Mears Group (MER) H2 2024 earnings summary

Executive summary

• Revenue grew 4% year-over-year to £1,132.5m, with profit before tax up 37% to £64.1m and diluted EPS up 53% to 48.9p.

• Operating margin improved to 6.4% from 4.8%, reflecting strong operational performance and margin discipline.

• Order book increased to £3.0bn, with significant new contracts including North Lanarkshire Council and Moat.

• Strategic review completed, identifying growth opportunities in maintenance-led activities and Central Government work.

Financial highlights

• Revenue: £1,132.5m (+4% year-over-year); profit before tax: £64.1m (+37%); operating profit: £72.6m (+39%).

• Adjusted operating margin (pre-IFRS 16): 5.6% (2023: 4.7%).

• Dividend per share: 16.0p (+23%); average daily net cash: £59.6m (2023: £76.5m).

• EBITDA to cash conversion: 101% (2023: 123%).

• Net asset reduction due to £65m shareholder distributions, but strong profit generation replenished much of the value.

Outlook and guidance

• 2025 focus on strengthening market position in housing services, with solid growth in Local Government maintenance expected.

• Anticipates some normalisation in management-led division revenues, but reduction slower than expected.

• Confident in maintaining adjusted pre-IFRS 16 operating margin within 5-6% range.

• Guidance raised: expected 2025 revenue no less than £1,050m and adjusted profit before tax no less than £50m.