IDP Education to cut global workforce by 6%, shares tumble
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More news: Shares in IDP Education plunged at the start of trading on the ASX after it announced cost saving measures, including a 6% reduction of its global workforce, as it warned of a contracting international student market.
IDP shares were down 12.3% to $13.75 by 10:25am AEST.
IDP has 7,000 staff globally and will cut 400 across nine countries.
What they said: IDP's CEO and managing director Tennealle O’Shannessy told investors today: "We have trimmed discretionary expenditure across a number of areas, including travel, consultancy, IT and marketing to reflect the market conditions.
"We are reducing our staff base by approximately 6% with targeted reductions in nine countries where efficiencies were identified.
"It's important to note that changes to our global office and testing footprint are minimal and we are focused on minimising impact on revenue-generating roles.
"We've also continued to fund an expansionary capex programme, which will likely include some additional offices in high growth markets, where profitability can be achieved in year one."
IDP Education to cut costs as global student market contracts on visa settings
The news: Education services company IDP Education is introducing a cost-reduction program as changes in visa settings across Australia, Canada, and the UK have lowered the size of the international student market.
The numbers: IDP said it expects the international education market to decline by 20% to 25% over the next 12 months, owing to current policy settings and market trends.
The Melbourne-based company forecasts a 15% to 20% increase in student placement volumes for FY24, but a 15% to 20% decline in International English Language Testing System (IELTS) volumes, with "solid" average fee growth compared to FY23.
IDP said it expects full-year adjusted EBIT to be "broadly in-line" with FY23.
The context: IDP said that governments in its key markets have "largely implemented" visa changes that are expected to negatively impact on the size of the international student market.
In Australia, the government has amended international student visa settings which has resulted in a 28% decline in international student visa issuance in the first three months of the 2024 calendar year compared to the prior corresponding period.
In January, the Canadian government announced a temporary two-year cap on international student visa applications, with a 28% projected year-on-year reduction to permits issued relative to 2023.
Meanwhile, UK policy changes have seen a 21% year-on-year decline in visa issuance during the first three months of this calendar year.
IDP, which offers student placements in Australia, New Zealand, the USA, UK, Ireland and Canada, said it is implementing a cost reduction program designed to align expenses to the near-term revenue outlook.
It noted that it remained "very well placed" to navigate the challenging market conditions and expected to grow its market share in student placement. The company also said that it remained confident in the long-term growth drivers for the industry.
The source: ASX announcement
