Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fletcher strategy under microscope, seeks $70M annual gain

Fletcher puts strategy under microscope seeking $70M annual gain, will shed jobs

By Jonathan Underhill

Feb. 20 (BusinessDesk) – Fletcher Building chief executive Mark Adamson, in the job for just four months, has embarked on a review of the company’s business model aiming to find $70 million a year in additional earnings from centralising operations.

Adamson got approval from his board yesterday for the plan that is likely to see hundreds of jobs cut across Australia and New Zealand. He wants to find ways for the company’s 50-odd independent and autonomous business units to share everything from office space to core support functions and purchasing.

“I believe we’re leaving money on the table,” he said on a conference call.

The first step will be the creation of a shared services centre, likely to be based in Auckland using office space freed up by the rationalisation of Fletcher’s Laminex business and containing accounts, human resources and ICT for the whole group.

Group procurement will be centralised to try to trim the $800 a year Fletcher spends with indirect third-parties. Adamson also aims to cut the $250 million a year spent on property by co-locating businesses and renegotiating leases.

The improvement in earnings won’t become apparent until the 2015 year because of the cost of the changes including redundancies. Fletcher employs 19,200 people across the world, of which some 6,500 are in Australia and 8,500 in New Zealand, according to its November sustainability report.

Adamson announced the review after Fletcher posted first-half earnings that rose just 1 percent, missing some analyst estimates in the face of declining earnings from Australia.

The shares tumbled 5.3 percent to $8.83 on the NZX today, dragging the NZX 50 Index lower.

Profit rose to $146 million in the six months ended Dec. 31, from $144 million a year earlier, the Auckland-based company said today. Sales rose 3 percent to $4.38 billion.

Fletcher reiterated the guidance given at its annual meeting for full-year operating earnings of $560 million to $610 million. It sees no improvement in Australian trading in the second half while all of its New Zealand businesses should show gains, underpinned by increased home building, infrastructure projects and continued strong reconstruction activity in Canterbury.

“The pace of new residential construction in New Zealand has improved substantially over the past six months in both Canterbury and Auckland,” Adamson said in the statement. “By contrast, in Australia, weak market conditions have continued in the residential and commercial construction sectors.”

The biggest deterioration came from Crane Group, the Australian pipe manufacturer and distribution company acquired in early 2011with the aim of diversifying Australian earnings.

Fletcher's Adamson said weak conditions in residential and commercial construction in Australia led to a 12 percent decline in earnings from operations across the Tasman while in New Zealand, rising residential building activity, especially in Auckland and Christchurch, lifted local earnings by 31 percent.

Operating earnings from Crane’s pipeline business rose 7 percent to $31 million while at the Tradelink distribution business, earnings tumbled 59 percent to $9 million, reflecting the weak Australian residential housing market. Tradelink would take several years to turn around, Adamson said today.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news