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Mitie pledges to cut work in low-margin markets

Mitie will continue to reduce its exposure to markets that do not deliver high enough margins following its move away from major M&E projects, it said today.

The firm said it has seen “fundamental changes” in its sectors “which in some cases we believe are structural”. 

“Whilst we see significant opportunities in many areas - for example, within energy and integrated facilities management as well as healthcare - we believe some other areas will continue to be challenged.

“Going forward, we will actively seek to divest of cyclical businesses which are unable to reach our margin targets in the long term.

“We are continuing to reduce our activities in our cyclical mechanical & electrical engineering contracting businesses in certain regions of the UK that deliver large one-off projects.”

It said core FM is performing well, with a growing order book.

The company said: “Despite on-going weak economic conditions affecting our more cyclical markets and some delays in energy infrastructure projects, we remain very positive about the range of outsourcing opportunities across our key markets.

“We are confident that we will continue to build on our long track record of sustainable profitable growth.”

At 30 September 2012, 98 per cent of budgeted revenues for the current financial year was secured.

The private sector continues to provide significant opportunities, including major contracts with Lloyds and BSkyB.

The firm is also focused on public sector markets, including healthcare, justice, local authority and social housing.

It acquired healthcare firm Enara for £110.8m on 9 October 2012.

Mitie has also raised £151.6m with an issue in US private placement loan notes.

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