Freight and rail company Asciano has blamed a weak Australian economy for the planned axing of 500 jobs.
The operator of the Patrick and Pacific National businesses was not meeting earnings targets and had been forced to accelerate its five year restructuring program, chief executive John Mullen told investors.
Its restructure was developed after a near $1 billion loss in 2010, and Asciano has steadily grown net profit since, to $348 million last year.
The aggressive moves will cut $90 million in annual costs.
“We are taking aggressive cost measures in order to offset this hopefully temporary cyclical flat period,” he said.
Driving the cuts is pressure on Asciano to reduce fees to its coal miner customers due to weak prices, the mass automation of its port operations, a weak domestic economy and volatile freight volumes.
“The obvious challenge at the moment is a much lower than expected or negative growth in some of the markets we operate in, reducing our earnings trajectory quite considerably,” Mr Mullen said.
“Two to three years ago we had strong growth in every segment and now it is much flatter with one, two, three per cent growth while labour costs, rents go up and we have to offset that.”
Investors welcomed cost cutting, sending Asciano shares up 32 cents, or 6.1 per cent, to $5.55.
The job cuts caught unions by surprise, who say they were not consulted and are seeking more details.
Asciano did not say where the positions would be cut.
Rail, Tram, Bus and Union assistant national secretary Allan Barden said Asciano had cut 165 jobs involving its members recently.
The union has launched legal action in the Fair Work Commission over a lack of consultation in relation to the job cuts, which partly related to the merging of Asciano’s two NSW rail businesses.
“We’ve just gone through a round of redundancies within Pacific National Rail, if there are going to be further redundancies we will protect our members in line with our enterprise agreement,” Mr Barden told AAP.
The company has previously announced plans to halve its workforce at the Port Botany container terminal in Sydney ahead of next year’s automation of technology, angering the Maritime Union of Australia.
Asciano estimates it will have 3,600 full time equivalent employees by June 30.
The company maintained guidance of low single digit growth in its underlying net profit in 2013/14.
It said stronger-than-expected growth in coal and container volumes, combined with its cost cuts, had offset weaker volumes in export grain, intermodal and bulk ports.
It has flagged stronger earnings growth in 2015.