Jun 12, 2017

Mitie turns to microchipped mops in effort to freshen margin

In cleaning, the operating margin fell from 6.2 per cent to 1.5 per cent, which Mitie blamed on commoditisation, low barriers to entry, and price competition. In security, the higher cost of providing receptionists cut the margin from 5.7 to 4 per cent. In catering, expensive outdoor festival food shrank the margin from 4.3 to 3.5 per cent. Even in professional services and those new "Connected workspaces", the operating margin fell below the 5 per cent threshold. If Mitie can polish its overall margin back to 5 per cent, analysts calculate that earnings per share will rise to 20.5p. However, assuming a price to recovered earnings ratio of 12 times, investors have already priced that in.

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