Arq Group to cut another $1.6M in costs due to COVID-19
- 15 April, 2020 11:51
Troubled hosting services company Arq Group is to make another $1.6 million in cost cuts as the coronavirus hits sales.
The publicly listed company plans to make further cuts in staff, marketing expenditure, property and systems due to the “changed market conditions” stemming from the COVID-19 pandemic.
The latest cuts will come on top of the $3.7 million reduction announced in February, with the company now withdrawing its earlier earnings forecast.
Following these and consolidation of some business units, Arq will have a “simplified operational structure” with fewer senior and mid-level management roles.
According to a shareholder update, the publicly listed company had been on track to meet an EBITDA forecast of between $11 million and $12 million for this financial year.
However, the pandemic’s spread in Australia reduced Arq’s sales from the second half of March, as its small business customers cut spending in digital marketing and online business promotion.
As of its last update on 27 February, Arq had been undergoing a strategic review that may see it sell its small- and medium-sized business (SMB) -- its last remaining unit.
The results come off the back of a difficult year for Arq, starting with the sale of its TPP Wholesale Reseller arm, the resignation of CEO Martin Mercer in September and finally the sale of its enterprise services business.
It closed the 2020 half year ending 31 December with a loss of $129 million and an earnings loss of up to $31 million.