Arrival of new Interserve boss follows a familiar pattern for outsourcers
THERE is something very familiar about Debbie White’s arrival this week as chief executive of struggling contractor Interserve. In the last couple of years, a cycle has been established in this sector that goes something like this: outsourcer overstretches itself, a profit warning follows, the boss departs, a new leader arrives to simplify strategy and prune unprofitable contracts, investor faith and returns are restored.
Fast turning into a classic case study of recovery in this world has been Balfour Beatty, which under Leo Quinn looks unrecognisable from the accident-prone builder of not so long ago. At Serco, Rupert Soames’ Churchillian leadership has been slower to take effect as political uncertainty clouds the awarding of some public sector work. The question is at what point investors should climb on board during such a fall and rise. In almost all cases, these crises that test a company’s credibility and its balance sheet are not terminal. Over the long term, these bumps in the road present a buying opportunity.
Take Mitie, the facilities manager that runs Channel 4’s reception desk and acts as caretaker at Gatwick Airport, among numerous tasks. The outlook was grim last September when it warned operating profit for the year would be “materially below” expectations. The stock dived on the day but began recovering almost immediately. Mitie’s cause was aided by the announcement in mid-october that British Gas veteran Phil Bentley would replace long-time boss Ruby Mcgregor-smith. By the time he took office in December, the shares were 24pc higher than their trough. There have been reverses since – notably in January when Bentley gave his early