Excuse me for being cynical, but shouldn’t we be over the now usual ’new CEO’ kitchen sinking of a company?
Take beach sands miner, Iluka Resources.
There’s a new CEO in Tom O’Leary and he stuck to the now familiar script of a review of the company’s performance and assets, and then a slashing of jobs, asset vaules and other costs, all of which will help make his subsequent performance look better.
So Iluka will cut 90 jobs amid expectations of a 2016 full-year net loss of up to $230 million as a result of impairments and charges in the wake of closing a lengthy takeover battle for an Africa producer.
The company said the loss would range from $220 million to $230 million after the $200 million plus impairment which wasn’t linked to the takeover, but the company’s existing assets in Australia and the US in particular.
That means a sharp slide in revenue and prices for the year to December (on tp of the impact of the impairments and other costs) would see the company incur a loss from operations after reporting a net profit for 2015 of $53.5 million.
The miner recently completed a $375 million takeover of miner Sierra Rutile Limited, and it said in its December production report, released yesterday, that it will take non-cash impairments of $201 million, cut costs and reduce or close a number of exploration activities following a review of its business.
The company’s 2016 revenue fell 13.6% to $708.5 million due to lower zircon and ilmenite sales and lower prices.
Iluka, which is world’s largest producer of zircon, and the second-largest producer of titanium dioxide feedstock rutile and synthetic rutile, said the write-down related mainly to its idled operations in Australia’s Murray Basin.
“Our review has been aimed at generating shareholder value and, with the completion of the Sierra Rutile acquisition, Iluka has added a large, long life asset with strong growth potential,” the company’s new Managing Director Tom O’Leary said in a statement.
"It’s against that backdrop that we’ve reviewed the likelihood of developing some of Iluka’s mineral deposits in Australia and the United States," O’Leary said.
Mr O’Leary took over as managing director from long-serving boss David Robb in September last year. So the kitchen sinking has taken a whole four months!
The company said it would update investors on plans to develop its Cataby mineral sands deposit north of Perth and the status of the integration of its Sierra Rutile operations when it releases its full-year results next month.
Iluka shares were down 3% at $7.54.
