Micro Focus targets up to $500m of cost cuts
Micro Focus International
532.00p
16:40 30/01/23
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.
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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.