Mitie Group Shares Fall Despite Solid H1 Performance; Announces Forest Group Acquisition

Mitie Group PLC (LON: MTO) has announced robust interim results for the six months ending September 30, 2025, signaling strong momentum and exceeding expectations in its strategic plan.

The facilities management and professional services company is demonstrating significant growth, driven by record contract awards and a strategic acquisition. However, the stock declined in early Thursday trading following the news.

Revenue climbed 10.4% to £2,677 million, up from £2,426 million in H1 FY25. Organic growth contributed 6.4%, fueled by net contract wins, projects, and strategic pricing adjustments, along with a 4.0% boost from acquisitions. Operating profit before other items increased by 8% to £109 million, compared to £101 million in the prior year.

The company's order book grew by 7% to £16.5 billion, with a book-to-bill ratio of 141% and renewals at 86%. The bidding pipeline surged 39% to £33.0 billion, with over 70% expected to be awarded in the next 18 months. Basic earnings per share (EPS) before other items rose 6% to 5.7p, reflecting higher operating profit and share buybacks.

Mitie is rewarding shareholders with an 8% increase in the interim dividend to 1.4p per share. A new £100 million share buyback program is underway, with 15 million shares already purchased for £24 million. Free cash flow generation improved to £52 million, up from £34 million in the prior year.

The acquisition of Forest Group Holdings, a specialist engineering business focused on commercial refrigeration maintenance, for a maximum cash consideration of £7 million, expands Mitie's ‘Intelligent Engineering' proposition.

In the 12 months ended January 31, 2025, Forest delivered revenue of £7.6 million and EBITDA of £0.5 million. The integration of Marlowe, delivering ‘Facilities Compliance' market leadership, continues to progress well, with synergy delivery on track.

Mitie's performance is driven by several factors, including: Increased investment in sales and marketing, a focus on higher-margin projects and compliance capabilities, and the implementation of customer-facing technologies and Artificial Intelligence (AI). AI is already delivering a positive impact by automating workflow and workforce management.

CEO Phil Bentley stated, “At the start of our Strategic Plan, our ambition was to increase revenue by £1.2bn to £5.6bn in FY27 through high single digit annual revenue growth. We are comfortably on track to exceed this target, having delivered double digit growth over several successive periods, including in the first half of this year,” reinforcing the company's growth-oriented strategy.

Mitie has reiterated its full-year guidance for operating profit before other items of at least £260 million and free cash flow of at least £120 million. The company's robust performance, strategic acquisitions, and positive outlook suggest a promising future, potentially opening new trading opportunities.