Is rail group, Aurizon (AZJ) planning another round of cost cuts with losses to be announced in the next six weeks?
The company yesterday revealed a number of changes to its senior management structure as part what it calls “its ongoing transformation program.” CEO Lance Hockridge said that as a result of the restructuring, four of his direct report executive roles have been merged into two, reducing the number of Executive Vice President direct reports to five.
He said the merging of functions and reduction in senior management reflected the current tough market conditions (especially due to weak demand for coal, its primary haulage commodity) and would help deliver greater efficiencies in Aurizon’s drive to continued improvement in financial performance.
So effective immediately, the company said its Strategy and Business Development function will be merged with the Commercial and Marketing function, and the new Customer and Strategy function will assume the responsibilities of both existing functions, under Mauro Neves.
And David Welch the current Acting EVP for Strategy and Business Development will report into Mauro as Vice President Market Development.
Mr Hockridge said the functions of Enterprise Services and Human Resources would also be merged by the end of the calendar year.
“In light of this change and the reduction in EVP positions, current Executive Vice President Enterprise Services Jenny Purdie has decided to leave
Aurizon at the end of this month and Executive Vice President Human Resources John Stephens at the end of the year.
“As we transition to the new structure, John will continue in his current role and Steve Mann will act in the role of EVP Enterprise Services. A recruitment search, including internal candidates, will be undertaken for the new role leading the merged function.”
Mr Hockridge said further detail on the new structure and its benefits would be provided as part of Aurizon’s Full Year results presentation on August 15.
Aurizon shares rose 3% to $4.93 yesterday.
Back in February, Aurizon shares fell 11% to $3.42 on the 15th when it revealed a loss for the December half year.
Aurizon reported a net loss of $108 million after taking impairment charges of $426 million in its results, mainly related to its iron ore rail and port project in Western Australia, and delays to a planned rail network in Queensland’s Galilee Basin.
The company in December signalled an impairment of up to $240 million in the half year results, but said it had been forced to write down a further $186 million.
Underlying earnings for the six months ended December 31, which exclude the one-off charges, fell 17 per cent to $403 million.
Revenue fell 11% from a year ago, as a continuing slump in commodities prices (especially coal) saw most of its mining customers moving to cut back volumes and slash spending.
Aurizon trimmed outlook for coal volumes for the second time, narrowing its forecast to between 204 million and 209 million tonnes for the year to June 2016.
