Rentokil, the support services group, is to make up to 1,700 UK workers redundant after deciding to close its textile operations that provided workwear and linen to businesses.
Doug Flynn, the chief executive, who this week announced the company's biggest acquisition in years, said the textile operation was Rentokil's most intractable problem. The company had failed to find buyers for it, and investing to try to turn it around would be too expensive, he said. The unit rents and cleans work clothes and linen, such as table cloths.
"There is no other parallel to this situation in the group, where you have a business [textiles] in minor meltdown. There are some businesses that have to be fixed, such as UK pest control, but nothing like this," Mr Flynn said.
Rentokil has similar textile operations in Europe, which Mr Flynn said would be maintained.
The UK textile business, which sits within the hygiene division, lost £9m last year on turnover of £55m. The unit employs 2,000 across the UK, 300 of whom will be kept, as a small part of the business will remain.
Mr Flynn, brought in as chief executive last year, said Rentokil would attempt to find jobs for others in the group but there were "no guarantees". The company, which has 40,000 UK employees, will take a charge of £45m-£50m over the closure.
The bad news for Rentokil's textile workers could prove a fillip for the business's two main rivals - Johnson Service, the dominant player in workwear, and Davis Service, which leads the linen market. Competition issues meant that neither of these was thought likely to be permitted by regulators to buy Rentokil's business.
Analysts at Deutsche Bank said: "Rentokil is gradually solving some of its structural problems and we think that this will lead to a rebound in margins, which the market consensus does not expect."Reuse content