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THE NEWS WRAP: Ford closure to impact auto parts sector, “Geelong to get through this”
Ford’s decision to end production of vehicles in Australia is set to have a major impact on auto parts suppliers and the Geelong region, as well as an indirect impact on other businesses.
“Suppliers have been adjusting their businesses over many years, given a lack of volume. The fact that one of the vehicle manufacturers has announced they are going to pull out will mean businesses will have to further adjust and, quite frankly, not all of them will make it." Federation of Automotive Products Manufacturers chief executive Richard Reilly said.
Meanwhile, Geelong mayor Keith Fagg remains defiant in the face of the closure of the ford factory, saying the provincial Victorian city will survive.
"It's a significant dampener on the psyche, but I believe Geelong will get through this… Geelong has proved its resilience in the face of some major blows,” Fagg said.
Packer sells $264 million stake in Echo
James Packer-controlled Crown has announced the sale of its 10% stake in Echo Entertainment, the owner of Sydney’s Star City Casino, for around $264 million.
The sale comes as New South Wales Premier Barry O'Farrell prepares to decide on the fate of Packer’s proposal for a second Sydney casino at Barangaroo, with the announcement due before June 21.
“Melbourne is a much better city because of Crown . . . the reality is Star has never achieved that in Sydney," Packer said last week.
Service Stream hammered by NBN rollout contract loss
Service Stream has been forced to downgrade its full year earnings after its 50:50 joint venture with Lend Lease was forced to hand back a contract to roll out the NBN in the Northern Territory, estimated to be worth up to $341 million.
The company has downgraded its full-year earnings guidance to $20 million after the company’s Syntheo joint venture lost the lucrative contract in March, with the company revealing it is now also in breach of loan ratio gearing agreements with both the ANZ and Westpac banks.
“As a result of lower EBITDA as previously announced to the market, Service Stream has breached the gearing ratio covenant under its banking facility agreements," the company told the ASX.
The Dow Jones Industrial Average is down 0.07% to 15,296.04. The Aussie dollar is up to US97.6 cents.