Building products company CSR shares are down more than four per cent as it prepares to cut about 150 staff and lowers profit guidance.
The jobs will go as CSR closes a glass manufacturing facility in Sydney’s south-west in July, and merges two processing plants into one by January 2014.
CSR said it would try to find other jobs within the company for those staff affected at Viridian.
The “recent deterioration in performance of Viridian”, as well as the timing of property sales, meant net profit was now expected to be between $30 million and $34 million for fiscal 2013,” CSR said.
The updated guidance, announced on Monday, was lower than previous expectations of net profit between $35 million to $54 million issued in November.
CSR’s financial year ends on March 31.
The company reported statutory net profit of $76.3 million in fiscal 2012.
At 1050 AEDT, CSR was down 8.5 cents, or 4.05 per cent, at $2.015.
In percentage terms, CSR was the worst-performing stock on the S&P/ASX200.
“CSR is implementing a major restructure of its Viridian glass operations to reflect the reality of the market, improve the short-term performance of the business and position Viridian to compete successfully in the future,” CSR managing director Rob Sindel said in a statement.
CSR said operating losses at Viridian had accelerated since CSR’s first half results announcement in November.
It said the higher Australian dollar had made imported glass cheaper, while construction activity was forecast to grow at a slower pace than previously thought.
Moreover, energy and manufacturing costs had risen.
But on a positive, CSR noted Australian Bureau of Statistics figures which showed the 12-month total of building approvals had increased steadily over the six months to January.
“While the Australian construction market has been difficult for some time, the outlook for residential construction appears to be improving modestly – particularly in New South Wales, Western Australia and Queensland,” CSR said.
“CSR’s Building Products businesses continue to perform well in a challenging market.”
The federal opposition’s industry spokeswoman Sophie Mirabella said the CSR job cuts proved the carbon tax was exacerbating what was already a difficult time for manufacturing.
“As manufacturing struggles, this is the worst possible time to impose a carbon tax on Australian industry,” Ms Mirabella said in a statement.
“This tax is a reverse tariff on Australian industry and is resulting in a significant loss of competitiveness for those that are trade exposed.”
Australian Workers Union NSW secretary Russ Collison said he was not surprised by the job losses.
“Viridian Glass has become a victim of the downturn in the building and construction industry,” Mr Collison said in a statement.
“The plant is unviable due to the combination of the over-valued Australian dollar, the collapse in the domestic housing construction sector, and ageing equipment that needed a major overhaul.
“At the same time, cheap and often substandard overseas imports have put the bite on local manufacturers.
“While we are not entirely surprised by the company’s decision, it’s a very bitter pill to swallow.”
Mr Collison said the AWU would fight to ensure that Viridian employees “aren’t left out in the cold”.
“The onus is now on the company to make sure workers are treated with the respect they deserve in this difficult situation.”
Ms Mirabella urged the government to repeal the carbon tax and get rid of “some of the 20,000 new regulations that they have imposed on Australian business”.
“It’s no surprise that business has had enough, is fed up with a chaotic and dysfunctional government that chops and changes policy just to desperately try and hold on to power,” she told reporters in Canberra.
She reaffirmed that a coalition government would repeal the carbon tax and reduce regulatory costs by $1 billion a year.