COST CONTROL

Forrest cautious on iron outlook

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Original article by Andrew White
The Australian – Page: 15 & 16 : 13-Jan-17

Iron ore is trading at around $US80 a tonne, although it is tipped to fall to $US51.60 by mid-2017 and $US46.70 in 2018. The price of the steel input bottomed at $US36 per tonne in 2015, prompting Fortescue Metals Group to slash its debt and reduce its workforce. Fortescue also reduced its costs to just $US14.31 per tonne, but chairman Andrew Forrest says the group aims to achieve further cost reductions given the outlook for the iron ore price. Forrest also continues to advocate action to end slavery, and he has urged all Australian companies to take a similar stance.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, WALK FREE FOUNDATION, MINDEROO FOUNDATION, ROY HILL IRON ORE PTY LTD, VALE SA, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

Westpac returns hit by need to build capital

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Original article by James Eyers
The Australian Financial Review – Page: 11 & 15 : 8-Nov-16

Westpac has posted a 2015-16 cash profit of $A7.8bn. Its return on equity fell by 1.85 per cent to 14 per cent in the year to 30 September 2016, and its ROE target has been scaled back from 15 per cent to 13-14 per cent due to factors such as new capital requirements for the banking sector. PwC estimates that the combined ROE of the four major banks fell by 127 basis points to 13.75 per cent in 2015-16. Meanwhile, Westpac will seek to reduce its cost-to-income ratio from 42 per cent at present to less than 40 per cent

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD, CITIGROUP PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, KPMG AUSTRALIA PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Fortescue to challenge Rio Tinto’s cost crown

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Original article by Peter Ker
The Australian Financial Review – Page: 17 & 22 : 28-Jul-16

Fortescue Metals Group’s iron ore production cost fell to $US13.10 per tonne in June 2016, and averaged $US14.31/tonne during the June quarter. Fortescue expects its C1 production costs to be within the range of $US12 to $US13/tonne in 2016-17, and the group expects its iron ore shipments to be between 165 million and 170 million tonnes for the year. Fortescue has significantly reduced its production costs in recent years, with unit costs averaging $US34.03 per tonne in 2014. Fortescue shares rose $A0.29 to $A4.41 on 27 July.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, VALE SA, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD

Low prices knock sense into producers

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 27 : 10-Jun-16

There is growing recognition among Australian energy groups of the need to continue reducing costs, amid sustained weakness in the crude oil price and a growing oversupply in the LNG market. Santos CEO Kevin Gallagher has suggested greater collaboration among rival LNG groups and has raised the possibility of LNG infrastructure being owned by independent operators rather than producers. Meanwhile, Woodside Petroleum CEO Peter Coleman has acknowledged that the LNG projects in Queensland have cost much more than originally budgeted.

CORPORATES
SANTOS LIMITED – ASX STO, WOODSIDE PETROLEUM LIMITED – ASX WPL, OIL SEARCH LIMITED – ASX OSH, NOVA SYSTEMS, ORIGIN ENERGY LIMITED – ASX ORG, AUSTRALIAN PETROLEUM PRODUCTION AND EXPLORATION ASSOCIATION LIMITED, INTERNATIONAL ENERGY AGENCY, CLOUGH LIMITED, McKINSEY AND COMPANY, CB&I INCORPORATED, SHELL COMPANY OF AUSTRALIA LIMITED

Santos puts cost cutting before more asset sales

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Original article by Simon Evans, Angela Macdonald-Smith
The Australian Financial Review – Page: 23 & 32 : 5-May-16

Shares in Santos closed 8.7 per cent lower at $A4.20 on 4 May 2016, after the oil and gas producer’s annual meeting. Santos has shed 825 employees over the last 18 months, and CEO Kevin Gallagher has confirmed that more redundancies are on the agenda as part of the group’s cost-cutting strategy. He has also indicated that Santos may eventually divest some assets, but stressed that reducing costs and stabilising the company is the immediate priority.

CORPORATES
SANTOS LIMITED – ASX STO, HONY CAPITAL, ENN HOLDINGS, GLADSTONE LNG PTY LTD, TOTAL SA, RBC CAPITAL MARKETS

Shell to axe jobs as cost cuts hit home

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Original article by Paul Garvey
The Australian – Page: 19 & 20 : 27-Apr-16

Oil and gas giant Royal Dutch Shell is believed to be planning to retrench up to 250 employees across Australia as part of a global cost-cutting strategy. Shell recently advised its Australian staff of the proposed job cuts but has not quantified the number that will be lost. Many Shell Australia employees will also be required to re-apply for their jobs. Shell spokesman Paul Zennaro says projects such as the Prelude floating LNG venture and the expansion of the group’s LNG project in Queensland will eventually create jobs.

CORPORATES
ROYAL DUTCH SHELL PLC, SHELL COMPANY OF AUSTRALIA LIMITED, BG GROUP PLC, QUEENSLAND GAS COMPANY LIMITED, CHEVRON CORPORATION, GORGON PTY LTD, WOODSIDE PETROLEUM LIMITED – ASX WPL, ORIGIN ENERGY LIMITED – ASX ORG, SANTOS LIMITED – ASX STO

700 jobs to go as Rio strips its costs

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Original article by Matt Chambers
The Australian – Page: 20 : 3-Mar-16

Rio Tinto has declined to comment on media reports which suggested that it plans to shed between 500 and 700 workers at its iron ore mines in Western Australia. The job cuts are part of its goal to reduce global costs by $US2bn ($A2.6bn) over the next two years. Rio Tinto previously reduced its Western Australian iron ore headcount by 800 in 2015, and its costs have been slashed by $US6.2bn over the last three years.

CORPORATES
RIO TINTO LIMITED – ASX RIO

Geminder’s Pact with the market: no surprise

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Original article by Kylar Loussikian
The Australian – Page: 21 : 25-Feb-16

Pact Group has posted a 2015-16 interim underlying profit of $A45.9m, which is 10 per cent higher than previously. The packaging group’s revenue increased by eight per cent to about $A688m, and shareholders will receive a half-year dividend of $A0.10 per share. CEO Malcolm Bundey says an efficiency program generated cost savings of $A2.8m during the half-year. Pact shares closed 4.5 per cent higher at $A4.92 on 24 February 2016.

CORPORATES
PACT GROUP HOLDINGS LIMITED – ASX PGH, JALCO PTY LTD, POWER PLASTICS

Fairfax modelled a future with no newspapers and 40pc fewer journos

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Original article by Jake Mitchell
The Australian – Page: 1 & 2 : 15-Feb-16

Fairfax Media is tipped to reveal a significant restructuring program in 2016, aimed at reducing costs. Internal documents produced in early 2013 estimate that the media group could shed 205 full-time members of its editorial team by discontinuing the print editions of "The Age" and "The Sydney Morning Herald". Meanwhile, publishing print editions of these mastheads only on Saturdays would enable Fairfax to cut 150 editorial positions.

CORPORATES
FAIRFAX MEDIA LIMITED – ASX FXJ, PAGEMASTERS PTY LTD, AUDIT BUREAU OF CIRCULATIONS

South32 takes $2.4bn hit, signals job cuts

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Original article by Paul Garvey
The Australian – Page: 20 : 5-Feb-16

Shares in South32 rose by 14.2 to $A1.085 on 4 February 2016, as it flagged plans to significantly reduce costs. The BHP Billiton spin-off will scale back capital expenditure and production at its manganese mines in South Africa, which will result in the loss of 620 jobs. South32 has also indicated that it is likely to pursue job cuts in Australia, while its financial accounts will include $US1.7bn ($A2.4bn) worth of write-downs.

CORPORATES
SOUTH32 LIMITED – ASX S32, BHP BILLITON LIMITED – ASX BHP, MORGANS FINANCIAL LIMITED, CONSOLIDATED MINERALS LIMITED, QUEENSLAND NICKEL PTY LTD, GRANGE RESOURCES LIMITED – ASX GRR, MOUNT GIBSON IRON LIMITED – ASX MGX, SHAW RIVER MANGANESE LIMITED – ASX SRR