Fletcher Building [NZX: FBU], New Zealand's largest listed company, will close its unprofitable Crane copper tube manufacturing business in Australia amid increased competition.
The building company acquired the business when it took over the publicly listed Australian plumbing supply chain and plastic piping company Crane Group in early 2011 in a deal valued at $1.2 billion. Exiting the business will result in a $19 million expense in the current financial year ending June 30, 2015, the Auckland-based company said in a statement today.
Fletcher shares fell 1.4 percent to $8.79.
Exiting copper tube manufacturing will result in the closure of the company's factory in Penrith and affect 108 roles, Fletcher said. The company will seek to redeploy workers within Fletcher Building where possible, it said.
"The decision to cease trading and close the Penrith factory has been made only after an exhaustive analysis of options to restore profitability," the company said. "Crane Copper Tube has been unprofitable for a number of years due to factors including manufacturing overcapacity of copper tubing for plumbing requirements in the Australian market, the increasing substitution of copper tubing with other materials such as plastic composites and increased import competition."
Fletcher expects manufacturing and domestic trading at the copper unit to end this calendar year and a transition out of export trading within 18 months. The company's Tradelink business, which used the Crane copper tubing, has secured alternative supply, it said.
The Penrith site will remain in Fletcher ownership, the company said.
(BusinessDesk)
Tina Morrison
Wed, 24 Sep 2014
Wed, 24 Sep 2014
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Fletcher to close Australian copper tube manufacturing unit at $19m cost
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