Rural and financial services company Elders Ltd
(ASX:ELD) says it expects to post a loss for the year and slashes jobs in an effort to keep the business afloat.
The company says despite recording a break even underlying after tax profit for the 8 months to May 2010, well ahead of the loss recorded for the same time last year, it is well behind the budget comparative for the period of $25 million.
As a result Elders says it underlying earnings after tax for the 12 months to September 30 is now expected to range between a loss of $8 million and loss of $14 million, compared to previous guidance of $55.7 million.
Elders reported underlying profit after tax of $1.1 million for the 2010 first half.
CEO Malcolm Jackman says the downgrade reflects fundamental changes in the rural service and forestry markets this financial year which have overwhelmed the improvements in operations, cash and cost management by the company.
The company also announced a number of initiatives to reduce costs by 11% and improve sales performance.
These initiatives include performance management of the lowest decile of performers out of the business, an immediate freeze on replacement and recruitment and a new flatter executive management structure which reduces the layers of supervision between the CEO and branch management from 4 to 2.
As a result Mike Guerin has resigned from his position as COO with Mr Jackman saying it became clear that market conditions require Elders to have a leaner management structure and, as such, his position was no longer viable.
Elders posted a loss of $466.43 million for the year to September 30, 2009.
