Interserve swings to loss as outsourcer targets £50m in cost savings
The company has embarked on a restructuring programme.
Outsourcer Interserve has swung to a loss as it scrambles to find £50 million in cost savings.
The company made a £6 million loss in the half-year ended June 30, as compared with a profit of £24.6 million during the same period last year.
Shares fell 3.3% following the announcement.
Revenues were down 9.7% from £1.64 billion to £1.49 billion.
The outsourcer has embarked on a restructuring programme, its so-called “Fit for Growth” initiative, and said this would deliver £15 million in savings in 2018, with £8 million saved in the first six months of the year.
Interserve is targeting between £40 million and £50 million in yearly savings through the programme by 2020.
The group also completed a refinancing, securing loan facilities to see the business through to 2021.
However, net debt had widened year on year from £387.5 million to £614.3 million.
Neil Wilson, analyst at Markets.com, said: “Being an outsourcer doesn’t get any easier.
“Interserve’s half-year numbers suggest that, while management is confident its ‘Fit for Growth’ restructuring is working, the numbers look decidedly skinny.”
Chief executive Debbie White said the management team had taken action to stabilise the business, and that its refinancing put the company on a “firmer financial footing” as it restructures.
“Today we have a strategy that provides a clear direction, leveraging our areas of strength, where Interserve can provide compelling customer propositions, delivered with rigorous operational and financial discipline,” she said.
“Whilst there remains a significant amount of work to do, we have energy and momentum in the business, as evidenced by the significant new contract wins secured in the first half of the year.”