COST CONTROL

Mt Gibson iron ore mine may close if prices stay low

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Original article by Tess Ingram
The Australian Financial Review – Page: 22 : 16-Jul-15

Mount Gibson Iron achieved a 15 per cent reduction in costs at its Extension Hill iron ore mine in Western Australia during the second half of 2014-15. The group aims to further reduce costs in 2015-16, with production slated to rise from three million tonnes per annum to at least 3.5 million tonnes. However, CEO Jim Beyer has not ruled out closing the mine if the iron ore price remains subdued. The steel input is trading at around $US50 per tonne.

CORPORATES
MOUNT GIBSON IRON LIMITED – ASX MGX

‘More holistic’ leadership will save billions

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Original article by Jenny Wiggins
The Australian Financial Review – Page: 13 & 18 : 22-Jun-15

Research by consulting firm Agilience has found that the total cost blowout of 44 large infrastructure projects in Australia was around $A6bn. WestConnex Delivery Authority chairman Tony Shepherd says the research demonstrates that more efficient management of large-scale infrastructure projects can result in significant cost savings. He has called for a more holistic approach to leadership of such projects.

CORPORATES
AGILIENCE, NEW SOUTH WALES. WESTCONNEX DELIVERY AUTHORITY, AUSTRALIAN CONSTRUCTORS ASSOCIATION LIMITED, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, BOUYGUES SA, LEND LEASE GROUP LIMITED – ASX LLC, URBANGROWTH NSW

Rio iron ore boss keeps eye on prize

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Original article by Amanda Saunders
The Australian Financial Review – Page: 17 & 22 : 4-Jun-15

Rio Tinto’s iron ore operations boasted a cash cost of about $US20 per tonne in the first half of 2014-15, but the group aims to reduce this to $US17/tonne in the second half. Andrew Harding, the head of the iron ore division, concedes that it is getting harder to further reduce costs after Rio’s aggressive push in recent years. Rio is also negotiating more favourable contracts with its suppliers and introducing automation technology.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA

AGL Energy shares hit 8-year high

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 17 : 27-May-15

AGL Energy has revealed details of its "strategic road map", which will include cost reductions and asset sales. AGL plans to divest its 50 per cent stake in the 420-megawatt Macarthur wind farm in Victoria, which is expected to fetch about $A500m. Some analysts believe that AGL will also sell its upstream gas business, while a decision on the Gloucester coal seam gas project will be made later in 2015. AGL shares closed 6.3 per cent higher at $A16.45 on 26 May.

CORPORATES
AGL ENERGY LIMITED – ASX AGL, MACQUARIE GENERATION, MORGAN STANLEY AUSTRALIA LIMITED, AES CORPORATION, MACQUARIE WEALTH MANAGEMENT

‘Leaner’ Woodside targets acquisitions

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 13 & 18 : 22-May-15

Woodside Petroleum is expected to decide whether to proceed with the Greater Enfield oil project in 2016. The group will commence engineering and design work on the Western Australian project ahead of schedule, in order to secure lower costs for oil rigs. CEO Peter Coleman has also flagged acquisitions, including oil projects and LNG receiving terminals in Asia. Woodside is also seeking to reduce costs and improve productivity.

CORPORATES
WOODSIDE PETROLEUM LIMITED – ASX WPL, APACHE CORPORATION, RBC CAPITAL MARKETS, CHEVRON CORPORATION, WOOD MACKENZIE, MITSUI AND COMPANY LIMITED

Westpac banks on cloud push to rein in costs

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Original article by Paul Smith
The Australian Financial Review – Page: 23 : 12-May-15

Westpac anticipates significant cost savings from a proposal to shift many of its IT systems to a hybrid cloud environment. Chief information officer Dave Curran says the banking major aims to capitalise on the efficiencies that can be derived from shifting to cloud technology. Westpac also aims to reduce its cost-to-income ratio, which rose from 41.6 per cent to 42.5 per cent in the first half of 2014-15.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AMAZON WEB SERVICES LLC, MICROSOFT CORPORATION, GOOGLE INCORPORATED

Simplot Australia hit by restructuring costs

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Original article by Simon Evans
The Australian Financial Review – Page: 15 : 16-Feb-15

Food group Simplot Australia posted an after-tax net profit of $A33.8m for the year to 30 August 2014, which is 26 per cent lower than previously. The result was marred by restructuring costs, which included redundancy payments totalling $A22.8m. MD Terry O’Brien says reducing costs was necessary for Simplot to remain competitive. The group’s sales revenue rose by 4.65 per cent to $A1.24bn

CORPORATES
SIMPLOT AUSTRALIA (HOLDINGS) PTY LTD, JR SIMPLOT AND COMPANY, COLES GROUP LIMITED, WESFARMERS LIMITED – ASX WES, WOOLWORTHS LIMITED – ASX WOW, AUSVEG LIMITED, HJ HEINZ COMPANY AUSTRALIA LIMITED, McCAIN FOODS (AUST) PTY LTD

CCA sheds 260 jobs to help cut costs by $100m

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Original article by Sue Mitchell
The Australian Financial Review – Page: 15 &20 : 9-Dec-14

Australia-listed Coca-Cola Amatil (CCA) has advised that its EBIT for the second half of 2014 will be higher than the first-half result of $A316.7m. The group’s underlying EBIT for calendar 2013 was $A833m. Meanwhile, CCA will retrench 260 employees in the finance, human resources and IT departments in 2015 as it seeks to achieve further cost savings. CEO Alison Watkins notes that sales of its new products are performing well

CORPORATES
COCA-COLA AMATIL LIMITED – ASX CCL, GRAINCORP LIMITED – ASX GNC, CIMB SECURITIES INTERNATIONAL (AUSTRALIA) PTY LTD, CITIGROUP PTY LTD, THE COCA-COLA COMPANY, PEATS RIDGE WATER PTY LTD, BARISTA BROS

Qantas on course for profit of $350m

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Original article by Jamie Freed
The Australian Financial Review – Page: 15 & 20 : 9-Dec-14

Qantas expects its 2014-15 interim underlying net profit to be within the range of $A300m to $A350m, compared with a loss of $A252m previously. Deutsche Bank has responded by upgrading its full-year forecast from $A364m to $A801.5m. Qantas has benefited from factors such as its $A2bn cost-cutting initiative and lower fuel costs. Reducing debt remains the priority, although CEO Alan Joyce says the carrier could potentially resume paying dividends earlier than forecast

CORPORATES
QANTAS AIRWAYS LIMITED – ASX QAN, DEUTSCHE BANK AG, VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH

Oil slump drives Santos to hybrid

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 19 & 24 : 27-Nov-14

David Knox and Andrew Seaton, CEO and CFO respectively of energy group Santos, on 26 November 2014 told investors about plans to compensate for the recent decline in the crude oil price by some 30%. The company, which has LNG projects in Queensland and Papua New Guinea, will cut costs and capital investment. A previous estimate for annual cash flow to grow 100% between 2013 and 2016 has been revised down to 65%, and Seaton foreshadowed a potential hybrid debt issue worth EUR500m ($A726m). Santos shares closed $A0.15 higher at $A11.98, after a fall of 5% the day before

CORPORATES
SANTOS LIMITED – ASX STO, GLADSTONE LNG PTY LTD, SENEX ENERGY LIMITED – ASX SXY, CREDIT SUISSE (AUSTRALIA) LIMITED, ORD MINNETT GROUP LIMITED, PAPUA NEW GUINEA LNG PROJECT, UBS HOLDINGS PTY LTD, TOTAL SA