Jobs, asset sales on line at Aurizon
The company, formerly known as QR National, also announced that it will retain its small intermodal business that specialises in shifting container freight. Analysts had speculated that Aurizon would sell or close the business, which has struggled to turn a profit since it was established in 2007.
Chief executive Lance Hockridge sought to allay jitters about subdued growth in China - the final destination for most of the coal Aurizon hauls from mines to ports in NSW and Queensland.
"We certainly do not deny that there is a more subdued environment," he told investors at a briefing. "It is, in our view, a low-growth environment but it is not a zero-growth environment. We just caution that while the world is more subdued it certainly hasn't come to an end from a growth point of view."
Almost three years since it was floated, Aurizon will begin another round of cost-cutting aimed at shedding the last remnants of its past as a government-owned rail business. The company would not put a figure on the likely number of job cuts but revealed it will strip out $100 million in "support costs" over the next two years - more than half of which will be from reducing its labour bill.
The cuts to its labour bill will involve a combination of laying off workers, not replacing staff who leave of their own accord, outsourcing work to third parties and reducing contractors.
Aurizon will also reduce real estate costs by up to $25 million, partly by selling property it believes it no longer needs.
Aurizon is targeting more than $130 million in "productivity improvements" over the next two years, including up to $70 million in labour savings.
The company has made clear it is seeking greater "labour flexibility" from renegotiating enterprise agreements over the next two years. All but one of Aurizon's 19 labour agreements, which cover about 88 per cent of its 8000-strong workforce, will expire by the end of next year.
Aurizon has already reduced its workforce by about 1600 over the past two years through voluntary redundancy programs. However, the impending round of job cuts is expected to be from corporate ranks and support roles rather than frontline staff.
The company also disclosed that it had hauled almost 194 million tonnes of coal in the year to June, which was within its guidance.
Shares in Aurizon rose almost 4 per cent to $4.55 on Thursday, their highest level since the Queensland government relinquished control in late 2010.
Frequently Asked Questions about this Article…
Aurizon said it will strip more than $230 million in costs over the next two years. That includes $100 million in support-cost reductions (with more than half coming from lower labour costs), up to $25 million from reducing real estate costs (including property sales), and more than $130 million in productivity improvements — which includes up to $70 million in labour savings.
Yes. Aurizon confirmed job losses as part of its cost program but did not give an exact number. The company plans to reduce its labour bill through a mix of layoffs, not replacing staff who leave, outsourcing work and reducing contractors. The article says the next round of cuts is expected to come mainly from corporate and support roles rather than frontline staff. Aurizon has already reduced its workforce by about 1,600 over the past two years via voluntary redundancy programs.
Yes. Aurizon plans to reduce real estate costs by up to $25 million, partly by selling property it believes it no longer needs as it moves to streamline the business.
Aurizon said it will retain its small intermodal business, which specialises in shifting container freight. Analysts had speculated the unit might be sold or closed because it has struggled to be profitable since it was established in 2007.
Aurizon acknowledged a more subdued environment in China — the final destination for most coal it hauls — but CEO Lance Hockridge emphasised it is a low-growth, not a zero-growth, environment. The company is signalling caution but not an expectation of no growth.
Aurizon disclosed it hauled almost 194 million tonnes of coal in the year to June, which the company said was within its guidance.
Aurizon is seeking greater labour flexibility by renegotiating enterprise agreements over the next two years. The company has 19 labour agreements that cover about 88% of its roughly 8,000-strong workforce, and all but one of those agreements will expire by the end of next year, creating an opportunity to renegotiate terms.
Shares in Aurizon rose almost 4% to $4.55 on the day of the announcement, reaching their highest level since the Queensland government relinquished control in late 2010.
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