Bradken flags more job losses
The mining sector is set for more job losses this year with engineering company Bradken flagging it would continue to cut costs to meet the slowdown in the resources boom.
The company, which makes mining equipment such as rigs and railway cars, reported a net profit of $66.9 million on Tuesday, down 33 per cent from a year earlier.
Despite a 10 per cent fall in revenue, it blamed the profit slump on $30.4 million in legal costs relating to a Federal Court case against it.
In March, the company, a director - former NSW premier Nick Greiner - and managing director Brian Hodges were ordered to pay $21.6 million in damages to Swiss group Pala after they were found to have rigged a deal to buy Pala's mining parts manufacturer Norcast for less than it was worth. The company and its directors are appealing.
On Tuesday, Bradken warned it would continue to cut operating and overhead costs, "in line with the lower activity levels and to reduce working capital".
Over the past year it has shed more than 1000 jobs from its Australian and US divisions to counteract the fall in mining investment.
"The first half of full year 2014 will be challenging, but overall we expect the year to be broadly comparable with full year 2013," it said.
Bell Potter Securities analyst John O'Shea estimated the company would shed another 500 jobs by December. He said the number of employees, now 5425, would head towards 5000 in this half.
The market responded positively to the results, sending the share price up 12.4 per cent to $5.89.
Mr O'Shea said investors were buoyed by the company's strong operating cash flow, which was up 80 per cent at $217 million.
"When times are pretty difficult, Bradken has always had a pretty good track record in terms of being able to manage its working capital and pull costs out of the business," he said.
Bradken has fared a lot better than other companies in the sector, partly because it is exposed to the end of the mining food chain - production - rather than the beginning - construction.
But despite the impact of the slowdown, the company said its business strategy remained unchanged.
It will pay a final dividend of 18¢ a share on September 13.