Seven Group's (ASX: SVW) WesTrac heavy equipment business will be cutting 630 jobs to further adjust to the harsh realities of the mining sector. WesTrac operates Caterpillar equipment and vehicle dealerships in Western Australia, New South Wales, the Australian Capital Territory and in Northeastern China, and makes up 96% of Seven Group's revenue.
Mining companies are scaling back new developments and expansions, so fewer vehicle sales have resulted in the company announcing this second round of workforce cutbacks. Previously, 375 positions were made redundant in its NSW/ACT operations. All up, these staff reductions will cost the company about $21 million in restructuring charges.
Lower sales are expected to flow on to affect earnings guidance, which the company now says that full-year underlying earnings before interest and tax (EBIT) will be now at the lower end of the previous guidance of 30%-40% below the previous year.
The company owns 35% of Seven West Media (ASX: SWM), which operates the Seven Network television business as well as its print and online media. This ownership stake contributed $105. 8 million of EBIT in 2013, or 16.7% of Seven Group's total EBIT. It also owns 45% of Coates Hire, the equipment rental services provider.
Other mining service-related companies will be announcing earnings guidance soon, and the first of them already are not painting a bright picture.
Boart Longyear (ASX: BLY) has dropped in share price from about $2.20 in February to $0.40 now. Its 2013 NPAT was 58% lower than in 2012, down to $65.6 million. It is looking to have more drilling work in 2014, but even keeping equipment and staff at peak performance will cost money while it waits for miners to get back to more exploration.
Emeco Holdings (ASX: EHL), operator of equipment and vehicle fleet rentals, is at $0.25 a share after a slide down to $0.17 in September following the 2013 annual results showed NPAT being decimated in the literal sense by going from $69.7 million to $6 million. Revenue from its Canadian division held up, but it saw a loss in Indonesia.
Ausdrill (ASX: ASL) was in a trading halt for two days last week as it prepared to announce its operating performance. It now is expecting 2014 full-year profits to be about half or even less than 2013's NPAT after abnormals of $90 million. Its $35 million-$45 million earnings guidance sent the share price gapping down from about $1.40 before the trading halt to $1 following reinstatement of trade.
