MITIE Group is pulling out of the mechanical and electrical engineering contracting sector to concentrate on the facilities management, healthcare and energy services markets, which it says offer a higher return.
The company made the announcement as it posted its preliminary results for the year ending 31 March 2013, which showed an 8.4% increase in revenue to £1,980.6m and a 5.4% rise in pre-tax profit to £111.1m.
It said: 'We are exiting our cyclical mechanical and electrical engineering contracting businesses, which generated margins well below the group average - business closure costs of £22.1m were incurred, with no further material costs expected.'
Chief executive Ruby McGregor-Smith said: 'We have had another good year with success in achieving organic growth driven by new and expanded contracts, as well as completing a strategic acquisition in healthcare. Whilst the economic environment remains challenging, we have reshaped the business to focus on long-term facilities management opportunities, as well as higher margin healthcare provision and energy consulting, all of which will support our growth aspirations.'
'We expect outsourcing opportunities will continue to grow, with a trend towards more clients seeking to access integrated services. We are positioned to build further on our long track record of sustainable profitable growth.'
MITIE stopped bidding for major one-off m&e contracts last year. In the firm's half-yearly report for the six months ending 30 September 2012, Ms McGregor-Smith said: 'We have reviewed the parts of our portfolio which are affected by the difficult economic conditions and external market pressures, and have concluded that delivering large, one-off mechanical and electrical engineering installation projects directly does not help us deliver our strategy or meet the performance targets of the group.'
MITIE gained entry to the healthcare market in autumn 2012 with the £110.8m acquisition of home care services provider Enara.
