Toll to cut 100 jobs
TOLL Holdings has flagged further cost savings initiatives at its upcoming annual results after revealing plans to save up to $12 million a year by merging some of its businesses and abolishing a division.
From July 1, Toll will have five divisions instead of six to reduce crossover and increase collaboration, which will lead to the loss of 100 jobs from the head office of the company’s Domestic Forwarding business and Toll Intermodal.
The majority of the positions will go from the Intermodal business as the specialised contract-driven parts of the operation will merge into the Toll Global Logistics division.
Long-serving directors Paul Ebsworth and Wayne Hunt will leave as part of the restructure.
“We have strong businesses, particularly in Australia, but it is critical that in the current challenging market we reduce complexity and costs, improve our productivity and build on our strengths,’’ Toll chief executive Brian Kruger said.
“This restructure will help mitigate near-term ongoing margin pressures as well as ensuring that we maximise the leverage that our company has to any improvements in the external environment.’’
But Toll flagged that other cost-saving initiatives would come with the annual results in August. Toll’s costs fell by $30m in the first half.
While analysts such as Bank of America Merrill Lynch said it did not expect further material cost reductions, “we think these measures will be taken positively”.
“Toll as been criticised for not being vigilant enough on costs given the weak economy, so this should assuage some concerns,’’ the broker said yesterday.
Toll reiterated previous guidance that underlying earnings before interest, taxation and amortisation for fiscal 2014 was expected to be in line with 2013, while EBIT would be ahead of the prior year.
Toll shares rose more than 4 per cent in the wake of the announcement, having fallen more than 7 per cent so far this year.
“The reiteration of guidance is positive in that it demonstrates Toll has been able to offset a challenging operating environment with some contract wins and cost,’’ Goldman Sachs said. But it added: “While this is encouraging, the backdrop for Toll remains one of subdued activity levels, margin pressure, and risk relating to the retender of Singapore government contracts.’’
Article by Damien Kitney