This article is from the Australian Property Journal archive
BUILDING company Fletcher Building has put up major plumbing supply retailer Tradelink for sale and announced a major leadership shake-up as it swung to a first-half loss of $113 million.
Revenue for the New Zealand company was $3.98 billion over the period, down by 1% on the prior corresponding period, when it had posted an $86 million net profit after tax.
It announced that chief executive officer Ross Taylor has given notice to the board of his retirement, and that “as part of a board renewal review being undertaken”, chairman Bruce Hassall will step down from the board at the company’s annual shareholders meeting (ASM) later this year.
Taylor has a six-month notice period. An “international and domestic” search for a replacement will be led by non-executive director Barbara Chapman.
“The board, Ross and I believe it is in the best interests of the business and the team that he handover to a new leader and that I hand over to a new Chair at the time of the ASM in October,” Hassall said.
Meanwhile, Taylor said yesterday that a full review of the Australian Tradelink business over the half year combined with “disappointing results” led to a NZ$122 million non-cash impairment and write-down in its carrying value.
“We have concluded that whilst we believe there is a compelling opportunity for Tradelink, further ownership of the business is not in line with the strategic objectives of Fletcher Building. Consequently, we intend to commence a divestment process for Tradelink shortly.”
The wider result was also impacted by “materially weaker trading conditions, particularly in the NZ residential sector” where volumes declined by 20%. Revenues for the New Zealand materials and distribution divisions was 8% lower.
The Australian division was a “particular highlight”, which delivered EBIT and EBIT margin broadly in line with HY23 despite a soft market. Gross margin lifted from 31.9% to 33.1% and overhead costs were 3% lower.
Taylor said that given the current market conditions, the expected legacy cash outflows and in line with the company’s dividend policy, the board had decided to not declare and pay an interim dividend in order to maintain balance sheet settings.
