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

 

Maritime: Navigation Safety Review Raises Big Issues For The Govt

Shipping Federation: "The reports makes it clear that the ratification of the Maritime Labour convention (MLC) is long overdue. Only when the MLC is ratified will Maritime NZ be able to inspect and enforce the labour conditions on international ships visiting our ports." More>>

ALSO:

100 Years After Einstein Prediction: Gravitational Waves Found

For the first time, scientists have observed ripples in the fabric of spacetime called gravitational waves, arriving at the earth from a cataclysmic event in the distant universe. This confirms a major prediction of Albert Einstein’s 1915 general theory of relativity and opens an unprecedented new window onto the cosmos. More>>

ALSO:

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news