Engineering group Bradken has announced plans to cut more jobs and shift more production offshore due to a drastic decline in profit.
Bradken decided to start cutting costs in April in response to the challenges facing companies exposed to the mining sector; however, hopes run high for a quick rebound due to the good results of the cost reduction initiatives and the stable demand for iron ore and copper.
The company has slashed 450 jobs over the past year and is closing smaller plants to move capacity to lower-lost centres abroad, The Sydney Morning Herald reports.
In the 12 months to 30 June, Bradken recorded a net profit of $21.5 million, a 67.9% fall on the $66.9 million recorded last year, while revenue for the period was $1.14 billion, a 13.5% decrease on last year.
Net debt levels decreased to $377.2 million from $431.5 million in the previous year due mainly to the lower capital expenditure, reduced working capital level and also lower cash dividend payments, the company said.
According to Bradken’s Managing Director Brian Hodges, the company’s cost cutting and continued dedication on product development placed it in an excellent position to make the most of the much improved market conditions.
“We expect an improvement in order intake as delayed expenditure at mine sites is released and mine production volumes continue to increase, supporting sales in the second half,” Mr Hodges said.
“It remains unclear when the mining capital cycle will improve, but we are not solely relying on it to do so.”
The company already has a large metal forging works in Xuzhou, China where capacity can be doubled.
”We’ve still got a lot of capacity at Xuzhou,” Mr Hodges said. ”We will have a need for another low-cost activity in a different locale in two to three years.”