Market unimpressed as IAG shakes its own foundations
IAG’s announcement last week of its biggest shake-up since it was formed has done little to lift its stalled share price. Despite tough talk of a restructure, 600 job cuts, a slashed dividend and the imminent fire sale of British acquisitions, the stock price barely flickered.
The group’s shares closed last Monday at $3.62. By Tuesday night, as metropolitan newspapers ran forecasts of the bloodletting to come, the stock had eked its way to $3.67.
After CEO Mike Wilkins’ announcement of the restructure, the stock explored some negative territory before rallying ever so mildly to close the week back at $3.67 – five cents up on Monday’s price.
Analyst reaction has been mixed. Citigroup rated the stock neutral, Merrill Lynch rated it “under-perform” and Credit Suisse rated it “outperform”.
IAG’s army of 900,000 retail investors are probably positioned on the fence.
While IAG will book a $350 million charge from the UK divestitures on top of an expected $60 million cost of restructuring, the company will be rid of its poorest performing entities. The loss of 600 Australian staff will free up around $130 million a year.
Mr Wilkins has moved the organisation in line with the successful Promina formula of devolution, and four top executives are departing as the company adopts a slimmed-down corporate model.
Chairman James Strong has also hired more boardroom talent in former Aviva supremo Philip Twyman.
During the briefing Mr Wilkins was clear on the subject of short-term pain. IAG is likely to book a net loss when the company reports its full-year financials on August 22 and it will take time to bed in these changes.
The group’s shares closed last Monday at $3.62. By Tuesday night, as metropolitan newspapers ran forecasts of the bloodletting to come, the stock had eked its way to $3.67.
After CEO Mike Wilkins’ announcement of the restructure, the stock explored some negative territory before rallying ever so mildly to close the week back at $3.67 – five cents up on Monday’s price.
Analyst reaction has been mixed. Citigroup rated the stock neutral, Merrill Lynch rated it “under-perform” and Credit Suisse rated it “outperform”.
IAG’s army of 900,000 retail investors are probably positioned on the fence.
While IAG will book a $350 million charge from the UK divestitures on top of an expected $60 million cost of restructuring, the company will be rid of its poorest performing entities. The loss of 600 Australian staff will free up around $130 million a year.
Mr Wilkins has moved the organisation in line with the successful Promina formula of devolution, and four top executives are departing as the company adopts a slimmed-down corporate model.
Chairman James Strong has also hired more boardroom talent in former Aviva supremo Philip Twyman.
During the briefing Mr Wilkins was clear on the subject of short-term pain. IAG is likely to book a net loss when the company reports its full-year financials on August 22 and it will take time to bed in these changes.