NewSat Management Takes Salary Cuts amid Revenue Retreat
PARIS — Startup Australian satellite fleet operator NewSat Ltd. on June 6 told investors to expect a 20 percent decline in revenue and a net loss for the year ending next June 30 as the company suffers the continued effects of the U.S. military drawdown in Afghanistan.
NewSat said its board of directors had established a spending review committee that will decide where to cut costs in staff and other expenses, with most of the measures to be decided by June 30. Company management has agreed to take salary cuts of 10-25 percent and to forgo near-term cash bonuses, NewSat said.
Southbank, Victoria-based NewSat has an established business as an operator of teleports that serve corporate and government customers. It is entering the satellite operations business through a large share in the capacity of the Measat-3b satellite, which NewSat calls Jabiru-2, whose May launch date has been postponed to September because of issues with the Optus-10 satellite scheduled to share the same Ariane 5 rocket launch.
NewSat’s own Jabiru-1 satellite, in which Malaysia’s Measat has purchased a large capacity stake, is under construction byand scheduled for launch in 2015 aboard an Ariane 5. NewSat has received some $390 million in low-interest loans from the U.S. and French export-credit agencies.
NewSat reported revenue of 39.3 million Australian dollars ($36.5 million) for the year ending June 30, 2013, up 5 percent from the previous year. Net profit was 10.4 million Australian dollars.
But starting in late 2013, the company’s core teleport services customers, including energy extraction and military services, reduced their purchases of NewSat teleport services.
NewSat originally thought that the downturn in the energy business was temporary, but in its June 6 statement to the Australian Securities Exchange the company said market conditions “have not improved to the levels initially anticipated by NewSat.”
As a result, NewSat said its fiscal 2014 results will show sharp revenue and profit declines. Revenue for the year will be between 30 million and 33 million Australian dollars, with a net loss of 5 million to 6 million Australian dollars including the one-time costs associated with the restructuring to lower spending.
“[R]edundancies, head-count reduction, better alignment of internal department structures, reduced travel, marketing and consultancy expenses and remuneration” are among the measures being used to align costs with the reduced revenue outlook, it said.
“The initiatives will not impact the delivery of the Jabiru-1 satellite project,” NewSat said. As for Jabiru-2/Measat-3b, the launch delay to September “will have no material impact on NewSat as Jabiru-2 is an operating lease and lease payments do not commence until the satellite has entered service.”
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