Fletcher’s Boss Considers Company Breakup

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Thursday, October 17th, 2013
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Fletcher Building chief executive Mark Adamson says he is considering splitting home building from the construction division at New Zealand’s biggest listed company.

Adamson, former head of Fletcher laminates, is 12 months into the job and is close to completing his management overhaul, including installing a new chief financial officer and general counsel.

“About 80 per cent of the management changes are done,” Mr Adamson told BusinessDesk after the company’s annual meeting in Auckland.

“You’ve got to have your own people. You don’t want to spend years and years trying to get people to adopt your philosophy.”

He declined to elaborate on potential further management changes, but further moves may be pending for the company’s construction division, which he referred to as “a big behemoth of infrastructure and residential”.

It was a broad business structure that we may “look to separate”, he said.

Mr Adamson said no firm decisions had been made about the construction business and there were no plans to divest the business.

The review looked at how the residential business operated within the group and was part of a wider strategic assessment of all Fletcher’s operations.

“The residential development business has very different characteristics from our other construction and engineering activities,” he said.

“We have previously stated our desire to grow the residential business, which will require more resources, capital and management focus.”

Mr Adamson told shareholders that he saw opportunities to expand in the Auckland housing market through increased medium- and high-density developments. The company completed its first apartment building, in Auckland’s Stonefields subdivision, in the latest year and has several more planned.

Fletcher shares climbed 1.4 per cent to $NZ9.53 after it told shareholders that earnings before interest and tax would rise to between $NZ610 million and $NZ650 million ($A542.13 million and $A577.68 million) in the 2014 financial year from $NZ569 million last year.

The company said the first quarter had seen a continuation of conditions in the 2012 year.

Weak trading in Australia was being compounded by a strong kiwi dollar, which is likely to shave $NZ15 million off earnings.

 

By Jonathan Underhill

 

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