Struggling UGL lowers hopes and axes jobs
UGL will axe 200 jobs within a month and has downgraded its full year guidance, capping off a tough 12 months for the engineering group.
The company said the job cuts by the end of June would save $33 million next year.
UGL lowered its full year revenue guidance by $100 million to $2.3 billion and flagged a fresh hit to its full year profit in the form of another $74 million in writedowns.
The job cuts and weaker guidance come at the end of a strategic review of UGL’s operations commissioned by new chief executive Ross Taylor, following the $1.2 billion sale of its property business in November.
UGL’s transition to a pureplay engineering group has come at a tough time due to the downturn in investment in the resources sector.
The company posted a first half loss for the six months to December 31, of $122 million, due chiefly to writedowns related to work on a power station at the Ichthys LNG project in the NT.
UGL’s announcement yesterday was well received by investors, who cheered an improved outlook for the next two financial years.
Mr Taylor said while revenue would likely be flat in the 2015-16 year, cost cutting efforts should boost its earnings.
“A significant amount of work has been undertaken to reposition UGL for its future and I am confident from FY16 we will deliver improved profitability,” he said.
IG market strategist Evan Lucas said despite the weak guidance for this year, the outlook was strong enough to buoy investors after a difficult few years for the company.
UGL shares rallied 24¢ or 10.3 per cent to $2.56.