LONDON: Support services company Rentokil Initial Plc. is closing down its workwear and linen operations at Initial Hygiene U.K., which will lead to job losses to 1,700 people.
The company said the operations, comprising 27 cleaning plants and distribution centres across the country, and which have been leading to losses, would be closed on 30 April. It could then focus on its washroom and dustmat business, which the company said is profitable.
The company said in a statement that the unit employs some 2,000 people across the country and up to 1,700 of them could become redundant once the operations are closed down.
Rentokil had planned to sell the business, but the idea was dropped as such a plan could attract regulatory intervention and the resulting uncertainty over timings and terms of sale.
Rentokil said it will take charge of around 50 million pounds to cover the cost of employee exits and much of it will figure in the 2005 accounts. The unit had made an operating loss of 5 million pounds on sales of 55 million pounds in 2004.
The company has similar textile operations in Europe, which it said it intends to continue.
Doug Flynn, Rentokil's chief executive, said the company would try to place the people who would face the axe in other units, but there are no guarantees.
Flynn, who was brought in recently to turn around the company, has initiated a restructuring of the company's operations. The company had sold its conference venues business for 325 million pounds recently and it has acquired a U.S. pest-control firm for 79.4 million pounds.
Apparently, the decision to sell the linen and uniforms business was taken by company chairman Brian McGowan in November 2004. Flynn, who joined the company later, concurred with the decision.
Posted
on : Thu, 26 Jan 2006 19:55 GMT | General News
By : Pippa Fielding
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