Aussie steps down from Fletcher Building
The romance is over, says outgoing Fletcher Building chairman Ralph Waters.
The Australian steps down in October, to be replaced by the well-respected Sir Ralph Norris, after a 13-year association with what has become Australasia's largest building products company.
He was brought in as chief executive in 2001 - the company's fourth boss within 12 months, and joined the board after leaving that role in 2006, becoming chairman four years later.
He has previously been on the boards of Fonterra, Fisher & Paykel and Westpac, and when he leaves Fletchers it will mark the end of his governance career in this country.
"My romance with New Zealand is coming to an end," he said in his plain-speaking way.
Waters remains chairman of Woolworths, which operates in this country under the Countdown brand, and of the 2015 World Cricket Cup which will return him to New Zealand for some of the matches held on this side of the Tasman.
His New Zealand affair was "a fantastic romance. It was a lucky break to get the opportunity to go there".
But the 65-year-old is less than enamoured of the personal attacks on him in Parliament this year after accusations Woolworths had boycotted New Zealand products and that its Kiwi subsidiary Countdown had bullied suppliers - the latter is still under Commerce Commission investigation.
He had a lot to say on both matters. Boiled down, he said the accusations were unfair and he didn't deserve the personal flak.
The company had bought $350 million of Kiwi products on its supermarket shelves in the past year, up $50m on the previous year and he questions why no-one had looked at how much own-brand products were being sold by the newcomer to the Australian market, the German-owned cost-cutter Aldi.
Aldi already has 300 stores in Australia, around a third of the number of Woolworths, but is fast encroaching on the two big players with plans for another 200 stores in west and south Australia. Waters said it's more a matter of when, not if, Aldi also eyes the much smaller New Zealand market.
On the issue of demanding retrospective payments from suppliers, Waters said the ComCom inquiry limited his ability to comment, but "let me say that you people pay in New Zealand prices that would not be tolerated in Australia".
Rather than any price gouging by the supermarket operators themselves, he pointed the finger at big name international suppliers charging a lot more to sell their goods here than in other countries.
Waters is leaving Fletcher Building six months earlier than planned, mainly due to the pressures of the Cricket World Cup.
He claimed it had nothing to do with his relationship with Fletcher chief executive Mark Adamson after the latter made some critical comments in an Australian media interview earlier this year.
Adamson's comments included quoting his chairman as having said: "I don't really understand what you are doing but I really like the outcome."
Waters said he gave Adamson a "good kick up the backside" for the "error of judgement", which cleared the air.
He had been there himself in terms of making unfortunate remarks to a journalist. "The difference was I wasn't a CEO when I did it and I was much younger."
Last week Fletchers reported a solid $339 million in net earnings for the June 2014 year, up on last year's $326m, with profit knocked back by the high kiwi.
Waters praised Adamson's performance in his two years at the helm of New Zealand's largest listed business and said Fletchers was in much better shape today than Waters found it in 2001.
"Fletchers was broken when I joined - no-one can be offended by me saying that. It had weathered a terrible industry downturn and had had misadventures in its overseas efforts in South America and Australia."
At the time Fletchers made nearly all of its money from New Zealand alone while the big three operators in Australia were Boral, James Hardie and CSR. "Now we have a market capitalisation $1 billion higher than Boral," he said.
Waters quickly reversed years of declining profitability, although his blunt style offended some of his senior managers and former Fletcher people. Waters said he did two key things: changed the internal culture to one where people "did the job they were paid to do" rather than contract out the work, and introduced better business disciplines, particularly around capital spending.
His successor Jonathan Ling copped criticism for paying too much for its 2007 $1.3 billion purchase of US-based Formica and the 2011 $1.3b purchase of the Australian Crane Group.
Waters said the US buy suffered from a timing issue with the GFC but Formica had since recovered well. In hindsight the company should have paid less for Crane even though its share price was at the lowest it had been in 10 years when they bought in, he said.
Waters said he will also end his board roles on Australian public companies by the time he is 70. Much of his time is now taken up helping run transformer manufacturer Tyree Industries in Australia, and being a trustee of the Tyree foundation that helps give away half the company's profits annually to engineering research.
- Sunday Star Times