Engineering and construction contractor VDM Group has become the latest in a lengthening list of resources-related firms to revise its profit guidance and cut jobs this month, with more than 40 full-time positions made redundant across its operations.
VDM announced today that it now expects to report a pre-tax loss of between $7 million and $9 million for the six months to December 31.
VDM said it had taken a hit as a result of contract claims and variations that came in over what it originally expected, and the company had also been negatively impacted by accommodation shortages on a site where two projects are under way in Western Australia.
Managing director Andrew Broad said the company would review the carrying value of certain assets during the first half of the financial year, which could lead to a further impairment of goodwill and a reduction in the value of its deferred tax.
Mr Broad said the company had also reviewed the company's entire cost base.
“Following that review, a number of areas have been identified where we can improve our structures and operating efficiencies,” he said in a statement.
“It is with regret that this has resulted in over 40 employees being made redundant in the past week.
Mr Broad said he expected the redundancies to save the company around $5.5 million each year, for a one-off cost of $1.2 million.
“Maintaining a competitive cost base is paramount in the industry in which we operate and these cost management decisions have not been taken lightly, but have been required in the best interests of VDM shareholders,” Mr Broad said.
“Activities associated with ongoing improvements to how we estimate projects at the time of tender and better delivery on projects will continue to progress despite the reduction in staff.”
The job cuts at VDM follow a volatile week in mining circles, with Matrix Composites & Engineering announcing it had cut 46 jobs over the past month, and BHP Billiton confirming jobs were on the line at its Nickel West operations near Leinster on Friday.
Rumours were also swirling on Friday regarding a significant round of redundancies at the Perth office of global engineering group GHD.
Earlier this month, iron ore miner Mount Gibson Iron announced it would put off up to $150 million in spending and lay off 270 jobs to ensure it remains profitable.
Atlas Iron also announced around the same time that it would cut 27 jobs and defer long-term exploration plans as a result of the continuing market uncertainty.
