Perpetual CEO Lloyd ramps up cost cutting

Alison Bell February 23, 2012

Wealth manager Perpetual's new boss says the company will aggressively cut costs and jobs as its seeks to restore its performance.

Restructuring costs combined with a weaker local equity market drove a 35 per cent drop in Perpetual's first half net profit to $22.9 million.

Just three weeks into his new job, chief executive Geoff Lloyd said cost cutting and tweaking Perpetual's business model were the main priorities as the wealth manager continued to adjust to weaker investment markets.

"We're not waiting for markets to improve," Mr Lloyd told analysts after unveiling the first half results on Thursday.

Perpetual's Investments division posted a net fund outflow of $3 billion during the first half, leaving funds under management at $22.9 billion by December 31.

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Perpetual lost chief executive Chris Ryan in January after the board disagreed with his company strategy.

Since then, Mr Lloyd has wasted no time in appointing a global consulting firm to help management cut costs after nine per cent was trimmed from the coast base in the first half.

Mr Lloyd denied the appointed consultants were readying Perpetual for sale and said he was not aware of approaches to the board by potential predators preparing for a takeover.

Perpetual cut employment costs by 14 per cent in the past 12 months, with almost half of Perpetual Investments' 253 employees disappearing after the closure of its Dublin-based equities business and sale of its self-managed superannuation fund administration provider.

Total headcount is now 1,382 full-time employees, 13 per cent lower than a year ago but no redundancy targets exist, Mr Lloyd said.

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"What's important is that we ... (review) what businesses we're in ... not pick a target otherwise you'll miss an opportunity."

Asked to quantify what meaningful cost reductions would be sought, Mr Lloyd said it was too early to say.

He stressed Perpetual's review of its business "does mean we'll be a smaller organisation but it's not being driven just by reducing heads".

Perpetual is also about to seek a review of its IT infrastructure.

As advised one week ago, Perpetual's underlying profit for the six months to December was $34.7 million, down 15 per cent from the same period a year earlier.

Perpetual declared a fully franked interim dividend of 50 cents per security, down from 95 cents a year earlier.

Its shares closed six cents higher at $223.59.

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