Struggling rural services company Elders will slash its workforce by 10% as part of $25m of cuts. Source: AAP
STRUGGLING rural services company Elders is set to axe about 150 jobs, or about 10 per cent of its workforce, as it re-organises and refinances its business and reduces its debt.
Elders chief executive Malcolm Jackman on Tuesday said the job losses would occur across all of the company's operations.
"It became pretty obvious in the first half of this year, with the very tough seasonal conditions that we operated under, that the cost structure in the business was not sustainable," Mr Jackman said.
"What we've done is reset the nature of the organisation, the management structure, the management style inside the organisation, so that we can deliver a sustainable profit through really tough seasons."
Elders is aiming to cut operating costs by more than $25 million, from April 2014.
A small number of rural and regional branch offices will be closed or consolidated into larger nearby branches.
Elders said it had agreed to terms with its financiers on renewing and extending its debt facilities to December 31, 2014.
Mr Jackman said the sales process for Elders' agricultural business was off the table now that refinancing was in place.
"We are now in the process of managing the business on a go-forward basis where it will be a listed agricultural pure play business," he said.
Elders in August sold its Futuris automotive interiors business, using the sales proceeds to cut its net debt to $272 million.
The group has almost completed the wind-down of its forestry assets and has agreed in principle with insurer QBE to reduce Elders' equity holding in the joint-venture Elders Insurance to 10 per cent, from 25 per cent.
Mr Jackman said the final exit from the forestry sector was a "zero sum" game that would not yield any extra cash for the company.
"The wind-up will be negative to neutral on cash - it's a small amount of money," he said.
He said QBE had asked that the financial outcome of Elders' reduced equity in the insurance business be kept confidential.
Elders also said it continued talking with parties that had expressed an interest in a recapitalisation of the company.
Mr Jackman did not yet have specific information on the size of a possible recapitalisation.
"We have different styles of parties who are looking at it from different angles," he said.
On the trading outlook, Elders said seasonal conditions in the sheep and wheat belts of southern Australia had improved throughout the winter and early spring.
Sheep and lamb prices had lifted, and sales of fertiliser and agricultural chemicals had improved.
Beef sales volumes in Asia, especially China, remained strong.
Elders said it expected to report an underlying net loss for 2012/13 of $32 million to $39 million.
Shares in Elders were 1.5 cents, or 15.79 per cent, higher at 11 cents at 1131 AEST.
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