Mitie Group said its FY operating profit is now expected to be materially below management's previous expectations.
It cited a continuation of the pressures experienced in the first half and further one-off costs of organisational change associated with our cost efficiency programmes, which are expected to total up to £10m in the year.
"For the full year, we continue to expect group revenues to show a small amount of growth compared to the prior year, in line with previous guidance. This is a result of the commencement of new contracts and seasonal factors in the second half offsetting revenue declines in the first half," it said.
"For the year as a whole, we expect modest growth in the Facilities Management business which will be offset by contraction in Property Management and Healthcare."
"During the trading period from 1 April 2016 to date, Mitie has secured some important new contracts in its core Facilities Management business, where our long term strategic positioning, order book and pipeline remain strong.
"However, in the short term we continue to experience the effects of significant economic pressures. These include lower UK growth rates, changes to labour legislation and further public sector budget constraints, and uncertainty both pre and post the EU referendum.
"We have taken strong action to counter the impact of these pressures by making changes now to the way we operate and initiating cost efficiency programmes across the group. These positive changes will help to ensure the long term competitiveness of the group and its service offering.
"Whilst we have seen some positive trends and contract awards in the year to date, it is our expectation that the pressures we are facing in our markets will impact our trading results during this financial year ending 31 March 2017, most significantly in the first half.
"When compared to the same period last year, in the first half we expect revenue to be modestly lower and operating profit to be very significantly lower.
"This is specifically due to a reduction in higher margin project work volumes and discretionary spend by clients, pricing and cost pressure, a deterioration in the trading performance of our local government facing Healthcare and Property Management businesses, and the in-period costs of implementing efficiency programmes of up to £5m.
"Operating profit in the second half will reflect the expected improvement in revenue and associated gross margin in that period driven by factors such as the impact of contracts secured in the last 12 months and by seasonal services and maintenance programmes.
"It will also reflect the expected benefit of gross cost savings which we currently estimate to be in the region of £15m in the second half based on our detailed plans. These savings will result from the combination of our hard and soft facilities management businesses and a number other efficiency programmes initiated across the group."