Fletcher Building chief executive Ross Taylor, to announce changes on Thursday. Photo/Greg Bowker
Fletcher Building chief executive Ross Taylor, to announce changes on Thursday. Photo/Greg Bowker
An overhaul of Australian business operations to increase revenue is on the cards for Fletcher Building when it announces its five-year plan, due out on Thursday morning in Sydney.
Fletcher has invited investors and analysts to join chief executive Ross Taylor for the launch of its new longer-term strategy announcementand briefing in the New South Wales capital.
It seems no accident Sydney was picked for Taylor's speech.
After re-engineering the business away from any new disastrous loss-making high-rise construction contracts, Taylor is said to be working on an overhaul of the company's Australian building products operations.
Those generate about A$3 billion (NZ$3.2 billion) in annual sales. In April, he told the Australian Financial Review he would appoint one executive to oversee the entire Australian business.
That person would oversee a reorganisation of the Tradelink plumbing and bathroom supplies, Iplex pipes, Rocla concrete, an insulation business and Stramit steel products in a substantial structural revamp, all bought last decade.
"We will run Australia as one business," Taylor told the AFR in the April article when he also said he was aiming to get returns across the Tasman of nearer to 8 to 10 per cent instead of the existing 3 to 4 per cent.
Shane Solly, of Harbour Asset Management, indicated that Fletcher to do more than just shake up Australia:
"Investors will be looking for a rebasing of the business – what are the go-forward business streams and what is non-core?"
Solly expects an update on asset sales, particularly Formica. Fletcher is selling the iconic American-headquartered Formica and its roof tiles business, which have been put at about $700m.
Fletcher, which has 37,800 shareholders, has been reported as hiring Macquarie Capital to sell Formica. The sale comes after big losses in New Zealand from major construction projects.
Taylor also indicated earlier this year that job losses would be announced in June. He told the Herald the business expected to announce lay-offs to trim overheads and said he was deeply disappointed about that prospect.
Sir Ralph Norris and Fletcher Building CFO Bevan McKenzie. Photo / Greg Bowker
A replacement for Fletcher chairman Sir Ralph Norris, who revealed he would stand down in February, is also yet to be announced.
Norris' resignation came after the business revealed it expected to lose nearly $1 billion on major construction contracts including the SkyCity International Convention Centre and Christchurch's Justice and Emergency Precinct.
The company expects, in the financial year to June 30, its earnings before interest and tax will be in the range of $680m to $720m. The loss from its Building & Interiors unit is affirmed at $660m.
In February, Forsyth Barr projected a net loss after tax for the 2018 year of $49.1m. If that occurs, it will be the second time since the company listed on the NZX in 2001 as a stand-alone business from the wider Fletcher empire that it has made a loss.
However, Forsyth Barr's Matt Henry has the business returning to the black to make a net profit after tax of $408.5m in the 2019 year and $371.8m in the 2020 year.
Fletcher's share price has recovered lately, rising from $5.50 on March 5 to $6.80 at last Friday's close.
