Asciano's growth hopes tempered
Asciano has reduced its expectations for growth on the country's container wharves next financial year because of challenging trading conditions.
The ports and rail company still expects its pre-tax earnings and revenue for the second half of this financial year to be higher than in the first half, but has emphasised the tough economic environment.
Asciano chief executive John Mullen told analysts during a site visit in New South Wales on Tuesday that trading conditions remained challenging, especially for transport such as its bulk-rail operations, which were linked to a "soft domestic economy".
It has revised down its expectations for market growth in container volumes from 4 to 5 per cent annually to 1 to 2 per cent. Container volumes remained "slightly negative" in the second half.
Asciano's Patrick stevedoring operations and DP World also face a threat from Hutchison Ports, which has begun operations in Brisbane and will open a container terminal in Sydney next year.
Asciano has been preparing for the arrival of Hutchison with plans to replicate its automated terminal in Brisbane at its operations at Port Botany in Sydney.
It already has begun laying off 270 of its 511-strong workforce at Port Botany as it switches from manned to automated straddles, which shift containers around the port terminal.
Asciano will now book all of the redundancy costs - about $17 million after tax - this financial year.
Construction has also begun on the $383 million redevelopment of its Port Botany container terminal. It is on track to be completed in July next year.
Mr Mullen said the company was responding to the tough conditions by focusing on cost cutting, and reducing its capital expenditure spending.
Shares in Asciano closed 3 per cent higher at $4.84 on Tuesday.