Fletcher's Adamson sets sights on Australia
Fletcher Building's recently appointed chief executive laid out his strategy at the firm's annual meeting in Auckland today, with further global expansion and a greater focus on cost controls on the cards.
The news boosted the company's shares to their highest level in just over a year.
Mark Adamson, who took over the top job at the Australasia construction giant from Jonathan Ling in October, said his chief priority in the year ahead was to further diversify the firm's revenue base by looking offshore.
Fletcher already generates about 63 per cent of its revenues from overseas markets - a level he hopes to lift.
"In the years ahead we will continue to look for further areas to invest overseas, principally Australia where we still have a number of gaps in the range of products we manufacture and distribute," he said, adding that acquisitions further afield could be made on a selective basis.
Not that trading conditions seen across the Tasman are seen as rosy, with chairman Ralph Walters saying the firm expected residential housing activity to decline, the commercial construction markets to remain weak, and uncertainty around the global outlook likely to delay resource sector projects.
Similarly, construction prospects remain subdued in its other markets, although signs of rising residential construction were evident in New Zealand and the US, while Asia continued to show satisfactory growth.
Despite the less than rosy outlook, the company is sticking with its earnings guidance of a 22 per cent lift in operating profits on last year to between $560 million and $610m for 2013, up from $403m in the previous financial year.
Those pre-tax operating gains will come from cost reductions and margin improvements, with Adamson looking to reduce Fletcher's expenses in the year ahead by sharing network costs and retail outlets, and sharing finance, IT, human resources and procurement platform across Australia and New Zealand operations.
Adamson is also looking to use the Fletcher's scale and footprint to establish "centres of excellence"specifically in the areas of procurement, logistics and distribution, manufacturing, digital technologies and business services.
The firm will also invest in its digital capability to better interact with customers and reduce its costs.
Directors reiterated their commitment to maintaining dividend levels, having paid out 34 cents per share in 2012, up from 33c a year earlier despite full year net profit coming at $185m - 35 per cent lower year-on-year.
Fletcher shares rose 3.9 per cent to $7.67 in the wake of the announcement, and have gained 20.2 per cent in value since the start of the year.