Micro Focus targets up to $500m of cost cuts

Micro Focus International said it was targeting up to $500m of cost cuts and at least flat revenue by the end of 2023 as the company seeks to turn its business round.

The FTSE 250 business software group has struggled since buying Hewlett-Packard's software business in 2017 for £8.8bn. It is in the second year of a three-year turnaround plan.

Micro Focus said it had completed the Hewlett-Packard integration after two quarters on a single platform. Revenue is expected to drop 5% in 2021 and to be flat or better by the end of 2023, it said. The company announced a medium-term revenue growth target of 1-2%.

Costs will drop from an expected $1.9bn at the end of 2021 to about $1.5-1.6bn in two years' time, Micro Focus. The company will spend $200m to make the savings. Free cash flow will be $500m by the end of 2023, it predicted.

Stephen Murdoch, chief executive, said: "Following the successful implementation of the enterprise-wide platform in H2 2021 we are now able to unlock substantial cost efficiencies, a key step on our path to generating $500m adjusted free cash flow annually by the end of FY23."

Micro Focus shares rose 0.5% to 378.4p at 08:29 GMT. The company will give more details in a presentation to analysts and investors on Tuesday.