Ross Taylor, CEO of Fletcher Building, recently revealed his ambitious plans for the company, with a target of doubling its profit margins from building products operations by 2023. However, he’s also issued a bit of a warning, as he believes that the AU’s residential construction market to slow down come 2019 thanks to falling demand for apartments, which might be problematic for companies like Amber Tiles, the ones that handle residential construction materials.
However, Taylor says that this shouldn’t be too problematic, as the decline in residential construction across the market would be compensated for by the construction boom happening across Australia’s Eastern Seaboard.
Fletcher will be bringing in all of its underperforming businesses into a single group, to be managed by the company’s new Australian Chief Executive, Dean Fradgley. The company’s AU operations amount for about 30% of Fletcher’s total revenues. These businesses include its competition for Amber Tiles;Tradelink plumbing and bathroom supplies, as well as Iplex pipers, Rocla concrete, Stramit steel products, Tasman Sinkware, and the Fletcher insulation subsidiary, which generate a combined $3 billion in annual sales.
The group will be slowly moving away from commercial construction, brought about by a sudden drop in value. Mr. Taylor says that, sometimes, a crisis is needed to really know what a company needs to do and what they need to focus on.
On top of the shift, Fletcher will also be selling off Formica, its US laminates operations, which could potentially sell for more than $1 billion. The company’s already listed, having gone up for sale back in April 2018. Taylor also describes some serious annual cost-cutting, of about $NZ30 million, with 90 people leaving from the group, most of them leaving from the company’s head office in New Zealand.
Taylor admits that some of the issues that have popped up were self-inflicted, saying that the group starved some of the businesses in the AU.
Taylor says he believes that the improvements aimed at Fletcher’s AU operations will still come through even though he forecasts that the country’s construction market will grow by an average of only 0.1% between 2018 and 2023.