Babcock & Brown chair and CEO to step down as profit slumps: Economy roundup

Babcock & Brown chief executive Phil Green and chairman Jim Babcock have announced they will step down as the company revealed profit had fallen 24% in the six months to 30 June to $150.9 million.

Babcock & Brown chief executive Phil Green and chairman Jim Babcock have announced they will step down as the company revealed profit had fallen 24% in the six months to 30 June to $150.9 million.

Babcock’s shares, which have fallen from $26.80 at the start of the year to just $2.79, crashed a further 19% in morning trade, pushing the company’s market capitalisation below $1 billion.

Chief financial officer Michael Larkin will replace Green, who will remain with the company as a non-executive director.

Babcock, who co-founded the firm in 1977, will be replaced by deputy chair Elizabeth Nosworthy, while the company searches for a new chair. He will remain on the board.

Executive directors Jim Fantaci and Martin Rey will also step down from the board.

Larkin faces a baptism of fire as he assumes the top job.

The company’s debt load – including its seven listed investment funds – is more than $50 billion and it is clear investors that have no confidence in Babcock’s investment bank business model.

Some analysts have speculated Babcock could be forced to return to its roots as a private investment bank, far away from the market spotlight.

Lend Lease has also disappointed the market by posting a 47% fall in net profit to $265.4 for 2007-08. The result was dragged down by $181 million of writedowns and property revaluations.

The company says property markets remain volatile, particularly in the United States and Britain.

Complaints about high fuel prices an ongoing battles with staff have not stopped Qantas recording a 44.1% jump in net profit to $970 million for 2007-08.

Strong domestic and international demand and organisational efficiencies were key factors in the result, but departing chief executive Geoff Dixon said the high fuel prices will put further pressure on the airline’s bottom line next year.

“At current prices our fuel cost in 2008-09 will be $1.6 billion higher than this year,” Dixon says.

Fairfax Media announced a $386.9 million net profit for 2007-08 this morning, up 46.8% on last year. Fairfax’s online operations achieved a 41% lift in EBITDA to $114.4 million thanks to 15% lift in traffic across its sites.

The Fairfax result came in slightly under median market expectations of a $389.2 million profit.

Despite all this bad news, the benchmark S&P/ASX200 has fallen just 44.1 points or 0.8% to 4885.4 points at noon AEST.