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

 


CORRECT: Fletcher strategy under scrutiny seeking $70M gain

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

(Adds dropped millions in fifth paragraph)

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 million 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

 

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news