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The FM provider has released its latest trading update for the three-month period ended 31 December 2023 (Q3 FY24), which reports record quarterly revenue growth and reiterates full year guidance for operating profit of at least £190m.
Q3 FY24 saw Mitie delivering a strong performance with revenue increasing 14% year-on-year to a record £1,146m (Q3 FY23: £1,005m). This increase reflected organic growth of 10.0%, inclusive of 4.1% contract re-pricing, through Key Accounts (net contract wins and losses and contract growth) and Projects upsell. Infill M&A completed since 1 October 2022 contributed a further 4.0% of inorganic growth.
Revenue has also grown sequentially in each quarter, reflecting good trading momentum and the increasing contribution from strategic growth initiatives. Q3 FY24 revenue of £1,146m was 6% ahead of Q2 FY24 (£1,079m), and 9% ahead of Q1 FY24 (£1,053m). In the nine months to 31 December 2023 revenue of £3,278m was 12% ahead of the same period last year (£2,928m).
Contracts
During the period, Mitie won and extended or renewed a number of significant contracts worth up to £0.9bn (Q3 FY23: £0.3bn). Contract wins and extensions or renewals in the nine months to 31 December 2023 increased by 46% to £3.5bn, compared with the same period of the prior year (£2.4bn).
Notable wins in the quarter included Aena in Spain, Department for Work and Pensions (DWP) projects work, increased security provision for the Home Office, expanded cleaning and security services across Landsec’s estate, and additional station guarding for Network Rail. Key contract renewals and extensions in the quarter included Facebook, Home Office and Ministry of Justice, King George Hospital, Landsec and Network Rail.
Acquisitions
In October, Mitie completed the strategic acquisitions of Cliniwaste, a specialist in treating plastic waste in healthcare environments, and in November it purchased independent provider of fire, security and information and communications technology, GBE Converge Group for a total consideration of £21m, complimenting its recent acquisition of JCA Engineering.
Outlook
Looking ahead Mitie stated: “Our strategy of focusing on Key Accounts growth (supported by a record £19bn pipeline of opportunities), Projects upsell and infill M&A drove a strong performance in the third quarter. We expect good revenue momentum to continue into the fourth quarter, albeit against a very strong prior year comparative for Projects work. As such, Q4 revenue growth is expected to moderate to mid-single digits, still comfortably ahead of the wider FM market.
“Our strong performance, combined with the ongoing delivery of margin enhancement initiatives, means that the Group remains on track to deliver operating profit before other items of at least £190m in FY24.”
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