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PetroChina to Book 5 Bn Yuan for 35,000 Laid-Offs
Oil giant PetroChina plans to book about five billion yuan (US$604 million) into its 2000 results in charges for laying off 35,000 workers over the next three years and asset write-offs, a senior company official said Friday.
The estimated five billion yuan would include about two billion yuan (US$241.5 million) in asset write-offs, the official, who spoke on condition of anonymity, told Reuters by phone from Beijing, adding that the final figure was still being determined.
Earlier Friday, PetroChina said in a statement that it had a preliminary plan to cut 35,000 staff over the next three years and that total provisions for the payroll cuts would amount to about 3.15 billion yuan (US$380.4 million).
The job cuts are part of a previously announced plan to reduce the oil producer's workforce by about 50,000 workers or some 10 per cent over the next five years.
PetroChina, the country's largest oil producer, has set itself a goal of cutting costs by nine billion yuan (US$1.09 billion) between 1998 and 2002.
The statement did not say how the company would book the provision, although some analysts said they had anticipated the 35,000 lay-offs and expected the 3.15 billion yuan provisions to be booked into 2000.
The plan was subject to finalization and the company intends to adjust the plan in line with its restructuring programme, employee reduction situation and cash flow position, the statement said.
The PetroChina official said PetroChina wanted to book the five billion yuan into 2000 because it would have huge profits for the year due to high oil prices.
"This year our profits will be very good," he said.
"It's normal for an international company like us to do this when our earnings situation is so great," the official said but declined to forecast profits.
Anticipating the high provisions, some analysts have revised down their forecasts for PetroChina's earnings this year.
Shuming Huang, analyst at Goldman Sachs which sponsored PetroChina's US$2.89 billion initial public offering in April, said she expected PetroChina to post net profits of 52.8 billion yuan (US$6.38 billion) for 2000 after an estimated provision of five billion yuan.
That would still be more than double PetroChina's 1999 net profit of 22.4 billion yuan (US$2.71 billion).
ING Barings said in a research report that it had cut its forecast for PetroChina's 2000 earnings from 55.3 billion yuan to 52.6 billion yuan due to the expected layoff charge. Analysts said the job cuts would have a positive impact on PetroChina's operations over the long term.
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