Ar­rival of new In­ter­serve boss fol­lows a fa­mil­iar pat­tern for out­sourcers

The Sunday Telegraph - Money & Business - - Business -

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

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