Transfield cuts jobs, profit outlook

The mining downturn and sluggish resources spending has led Transfield Services to cut its profit estimates for the second time this year to as low as $62 million for the year to June.

The company now predicts a net profit before amortisation charges and write-offs of $62-65 million, a considerable downgrade from the $85-90 million forecast indicated earlier.

The company also announced it would slash 113 jobs, the SMH reported.

Transfield pointed to the mining and resources sector downturn for the cuts, coupled with continuing pressure from customers to slash costs and charges for the considerably decrease in its earnings outlook.

Regardless, the company said its CSG sector activity is still strong.

Transfield follows other companies who have also downgraded their earnings outlook in the wake of the mining slowdown.

Last week UGL slashed its forecasts for underlying net profit after tax to about $90 million, down from last year’s underlying NPAT of $168 million. Its share price slumped 15 per cent after its earnings revision.

Continuing in this trend due to increased business pressure, $5.9 million of restructuring expense is to be reserved as the company reshuffles the business, it said.

Share prices of some mine service companies such as WorleyParsons have sprung back after their recent earnings amendments, but investors in Transfield stayed cautious on Monday after the downgrade.

Its shares fell 20 per cent last week after the downgrade and as investor remained apprehensive after the slowing of Chinese demand.

It closed trading Monday down 2¢ at $1.27.5, the lowest in the recent past.

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