Melbourne-based Arq Group may be in the worst financial shape it has ever been as the company struggles to stay afloat amid current market turmoil.
The company has been struggling financially for some time and pulled its earnings guidance for FY 2020 claiming uncertainty from the ongoing coronavirus pandemic.
At the same time the business is accelerating cost-cutting measures, including staff cuts.
Arq said it had experienced a reduction in small business spending away from digital marketing and online business promotions since the second half of March 2020.
The company is introducing incremental cost reductions across staffing, marketing expenditure, property and systems, which could add an additional $1.6 million in savings.
Arq said it expects to become a smaller organisation with a simplified operational structure that includes the consolidation of business units and the removal of some senior and mid-level management roles and reduced overheads.
The savings are in addition to previously announced cost reductions of $900,000 in direct costs and $2.8 million in corporate costs for the year.
In February, Arq expected to deliver core EBITDA of between $11 million to $12 million for the current financial year.
“The company has undertaken a review to understand the impact and it is clear that the company needs to proactively address the decline by removing additional cost from the business, including [some] incremental cost reduction initiatives set out below,” Arq’s ASX announcement read.
Arq also remains engaged with potential buyers of its SMB division, with “a number of parties” continuing to engage in discussions with the company and conducting due diligence.