Mitie Group toasted record full-year results on Thursday as it announced its medium-term targets had been “met or significantly exceeded.”
At 120.2p per share, Mitie’s share price edged 0.2% higher following the announcement.
Revenues rose 11% to a record £4.5 billion during the 12 months to March 2024, the FTSE 250 company said. This propelled operating profit 30% higher, to £210 million.
It noted that contract wins and re-pricing at key accounts, project upsells, and the contribution from recent acquisitions all drove the top line higher. Sales rose 7% on an organic basis.
Mitie’s full-year profit was boosted by cost-saving measures, which pushed the full-year operating margin to 4.7%. This was up 70 basis points year on year.
Contracts Rise
In the last year, Mitie has gained new or expanded contracts with Amazon, the Ministry of Defence, the Department of Transport, and Spanish airport operator Aena, among others.
The business provides facilities management, engineering consultancy, and other professional services across a wide range of sectors.
Total contract wins totalled £6.2 billion in financial 2024, up from £4.3 billion a year earlier. However, the firm’s renewals rate slipped to 79% from above 90% over the period due to the loss of two key contracts.
Mitie’s total order book rose 18%, to £11.4 billion, while its pipeline improved to a record high of £18.6 billion, up from £14.7 billion.
Free cash flow improved by £66 million year on year, to £158 million. But net debt increased to £81 million from £44 million.
Mitie raised the full-year dividend to 4p per share, up 38% year on year.
It also announced the repurchase of 7 million shares under the £50 million buyback programme started in April.
“Strong Performance”
Chief executive Phil Bentley commented that “we are pleased with our strong performance in FY24, having delivered record revenue, operating margin expansion and a good return on invested capital. Mitie is a cash generative business with a robust balance sheet, and we are committed to investing in accelerated growth, as well as returning surplus funds to shareholders via share buybacks.”
He noted that “we have secured a number of new contracts and projects in the fourth quarter of FY24 and first quarter of FY25, which give us good business momentum and we expect to offset, in the medium-term, the contracts lost and ending in FY24.”
Bentley added that “margin enhancement initiatives are also expected to deliver further benefits in the current year, and we will continue to generate strong cash flows and enhanced shareholder returns.”
Cleaning Up
Analyst Adam Vettese of eToro commented that “Mitie Group seems to have cleaned up in terms of delivering their targets for 2024, with record revenues as well as operating profit up 30% on last year. With contract values going into next year running over £2 billion higher than last year, investors could see scope for the strong performance to continue with shares up 20% already in 2024.”
He added that “it is worth a cautionary note on the loss of a couple of key contracts, however, if the pipeline is as strong as is indicated then this could be easily offset.”
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