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

 

Pre-Budget: Computer Emergency Response Team, Assemble!

John Key told the country's first ever Cyber Security Summit in Auckland that the government had earmarked funding set up a national Computer Emergency Response Team to help prevent and act on cyber incidents in partnership with the private sector and other organisations. More>>

ALSO:

Job Cutter Goes: Mark Weldon To Step Down As MediaWorks CEO

“When I joined MediaWorks in August 2014, I had a mandate to lead a significant change programme to bring the business back from receivership into a position where it could once again be a strong competitor in the market, with a sound and sustainable future. It was a big brief, laden with inherent challenges, but I took it in good faith and have dedicated myself fully to the goal since." More>>

ALSO:

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news