Jobs and costs cuts continue at Transfield

TRANSFIELD will continue to axe jobs in another wave of cost-cutting.

A Transfield Services drilling rig.

CONSTRUCTION and maintenance group Transfield Services will continue to axe jobs, cut costs and sell assets, after reporting a $250 million annual loss.

Transfield cut 359 jobs in the 2012/13 financial year. Another 180 jobs are to go this year, with 120 of them already gone. The rest will go by December.

The company expects its 2012/13 cost cuts will mean its cost base at the start of 2013/14 will be $81 million lower.

Transfield will also seek to further reduce its $566 million debt during 2013/14 through business and asset sales.

"We're into our fifth wave of cost reduction activity, with more to come," Transfield chief executive Graeme Hunt said on Wednesday.

Activity levels in 2014 are expected to be similar to 2013 as economic conditions remain challenging across many of Transfield's markets.

But growth in the coal seam gas (CSG) and upstream oil and gas sectors is expected to outpace growth in other sectors.

In May, Transfield downgraded its profit guidance, blaming a slowdown in the mining and process industries, and a focus by all companies on cutting costs and capital expenditure.

Mr Hunt said the company concluded 2012/13 having achieved many of its goals and was now benefiting from restructuring.

The group had met its revised earnings guidance, and its core operations in Australia and New Zealand, and in its Easternwell Energy business, had performed well.

Transfield's $250 million net loss for the year ended June 30 compared to a profit of $84.8 million in the previous year.

The result included $16.2 million in post-tax restructuring and redundancy costs, and $295.5 million of impairment charges.

The impairment charges related mainly to Transfield's Easternwell Minerals Exploration and Marine Geotechnical businesses ($175 million) and its US downstream maintenance business ($81 million).

Transfield also recorded an impairment charge of $31 million on its Chilean business.

Before impairment charges, Transfield's profit was $62.5 million, in line with its guidance.

Transfield expects a profit before amortisation of $65 million to $70 million in 2013/14, driven by its 2012/13 cost reductions.

Shares in Transfield were 6.75 cents, or 8.33 per cent, higher at 87.75 cents at 1215 AEST.