Forum Archive Index - August 2000

["Mike Hudson" <mikehudson@clear.net.nz>]

Peter wrote

"Hopefully all the businesses are not dogs and some value can be extracted out of
it for any future owner.

 

Another factor that concerns me is that there is no
doubt a lot of inter company trading within the group and within the whole
Fletcher organisation - how arms-length is this and what are the real margins
businesses could be making."

 

They are far from all being dogs. Winstone Wallboards is a money machine and the quarrying, aggregates and cement business are also far from being dogs. Actual EBITs for the year to June 99 and forecast for 2000 (ex CSFB) are         

 

                               A99                  F00

Building Products     $38m               $65m  ($44m from WWB F00)

Concrete                 $59m               $72m 

Steel                      $(41m)              $36m   ($50m write off from China fiasco A00)

Construction            $16m               $12m   ($4m write off Aus ops F00)

 

TOTAL                    $72m                $184m

Interest                   $35m                $  33m

Tax                        $16m                 $  47m

 

NPAT                    $21m                 $106m                 

 

My personal pick is that these results will be exceeded although as I said before I have no inside info.

 

Peter, I can assure you that all transactions within the Group are at arms length. Negotiations among the sister companies are probably tougher than with outside suppliers.

 

I agree that there has been mismanagement. One of the problems I believe is the propensity of FCL (much less recently) continually moving senior management around the Group. This has resulted in a lot of short term thinking and inconsistency of strategy. 

 

As a shareholder I believe that a break up would unlock a lot of value within FLB and at the same time get rid of a lot of dead wood at the top. Don't get me wrong, there are a lot of very talented people within the Group and a lot of very successful and well run businesses. Hang on to your shares

 

Cheers

Mike H