Jim Armitage: More elbow grease required for this kitchen-sink job at Mitie
What has Mitie’s chief exec-elect Phil Bentley let himself in for?
He’s spent the past two-and-a-half years running CWC’s sexy telecoms business in the Caribbean (weather today: 24 degrees and sunny). Next month, he’ll be mulling the margins on bog cleaning in Barnsley.
And, boy, do those margins look thin.
In just a year, profitability at this troubled toilet tidier have plunged from 5.2% to 3.2%. Much is due to a wage bill that can only go upwards thanks to the National Living Wage, apprentice levy and pension costs.
Add to that concerns about how Mitie books its revenues and it’s clear the hedge funds who’ve made it the most shorted stock in the universe were right.
The surprise on Monday wasn’t that Mitie was in trouble — recent profit warnings have said as much — but that Ruby McGregor-Smith launched a kitchen-sink job on the company just as she’s leaving.
City tradition has it that widescale writedowns and disposals are left to the new guy.
In Mitie’s case, the much-needed sale, or possibly closure, of Mitie Healthcare seemed like an obvious target for Bentley’s first squirt of corporate Cif. So, for McGregor-Smith to announce it as she quits after nearly a decade in the job is most peculiar.
But for investors thinking today’s clearout may mark a turning point, beware. Bentley is no fool: if he’s any sense, he’ll get more bad news out of the way when he takes over.
Cleaning up Mitie will be a long and mucky task. Steer clear until the new Mr Mop has got his Marigolds on.
