A swingeing restructure from Kerry Stokes’ main listed company, Seven Group Holdings (SVW) with more than 600 job losses announced, taking the number cut from the huge Caterpillar franchise operator to close to more than 1,000 in the past five months.
Seven Group yesterday revealed the revamp and an earnings downgrade in a statement to the ASX.
The shares fell 1.5% or 12c to $7.59 after the statement was released early yesterday afternoon.
Seven Group again lowered its earnings guidance, as the slowdown in mining services hit its WesTrac business which is cutting 630 staff.
Last week Ausdrill and Forge both revealed problems with falling revenue and key contracts in the mining sector. Other companies in the mining service sector are also doing it tough.
The staff cuts, to be implemented in the next month, will cost $13 million and are in addition to 375 redundancies announced earlier this year at a cost of $8 million.
"WesTrac has implemented a series of efficiency and productivity initiatives over the past twelve months in an effort to streamline its cost base, but these measures alone have not been sufficient in view of continuing challenging market conditions," Seven Group said in a statement to the ASX.
The cuts reflect the newish CEO for the company, Don Voelte, who used to be CEO of Seven West media (where there were smaller cuts last year) and before that, the long time CEO of Woodside.
SVW YTD – Seven Group cuts jobs for a second time in five months as profits soften
Seven said it now expects overall full year underlying earnings to be at the lower end of its previous guidance of 30% to 40% below the prior year ‘‘with a more marked reduction in the first half given the record comparative first half’’ in 2012-13.
A year ago WesTrac’s Australian business reported a record result for the 2011-12 financial year and accounted for more than 66% of the company’s earnings as the company’s Chinese business hit rough times.
In August, Seven Group said it expected WesTrac’s full year earnings to fall by more than a third due to the continuing slowdown in mining investment. Now it will be closer to 40%.
Seven said in June (before revealing the 2012-13 profit) that it had lowered its earnings forecast and moved to slash 350 jobs as a result of its WesTrac mining and construction equipment business encountering "challenging market conditions".
Those have obviously continued into 2013-14 and it is going to be a tough year for Kerry Stokes and his company.
His other major listed group, Seven West Media, (which owns the market leading Seven TV Network, magazines and West Australian Newspapers), holds its AGM in Sydney today.
Will there be an earnings downgrade, or as analysts expect, the group will confirm that it is on track, but facing another tough year?
