Perpetual has flagged a massive profit slide and pay cuts for its board as it begins a major restructure that involves the loss of hundreds of jobs.
The fund manager said on Monday that it will slash its workforce by 580 positions to achieve $50 million in cost cuts as part of a major restructure.
The company forecast a full year fall in net profit of up to 65 per cent to between $22 million and 29 million due to the costs of the three-year restructure.
Perpetual said it would outsource about 150 full-time positions, cut a further 145 workers, and sell a business that employs 280 full time employees as part of a company overhaul launched by chief executive Geoff Lloyd.
The company has also taken the unusual step of reducing the pay of its boardroom directors.
Chairman Peter Scott’s remuneration will shrink by 42 per cent from the more than $400,000 currently.
Remuneration for the remaining non-executive directors, which averaged about $230,000 in 2010/11, is to drop by an average 25 per cent.
A major criticism of Perpetual has been that costs have soared by more than 20 per cent since 2007 while revenue fell nine per cent.
At the same time, the managed funds market has grown exponentially and is one of the largest in the world but competition for Perpetual has also increased sharply.
In February the company reported a $3 billion first half drop in the amount of funds under management to $22.9 billion.
Mr Lloyd on Monday defended the company’s record, saying it was rated as number one in overall performance in Australian equities – but not globally – as rated by surveyed advisers.
He told an analysts’ briefing that a review of Perpetual that began when he was appointed in February showed a company with unnecessary complications.
That included 11 distinct businesses and three separate divisions, including separate corporate centres, infrastructure and management teams adding to costs.
Now there would be only one Perpetual, with the number of “direct reports” reduced from 11 to six and the executive team reduced, he said.
“I want Perpetual to be a smaller, much more focused business that has clarity of what it is, what it stands for, what we do and what we don’t do,” Mr Lloyd told the briefing.
“We have our core business but other activities have complicated us, we are not all asset classes and all things to all people.
“We are not a bank, we are not a life company.”
Perpetual will sell its mortgage processing business Perpetual Lenders Mortgage Services (PLMS), with negotiations with a buyer well advanced, it said.
PLMS employs 280 full time workers.
Perpetual shares had improved 69 cents to $24.03 on Monday.
