19 Jun 2012

Fletcher Building confident new CEO can lift earnings

6:04 am on 19 June 2012

Fletcher Building is confident its newly named chief executive can lift earnings in its main markets over the next few years.

Jonathan Ling will step down as chief executive at the end of September after six years in charge, to be replaced by insider, Mark Adamson, who currently heads Fletcher Building's Laminates and Panels division.

Mr Ling turned Fletcher Building into Australasia's biggest building products company, buying US-based Formica and Australia's Crane Group, which nearly doubled the size of the firm.

But his tenure co-incided with the global downturn, curbing earnings growth and halving the stock price from nearly $13 each in May 2007.

Mr Waters, who preceded Mr Ling, says he led the company well during trying times for the entire business community.

Mr Waters says although Fletcher Building's earnings might be below what was wanted, the company is basically intact.

Some analysts say Mr Ling overpaid for Formica, which cost about $1 billion, and for Crane at $1.3 billion.

On the Crane deal, Mr Waters says the company is more than pleased with the acquisition and the way it's been folded into Fletchers.

"We bought the main businesses of Crane to own forever and we bought them at a very appropriate time for price and we are more than pleased with the acquisition, the way it was handled and the businesses that we intend to continue owning from that".

Jonathan Ling says it's the right time to go, having bedded down the Crane acquisition, and with Fletcher Building ready to cope with the extra work when the rebuilding of Christchurch starts to pick up pace.

Mr Ling says going to the next stage in the development of the organisation it probably needs a commitment of another three or four years.

"I think this is an ideal time, from the company's point of view, to have fresh eyes, fresh energy, a new look across the business".

Mr Ling says he'll now take some time off before deciding what to do next.

His replacement, British-born Mark Adamson, started with Formica in 2000.

Mr Waters says he's shown great ability at its Laminates division to keep costs down and identify profitable opportunities despite weak demand.

Mr Adamson, who will move from Ohio with his family to Auckland, kept his future plans for the company close to his chest, but says Christchurch will be an important focus for the management team.

Mr Waters say he expects Mr Adamson to take what he's done at Laminates and apply that to the company as a whole.

"I would be disappointed in fact if there isn't some change as he rethinks how the company needs to operate in subdued markets to get the best out of it", Mr Waters says.

Mark Adamson will be paid $1.5 million and receive two tranches of 500,000 share options, granted three years apart.