Transpacific to clean up structure as chief quits
Transpacific said it forecast a net profit of between $46 million and $53 million for this financial year in a "difficult trading environment". The company has been hit by weaker economic conditions and cost-cutting drives in the industrial and mining sectors.
Transpacific projected earnings before interest, tax, depreciation and amortisation (EBITDA) of between $405 million and $415 million, below the previous financial year's $440.2 million.
The shares closed 11.8 per cent lower at 78.5¢ on Monday.
"Market conditions were tough in the first half and those conditions have generally deteriorated further," Transpacific's outgoing chief executive Kevin Campbell said. He was leaving the company as he was no longer able to "provide the longer-term commitment needed to drive the continuing transformation of the business".
It is understood Mr Campbell, who joined in September 2010 as its chief financial officer before becoming CEO four months later, resigned for personal reasons. He commuted between Queensland, where Transpacific is based, and Melbourne, where his family lives.
Transpacific, which owns the Cleanaway landfill businesses, said it would continue to focus on cost-cutting and debt reduction, and was undertaking a detailed business and operational review. "It will result in the sale or closure of a number of underperforming operations," Transpacific said. The company axed 200 jobs this year.
Moelis Australia analyst Adam Michell said the lower earnings expectations were not a surprise. "It's a general reflection of the broader economy rather than something being terribly wrong inside the company," he said.
Mr Michell said analysts would be looking to see if the new chief, who has not been appointed, would bring in a new strategic outlook.
"At the moment, the focus is very much on internal efficiencies and gains, and debt control rather than anything major," he said.
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Transpacific forecast a net profit between $46 million and $53 million for the financial year, saying this came in a "difficult trading environment" driven by weaker economic conditions and cost-cutting in the industrial and mining sectors.
The company projected EBITDA of $405 million to $415 million, down from $440.2 million reported in the previous financial year.
Shares closed 11.8% lower at 78.5 cents on the day the company issued the guidance and announced its chief executive's resignation.
Kevin Campbell said he was leaving because he could no longer provide the longer-term commitment needed to drive the business transformation; the article also noted he resigned for personal reasons and had been commuting between Queensland and Melbourne. He joined Transpacific in September 2010 as chief financial officer and became CEO four months later.
Transpacific said it is focusing on cost-cutting and debt reduction and is conducting a detailed business and operational review, which will result in the sale or closure of a number of underperforming operations. The company also cut about 200 jobs this year.
The article noted Transpacific owns the Cleanaway landfill businesses as part of its waste management operations.
Moelis Australia analyst Adam Michell said the lower earnings expectations reflected the broader economy rather than something being seriously wrong inside the company. He added analysts will watch whether the incoming chief (not yet appointed) brings a new strategic outlook.
Investors should watch for the appointment of a new chief and any change in strategic direction, updates from the company's business and operational review (including announced sales or closures), progress on cost-cutting and debt reduction, and future earnings or guidance revisions that reflect the tougher trading environment.
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