Shareholders have backed the appointment of Graeme Hunt as Transfield Services’ new chief executive, as the company begins cutting costs amid weaker industry conditions.
The construction and maintenance firm says it will conduct a full business review and sharpen its focus on costs and productivity as it re-affirmed its full-year earnings guidance on Thursday.
The shareholder approval of Mr Hunt’s appointment comes a month after he took on the role of acting chief executive after Peter Goode resigned on September 30.
Chairman Tony Shepherd told the company’s annual general meeting that the outlook for the remainder of fiscal 2013 was for softer market conditions.
This included a slowdown in the resources sector, falling discretionary expenditure in minerals exploration and development, and delayed timing of some infrastructure opportunities.
“To address this, the company is increasing its focus on execution excellence, customer service, cost and productivity improvements,” Mr Shepherd said in a statement.
The new chief executive will fine tune the company’s strategy following a review of its business portfolio.
Mr Hunt said the company had already reduced its capital expenditure budget by $50 million or about 22 per cent.
He will undertake a more disciplined assessment of the company’s contracts.
Mr Hunt declined to offer guidance for the 2014 financial year due to market volatility and factors beyond the company’s control, despite Transfield meeting its first quarter performance expectations.
Transfield had previously forecast an operating profit at the lower end of a range between $125 million and $135 million.
The company also announced $145 million worth of new work, with three new contracts and two contract extensions.
The new work includes management of about 500 Boral sites across Australia, mine maintenance in Chile and maintenance on part of the Icthys’ liquefied natural gas project in the Northern Territory.
Morningstar equities analyst Ross Macmillan said the shift at the top of the company’s management had been on the cards for some time.
“He’s (Mr Hunt) been on the board and he understands the company,” Mr Macmillan said.
The softer outlook across the sector would prompt Mr Hunt to lower operating costs and capital expenditure, Mr Macmillan said.
“It’s in line with industry expectations,” Mr Macmillan said.
“The real issue is what happens once the weaker conditions are over.”
Transfield plans to advise the market of the outcome of the full review at the release of its mid-year results in February.
At 1543 AEDT on Thursday Transfield shares were down 1.5 cents at $1.575.
