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

 

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

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, Including Xtra: 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>>

ALSO:

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:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news