South African leasing and capital equipment firm Eqstra Holdings plans to cut 7 percent of its workforce as it freezes expansion plans owing to weak demand for its products and services, it chief said. "We will be reducing our headcount by about 7 percent. A lot of it has already been done," Walter Hill, Eqstra CEO, told Reuters in a recent telephone interview.
-- Does not foresee project cancellation
-- Sales volumes down 40pc in January-February, leasing stable
Hill said Eqstra, which employs 4,500 people, would not pursue expansion in the next 2-3 years because "any opportunity in this environment could turn out to be a liability". "The party has stopped, the music has stopped," said Hill, referring to rising commodity prices and stronger economic growth that fuelled earnings in the past year, but have tailed off due to the global financial crisis.
"Our strategy is to batten down the hatches." Eqstra, which was spun off from industrial firm Imperial Holdings last year, carries out open cast hard rock contract mining and plant hire in Africa, and sells and leases capital equipment such as forklift trucks in Africa and Britain.
Hill said business at Eqstras South African leasing business had been good so far in the second half of its financial year, declining to give a forecast.
But the firms sales volumes of industrial equipment such as forklift trucks slumped 40 percent in January and February compared to the same period last year and Hill did not expect improvement until the economy recovered and credit markets improved.
Eqstra does not foresee any project cancellations in its open cast mining business in the next six months. Hill said there were opportunities in the iron ore and coal mining sector, but it would take "a while" before these opportunities become revenue producing projects. Eqstras material handling unit in recession-hit Britain was profitable because the unit had leasing contracts on fixed interest rates, said Hill. Interest rates in Britain have dropped to 0.5 percent.