 a.m.
Mitie woes are an indication of an immediate impact of Brexit amid ongoing debate about how Britain will fare outside the trading bloc. Short-term cuts in higher-margin project work and discretionary spend crimped profit at Mitie’s facilities management business as clients adjusted to rising labor costs and weak business confidence affected client investment plans, it said.
“Performance has been impacted by uncertainty around the referendum ,” Mitie said.
Separately, Mitie’s losses increased at the health-care services unit amid pressure on pricing and a reduction in the volumes of care being commissioned. In order to focus on facilities management, Mitie won’t seek additional contracts to provide home carers for people requiring support for conditions such as learning disabilities or dementia.
Mitie reported a pretax loss of 100.4 million pounds in the six months through September, compared with a year-earlier profit of 45.1 million pounds, weighed down by the write down of home-care operations. Revenue fell 2.6 percent to 1.1 billion pounds.