Transfield to sell assets after H1 loss
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Transfield Services is looking to sell assets and outsource back-office operations as part of its bid to turn around a $247 million half year loss.
The construction and maintenance firm on Tuesday announced plans to sell several of its non-core businesses following a four-month review of its portfolio, workforce, strategy and capital management.
Assets being targeted include Easternwell's minerals exploration and marine geotechnical arms, as well as most of its activities in the Middle East and Asia and its stake in Ratch-Australia Corporation.
"We are cutting parts that are not aligned with strategy or do not meet our margin, capital or growth criteria," chief executive Graeme Hunt said on Tuesday.
Transfield on Tuesday reported a first half net loss of $247 million for the six months to December 31.
This included asset writedowns worth $284.3 million - $169.2 million of which came from its Easternwell minerals exploration division.
Excluding these impairments and amortisation, the company's after-tax profit was $26.9 million, down 38 per cent on the previous corresponding period.
"Our result was disappointing because good performances in key areas of the business were offset by poor performances in other parts," Mr Hunt said.
He said Easternwell minerals arm had been heavily impacted by a recent sharp decrease in exploration by miners, noting that increase competition had seen the use of exploration rigs reach "historic lows".
Mr Hunt said Transfield planned to offload the business, among other non-core assets, over the next two years with the aim of raising more than $100 million.
"It'll be no fire sale, this is all about realising value," he said.
He said Transfield had already delivered $29 million worth of savings in the last four months, with the help of an organisational restructure and improved productivity.
"I now have a clear line of sight of a further $25 million of savings in the pipeline, but there's a lot more to do," he said.
The cost-saving measures include outsourcing or automation of Transfield's back-office functions, organisational streamlining, a reduction in growth and maintenance expenditure, and integrating Easternwell into Transfield's Australian and New Zealand resources and energy business.
"All that said, these are the first steps on a journey and there is much more to do," Mr Hunt said.
The company has revised down its full year net profit guidance to be between $85 million and $90 million.
It had previously forecast an operating profit of between $125 million and $135 million.
Transfield will pay shareholders an unfranked interim dividend of three cents per share.