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Mitie warns on 2017 profit after £100m pre-tax loss in H1 2016

Mitie has warned of a further fall in profit in 2017 after posting a major pre-tax loss of £100.4m for the first half of the year.

The outsourcing business said it expected underlying earnings for 2017 to be below management’s previous expectations as a result of market uncertainty.

It posted an £100.4m pre-tax loss for the six months to 30 September, which it said was largely down to writedowns totalling £117.2m on the value of its healthcare services business.

“Downward pressure on homecare charge rates and a reduction in care volumes has resulted in increased healthcare losses,” it added.

The group has therefore decided to withdraw from the domiciliary healthcare market and has placed its healthcare business under strategic review.

Revenue stood at £1.09bn for the period, compared with £1.12bn for the same period the year before, while operating profit dropped to £35.4m, compared with £58.1m in H1 2015.

This is the second time in two months the group has warned of falls in profit, after it said “significant economic pressures” would hit 2017 profit in a trading update in September.

It also follows last month’s announcement from Mitie chief executive Ruby McGregor-Smith that she will be leaving after 10 years with the business.

She will be replaced by former Cable & Wireless boss Phil Bentley on 12 December.

On today’s results, Ms McGregor-Smith said: “The first half of this year has been difficult but we are not alone in facing significant macroeconomic challenges.

“The steps we have taken to counter these impacts include the restructuring of both frontline and support functions across FM and the decision to withdraw from the domiciliary care market.

“Second-half performance is expected to improve with our new operating model as we adapt to market conditions.”

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