Asciano's Botany jobs at risk
Asciano has cut capital spending and brought forward planned Port Botany job cuts as it battles "very soft market conditions", particularly in the general freight sector and its ports division.
These conditions come before heightened competition at Port Botany from next year, when a new competitor, Hutchison, starts operations. Additionally, coal hauler rival Aurizon, the former Queensland Rail keen to grab market share, is increasingly flexing its muscles in NSW.
Despite the soft third-quarter numbers, Asciano told fund managers on Thursday it remained confident that revenue and pretax earnings for the full financial year to June will show growth.
Earnings-a-share growth of 30 per cent remains in hand before "material items", it said. This indicates earnings-a-share of about 32¢, up from 24.7¢ a year ago.
The full-year profit will absorb the "$2 million - $3 million" cost of industrial action in the Hunter Valley, but with the prospect that some redundancy charges may be brought to account for the job losses planned at Port Botany.
The company is automating operations, which will halve worker numbers. An estimated 270 jobs are to be axed.
Initial applications for voluntary redundancy have been brought forward to the fourth quarter ending June, Asciano said on Thursday without providing further details.
Asciano has been locked in dispute over the planned cuts, disclosed after negotiations for its latest enterprise bargaining agreement had been finalised.
The automation and preparations for heightened competition come as volumes handled at the Patricks operations fell 4.3 per cent in the March quarter, with the overall impact of the weakness at Port Botany and Freemantle limited, in part, by growth in Melbourne and Brisbane.
The lower volume at Port Botany was especially notable, however, since it more than wiped out the growth evident in January and February.
General freight handled across Asciano's rail operations was also weak, declining by 3.4 per cent, it said, although total coal volumes rose 22.2 per cent, with particular strength in Queensland.
In NSW "system constraints" were experienced in the Upper Hunter, which hurt the performance, it said. Motor vehicles shipped through its ports also showed growth.
Against the backdrop of weak freight markets, Asciano said it would cut planned capital spending to about $600 million in the year to June, from about $700 million to $800 million planned earlier.
For the year to June 2014, spending will fall to $700 million to $800 million from $800 million to 900 million planned, but will fall back further out to only about $300 million a year.
The planned spending for next financial year will be the peak, it said, reflecting the redevelopment work underway at Port Botany along with catch-up outlays following earlier under-spending.
If the economy remains weak, spending planned for fiscal 2014 will be cut further, Asciano said. The focus remains on cutting costs.