Fletcher boss warns of job cuts amid housing slump

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Goldman Sachs unveils alternative trading platform SIGMA X

Goldman Sachs unveils alternative trading platform SIGMA X

FLETCHER Building chief executive Jonathan Ling has flagged more job cuts in his Australian business amid tough conditions for the housing industry.

The company is counting on about $5 billion worth of earthquake reconstruction work in Christchurch, New Zealand, over the next five years.

Mr Ling said the most challenged parts of the business included its decorative surfaces arm The Laminex Group, which had suffered a fall in volumes and was being restructured, and the Australian insulation business and long steel business, which faced competition from imports and the strong Australian dollar.

“The steel industry is going through a very tough time. The insulation industry . . . is going through a very tough time,” Mr Ling said.

He said Australia would be “hard hit” by job cuts across the industry this year.

During its half-year result revealed last month, Fletcher announced that there would be up to $50 million worth of restructuring across its Laminex business, predominantly in Australia.

Fletcher had about 2500 people working in its Laminex business and it was possible that 10 per cent of that workforce would be shed.

“It’s about reducing costs in general, not just about jobs and people but balancing manufacturing capacity with demand,” Mr Ling said.

He said the company estimated that the rate of home building in Australia was lower than the global financial crisis levels, with weakness across the board.

But Mr Ling said the cost of the devastation from the Christchurch earthquake was expected to be up to $NZ30bn ($23bn), bringing $NZ5bn in work to Fletcher over five years.

Last month, when Fletcher reported a 13 per cent fall in its half-year net profit to $NZ144m, Mr Ling lashed out at the federal government, saying it was to blame for the poor state of the insulation market. It was reported at the time that Mr Ling wanted to pursue compensation, believed to be about $NZ20m in lost income.

Sales from the insulation business, which was also under review, had fallen sharply after the federal government’s installation incentive scheme was scrapped two years ago.

Last month, Fletcher also flagged that its full-year earnings before unusual items would be $NZ310m-$NZ340m, well down on the $NZ359m the company reported last year.

[The Australian]