Mears Group cuts profits forecast in wake of Grenfell Tower fire


Social housing maintenance company says London tower block tragedy has made clients delay new contracts.

The UK social housing maintenance company Mears Group has downgraded its profit forecast and slashed its full-year revenue predictions as its clients delay new contracts following the Grenfell Tower fire, The Guardian reports.

The company, which carries out repair and maintenance work for properties belonging to local authorities and other social housing landlords, said new orders were on hold as authorities focused on ensuring all their properties were safe and compliant in the wake of the June fire, in which 80 people died.

Mears, which provides services across the UK – delivering more than 6,000 repairs every day to a portfolio of more than 1m homes – said it had had no involvement with Grenfell Tower, nor with any properties run by Kensington and Chelsea council.

But it warned that the “tragic events at Grenfell Tower will impact the housing division later this year as clients review the commissioning and safety practices at their properties”.

This would cut the revenue it had expected to make this year from housing by £30m, to £800m. It said that would result in a lower than previously expected annual profit, although it has not disclosed its profit forecast. The group posted revenues of £471m and pre-tax profit of £13m for the six months to June.

UK authorities are currently reviewing building and fire safety rules after police said they believe the cladding panels added during a refurbishment of Grenfell Tower may have contributed to the rapid spread of the fire.

The Mears chief executive, David Miles, said: “While the likely revenue shortfall for the full year is frustrating, it is entirely understandable in the circumstances and the group will be working closely with its partners and clients at this time to address their immediate priorities.” He said delays in procurement decisions by housing clients were expected to be temporary and would not impact its long-term order book.

Mears, which was set up in 1996, employs more than 13,000 people in the UK. It also has a smaller care division providing support and help for older and disabled people who live independently in their own homes.

The group’s shares closed down 7.6 per cent at 448p, having been down by 11 per cent at one stage.

Russ Mould, an investment director at AJ Bell, commented: “Delays to social housing contracts in the wake of the Grenfell Tower disaster mean that Mears will miss its budgets for the year and add to a litany of woe for the support services sector, where firms such as Aggreko, G4S, Interserve, Carillion, Serco and Mitie have already badly disappointed, albeit for a wide range of different reasons.”