Construction giant Adbri is looking for a new permanent leader after chief executive Nick Miller’s sudden exit while flagging cost and weather pressures on its profit.
Mr Miller will step down as a director and the board will work with him to transition his executive responsibilities in an orderly manner, the group said on Monday.
Senior executive Mark Irwin has been appointed as interim chief executive on a fixed salary of $1.4m for six months, starting Tuesday.
“The board has determined that it is an appropriate time for a change in leadership and the board thanked Mr Miller for his service, particularly during the challenges of Covid-19,” AdBri said.
Mr Miller has been CEO of Adbri since late January 2019. The Barro family control 43 per cent of AdBri and Mr Miller was originally chosen for the role after running NZ construction and infrastructure company Fulton Hogan, which also has a sizeable business in Australia.
But his experience handling the Fulton and Hogan dynasties, the private rich-list families that control the NZ company, was also highly prized given the sensitivities around managing conflict protocols at AdBri.
Deputy chair Vanessa Guthrie said changing market dynamics means Adbri needs to increase focus on driving efficiencies and costs to improve margins.
“Mark is well-placed to drive this disciplined agenda given his executive track record, while continuing to deliver on our previously outlined Net Zero Roadmap.”
The company expects to record an underlying net profit after tax – excluding property and significant items – of $75 –$85m for the full year ending December 31.
“The demand environment has remained robust, however extreme rainfall events and ongoing inflationary headwinds, particularly energy and diesel costs, have continued to impact margins.”
Building construction workers on site in Melbourne. Picture: Andrew Henshaw/NCA NewsWire
While Adbri has implemented out-of-cycle price increases, they have not met ongoing cost inflation, the company said, and the business is looking at further cost-cutting.
The group has kickstarted a critical review of expenses to deliver further additional cost reductions by focusing on operational efficiency improvements, reviewing key supplier and customer contracts for repricing opportunities and accelerating its divestment of surplus land to realise value and recycle capital.
Adbri booked a net profit of $116.7m in the 2021 financial year.
The company’s shares were smashed in August after it delivered a “soggy and disappointing’’ half year result.
Adbri couldn’t lift prices fast enough in the six months to June 30 to offset inflationary pressures including higher raw materials, power, transport and fuel costs.
The company said a cost reduction program, which delivered $7.5m in gross cost savings, on track to for $10m in savings for the full year, had limited impact with the benefits outweighed by inflation and geopolitical events.
Residential construction provides about a third of AdBri’s earnings exposure, with mining above 20 per cent but infrastructure below 15 per cent.
Adbri shares last traded at $1.84 on the ASX, giving it a market value of $1.20bn.
ABC Price at posting:
$1.51 Sentiment: None Disclosure: Held
