Gold prices steady ahead of Fed decision; weekly weakness noted
Investing.com -- Mitie’s shares rose over 4% on Wednesday following a strong fourth-quarter performance that exceeded revenue expectations, an upgrade to its fiscal 2025 EBITA guidance, and the announcement of a £125 million share buyback program.
The facility management company’s solid revenue growth, boosted by a new contract win with the Department for Work and Pensions, along with improved cash flow projections, helped drive the positive stock movement.
For the fourth quarter, Mitie reported turnover of £1,350 million, which was 3% higher than consensus expectations of £1,311 million.
The company posted 7-8% organic revenue growth, which, while below Jefferies’ estimate of 9%, still reflected strong performance.
The overall reported growth for the quarter was 9%, supported by a 2% contribution from mergers and acquisitions.
Mitie’s order book grew during Q4, with £2.2 billion in new business added, including a £1 billion contract win with the Department for Work and Pensions, which is expected to generate £136 million annually.
This addition is part of a broader trend of strong sales momentum, with the bid pipeline at record levels, indicating further growth potential.
The company also upgraded its full-year fiscal 2025 EBITA guidance, now targeting £230 million, up from the previous £225 million estimate, aligning with consensus expectations.
Mitie is projecting an EBITA margin of approximately 4.5%. In addition, the company raised its free cash flow guidance for FY25 to £135 million, well above the previous forecast of over £100 million.
A strong Q4, delivering £59 million in FCF, drove a significant improvement in the financial outlook. This resulted in a total FCF of £59 million for the first nine months of FY25.
Mitie also reported a £125 million share buyback program, which is expected to be accretive to earnings per share by 5-7%.
This move flags the company’s solid financial position and its focus on returning value to shareholders.
Regarding cost management, Mitie expects lower national insurance costs than initially anticipated, now forecasting £50 million for FY26, down from the previous £60 million estimate.