A year on, the company is beginning to show signs of settling, with a staggering 95.8% rise in pre-tax profits, which hit £605m – despite a 3% fall in revenues, to £11.45bn. Operating profits (its preferred measure of performance) rose 5% to £1bn, beating analysts’ expectations, while costs fell by 9%. Not surprisingly, shares in the company rose by more than 6% this morning.
Chief executive Mark Wilson might be expected to revel in the glory of it all, but in fact he remained cautious, pointing out there were ‘several areas of underperformance’ (mostly geographical: Spain, Italy and Ireland). He added that ‘most of the issues we’re facing are in our gift to resolve… the real issue… is how long it will take’.
Alas, part of that success in cost-cutting has involved 2,000 job losses at the company – about one in 16 positions in the UK, Europe and Asia. Wilson is clearly playing hard-ball: the company has made changes to contracts for its UK workers, cutting redundancy pay from four weeks for every year served to two.
Other cost-cutting measures include disposing of 16 businesses, although Wilson denied rumours it was planning to withdraw from India.
‘We’re committed to Asia as a region,’ he said.
So it’s going to be another tough few months for Wilson, who joined at the beginning of the year. But there’s a sense that the hardest part is over. For now, at least.