Submitted by Joe Hendren on Wed, 02/07/2008 - 10:22am.
In a move which flies in the face of the economic downturn, Australian home improvement chain Bunnings says it plans to open six new stores in New Zealand, investing $90 million and creating 500 jobs.
The big-format retailer has announced expansion plans which show its retail outlets could grow from the current 16 to 22 stores - and then to 26 in the near future. Brad Cranston, general manager of Bunnings in New Zealand, said the business would open at Westgate in Auckland, increasing its footprint in Auckland to five big stores. West Auckland was a significant growth area, and the new store would have a hire shop, free DIY clinics, a children's playground, a cafe and two levels of carparking, he said.
Cranston was not concerned about the economic slowdown. Sales turnover was down on last year and same-store sales had dropped within the last two months, but Bunnings views New Zealand as an area of high growth, he said. The sales downturn was "something of a blip" and did not affect the firm's expansion drive.
Bunnings had invested more than $250 million in New Zealand this decade, Cranston said. The business started here in 2001 following the purchase of the Benchmark Building Supplies stores and now makes annual sales of more than $500 million, Cranston said.
Bunnings owned a new Nelson store and would own the new Westgate store, he said. The Westgate deal comes after a new large-format Bunnings store was developed in Nelson, where the retailer opened yesterday. Previously, the chain announced plans to develop stores in Gisborne, Wellington's Lyall Bay and Upper Hutt, and Dunedin. Some of its new stores cover more than a hectare.
Cranston said the business was also examining establishing a further four stores after that. Outlets in Hawkes Bay, Taranaki, South Auckland and the North Shore were quite on the cards, he said. However, plans for those areas were not yet finalised.
Cranston said Bunnings was showing confidence in the market with the new projects. Retail sales have been falling, in line with the shrinking economy, but he is confident about the retail niche Bunnings has carved out since coming here seven years ago.
"The creation of these 500 new jobs will have a positive impact on the community," he said. "As well as offering new employment, Bunnings Warehouse team members are encouraged to play an active part in their local communities by supporting local community groups.
Last year, Bunnings completed the sale and leaseback of 11 retail warehouse properties in Australia and New Zealand, netting A$203 million ($229.5 million). Auckland-headquartered Dominion Funds Management bought five New Zealand properties, while Australian fund Charter Hall bought the remaining six properties in Australia.
Bunnings is owned by Australian conglomerate Wesfarmers, and its main competitor in New Zealand is Mitre 10 Mega, which is also still expanding and aiming for 20 large-format stores.
Mitre 10 has been in New Zealand since 1974 when it was introduced by 15 hardware retailers who had watched the success of the retail formula in Australia. They felt it was time New Zealanders, too, were offered the cost savings achieved when retailers could pool their orders, buy in bulk and promote nationally, Mitre 10 says. More than 120 stores are operating under the Mitre 10 banner including more than 15 Mega stores.
* Opened in New Zealand in 2001.
* Has 16 large-format stores.
* Plans to have 22 stores soon.
* Melbourne-headquartered business.
* Became a public company in 1952.
* Founded by migrants from London.
Submitted by Joe Hendren on Fri, 02/11/2007 - 9:12am.
The world's largest shopping centre owner, Westfield, wants to expand here by developing more shops and adding to its $3 billion asset base.
So says Stephen Lowy, 44, joint managing director of Westfield Group, here from Sydney yesterday for the opening of the $210 million Albany centre after a partial opening two months ago. That new mall has 5.2ha of indoor floor space and although Prime Minister Helen Clark opened it yesterday, the 1800-seat cinemas will not open until next year.
Lowy said that in the last seven years, Westfield had spent an annual average $175 million and it planned to continue. "We've got 12 centres here with a value in excess of $3 billion so on that alone, we'd be in the top 10 New Zealand companies if we were listed [here]."
Lowy is one of Australia's richest men, with his family's fortune estimated to be at least A$5 billion ($6 billion), second only to Australian publisher James Packer with A$7 billion. Lowy, a son of Westfield founder and holocaust survivor Frank Lowy, is also a member of Prime Minister John Howard's Business-Government Advisory Group which consults on anti-terrorism strategies and national security issues.
The former US investment banker is president of Art Gallery of New South Wales, a director of the Victor Chang Cardiac Research Institute and a director of the Lowy Institute for International Policy. Westfield's annual report showed he earned A$8.4 million last year, up from A$4.9 million in 2005.
Lowy yesterday emphasised his company's expansion plans here, particularly at Albany where surplus land will allow far more shops to be built soon. "It's endless. What limits us is only demand of the population," Lowy said.
Westfield is expanding its Newmarket centre, adding a multiplex cinema and further shops, he said. At Riccarton in Christchurch, it is developing a second level and the expansion of Manukau is being completed.
But the growth here is being far outstripped by a global drive, with Westfield opening five new malls in the last month. Four weeks ago, it opened the £340 million ($917 million) centre in Britain's Derby, followed by two new centres in Australia at Newcastle and Brisbane. Yesterday was New Zealand's turn with Albany and tomorrow Westfield will open a new centre in Annapolis, Maryland in the US. "So that's about A$1.5 billion of shopping centres opened in four weeks."
To cater for that rapid expansion, Westfield was drawing many executives from New Zealand, Lowy said. For example, John Widdup, director of Westfield New Zealand since 2001, has just been appointed to run Westfield America, in charge of 9000 shops in 59 centres worth US$18.7 billion ($24.2 billion). Widdup left Parnell for Sydney about two years ago but has now shifted to the US. And Justin Lynch, an Australian at Westfield in Auckland for the last seven years, has stepped into Widdup's role. Lynch was this week appointed director of Westfield New Zealand. Lowy said Jason James, a former leasing manager at Glenfield, had shifted to Britain to run the new Derby centre.
But Lowy baulked at the suggestion that Westfield developed formula-style malls which were much the same throughout New Zealand. "I would strongly disagree with that. I don't think Albany's the same as any other centre. Every product we do, we challenge ourselves to make it better than the last one," he said.
- Westfield is the world's largest listed retail property group.
- Manages assets worth $73.1 billion.
- Malls in Europe, United States and Australasia.
- Owns 12 malls in NZ worth $3 billion.
Submitted by Joe Hendren on Tue, 04/09/2007 - 4:15pm.
An Indian businessman has paid a record price for an apartment, parting with $11 million for a new Auckland penthouse. But high taxes mean he may spend little time there.
Mike Panjwani - who has business interestsin New Zealand, India, Singapore, Europe and Dubai - has bought levels 29 and 30 of the Sentinel apartment block in Takapuna. Mr Panjwani has bought the apartment unconditionally, but will not be moving in until early next year because the property is a shell.
Speaking from Singapore yesterday, Mr Panjwani said he might only spend a few weeks a year in the penthouse. "We don't know how much time we're spending there. My family can't afford to spend months in New Zealand. The taxes are very high." Some Sentinel units have sold more than once, and units that fetched around $900,000 originally had resold for more than $1 million.
The 117-unit tower will open in December. The two penthouse levels are connected via an internal staircase. The unit was sold with a dedicated lift, four basement carparks, lap pool, spa and large glass-walled decks.
Barfoot & Thompson agent Wayne Muir, who acted for Mr Panjwani, said the businessman was impressed with the seaside suburb. "He sees Takapuna as a premiere urban seaside location and was impressed by the quality and location of the Sentinel."
The penthouse is yet to be fitted out, but will have a combination of bespoke hand-crafted carpet and natural stone flooring. Apartment walls will be able to be moved, and the apartment will include a home theatre, motorised windows, gas fireplaces, underfloor heating and large deck areas. Mr Panjwani has owned a house in St Marys Bay, central Auckland, for a number of years. Two years ago, he sold a collection of large Auckland investment buildings worth more than $25 million through his company Empress Leisure to apartment specialist Blue Chip.
Caption: Street level of the 30-floor Sentinel apartment building in Takapuna, Auckland.
The sale means property developer David Henderson's Princes Wharf apartment is now the most expensive penthouse on the market. That apartment, which went on the market earlier this year and was tipped to fetch $10 million, remains unsold. The apartment occupies the entire top level of the Princes Wharf block above the Hilton Hotel.
Businessman Colin Giltrap is understood to have set the previous apartment price record for a penthouse in Lighter Quay's North, on Auckland's waterfront. Mr Giltrap previously lived for about 20 years in a Herne Bay waterfront home that he sold four years ago for $7.2 million.
- Most expensive apartment for sale: $10 million Princes Wharf penthouse owned by property developer David Henderson.
- Most expensive house (not for sale): Graeme and Robyn Hart's sprawling $20 million Glendowie mansion.
- Most expensive property for sale: Pakatoa Island, Hauraki Gulf, $35 million, owned by businessman John Ramsey of Crusader Meats.
- Next most expensive: Cowes Bay estate on Waiheke Island, $30 million, 36ha with 1200sq m plantation-style mansion
Submitted by Joe Hendren on Tue, 07/08/2007 - 6:52pm.
The market is expecting positive news from Fletcher Building's annual result tomorrow, with predictions of a big surplus that could take net after-tax profit to between $462 million and $493 million.
Fletcher is also picked to give a better-than-expected forecast for next year, because rising interest rates are having little effect on its fortunes.
Rob Mercer, analyst at Forsyth Barr Research, released a report predicting Fletcher's profits would jump 22 per cent, from last year's $379 million to $462 million this June year. In March, Fletcher said it was happy with the consensus of analysts' forecasts of $388 million net profit after tax for the full year. Mercer said he expected the company would issue a highly positive forecast for next year. "We expect Fletcher Building to confirm a positive outlook, despite the rising interest rate environment. We expect that there should be evidence of a pickup in residential building activity, which is supported by the strong improvement in residential building consents, being up 14.3 per cent for the six months to June 30. "Fletcher's core earnings have been flattish over the past couple of years on the back of subdued building activity in New Zealand and Australia. We expect the second half-year performance to confirm a rebound in New Zealand residential building activity and a more positive outlook for non-residential building activity. "Fletcher has expanded its global earnings through the acquisition of Formica, which became effective from July 1. While the interest rate environment is attempting to impact on residential house prices, we remain confident that volume-based building activity will positively surprise." Mercer valued Fletcher's shares at $14.45 and recommended investors to buy because the shares were trading at around $12.50.
The building products division would reflect a resilient residential market and would show strong earnings in the second half, he said. The PlaceMakers result would be more modest. The laminates and panels division would hold on to earnings, despite difficult conditions in Australia. Pacific Steel and Pacific Wire had a difficult second half-year period. Fletcher's insulation operations performed poorly in the first half and Mercer was not sure if there had been an improvement in the second half.
First NZ Capital is expecting Fletcher's Formica acquisition to have a big benefit, but said there would be two unusual items on the accounts which would give a massive one-off gain. "Comments regarding the Formica acquisition will be important. The successful execution of this transaction should be a key growth driver over the next 12 months," First NZ said.
It forecast net after-profit tax would hit $493 million but said that would contain $94 million from the insurance payout after the Taupo fire and a one-off tax gain. Stripping that $94 million out would reduce the figure to $399 million. "We assume historically high levels of non-residential building activity combined with a sizeable forward order book of infrastructure projects help to offset weaker residential activity on both sides of the Tasman. "Although New Zealand residential activity has declined, it has held up relatively well, in spite of rising interest rates and increased building costs."
Jonathan Ling, Fletcher's chief executive, will release the result in Auckland tomorrow morning.
Fletcher Building has five divisions:
* Building products
Submitted by Joe Hendren on Mon, 06/08/2007 - 7:02pm.
Decades of acrid burning odours coming out of Fletcher Building's Penrose wood plant are about to come to an end to the relief of residents in the area. Fletcher chief executive Jonathan Ling said on Friday the hardboard and softboard plant on O'Rorke Rd would be shut after an investigation found an upgrade to control the smell would cost between $2 million and $4 million.
The closure brings to an end many years of complaints from residents in the area running from Penrose to One Tree Hill. Auckland Regional Council's air pollution team discussed taking legal action after advice that there were sufficient grounds for prosecution. ARC experts said the plant had major ongoing issues.
A One Tree Hill resident has disliked the smell for the 30 years she has lived in the area. "It used to be so bad, you couldn't have your windows open," she said, although it had been less offensive lately. Other residents said the smell was so bad it had forced them to to sell houses and move.
In 2001, Fletcher said it would control the odour by installing a bio-filter but the ARC had doubts about the efficiency of the equipment. Mr Ling said smell was not the only issue. The Laminex plant had been losing money for the past three to four years so any upgrade was out of the question. He cited discussions with the ARC about emission controls and said investigations of how to fix problems and reduce the smell had been central to the plant's future.
The high exchange rate and the plant's non-profitability were other reasons for the decision to close the production facility. "The odour comes when they heat up the processed wood fibre. It's a burning smell," Mr Ling said. The plant operated five days a week on 24-hour shifts and staff had tried to control the smells by making only hard boards on day shifts.
"You get an odour when you're making hardboard because of the higher temperatures, so we've tried not to make that board on the night shift. We've tried to manage the odour situation but have had no complaints from residents. We've been in discussions with the ARC on the odour for some time. We had agreed a plan of approach as to how we'd tackle the issues and that has led us to understand how much it would cost us to fix it."
The plant, known by long-time locals as the NZ Forest Products plant, had been operating for many decades and had employed 65 people. Ling said the company would try to place as many people as possible within Fletcher's other business units but he expected some people would consider redundancy.
About 60 per cent of the plant's product was exported to Australia, North America and Asia where it was used in furniture and building. The softboard had been used for display noticeboards. The hardboard was used among other furniture in cabinets. But Mr Ling said demand for the materials had dropped considerably and the hardboard had been largely replaced by other products.
- Air pollution problems at a Penrose plant partly forced closure.
- 50 complaints since 1999 prompted Auckland Regional Council action.
- ARC has issued seven infringement notices in the past eight years.
- Three abatement notices were issued during that time too.
- ARC demanded Fletcher improve emission controls at the plant.
- Prosecution was an option if offensive odours did not stop.
MEMORIES OF 'ASHY' SMELL GO BACK DECADES
Ana Ofa knows all too well the smells from Fletcher Building's Penrose factory - she's lived a couple of streets away all her life. "It smells like an incinerator, ashy," says the 27-year-old, whose memories of the odour go back to when she was aged 3. It hasn't been as strong during the past few years and her most recent memory of a truly pungent reek was the night Princess Diana died a decade ago.
Neighbours say the aroma is hard to describe, their accounts ranging from "dry and woody" to a chemical stench. "It used to annoy me," says Rosemary Lyon. "It was irritating on my nostrils."
For Bill Berwan, news that the factory is shutting is welcome relief. "I'm happy," says the Rockfield Rd resident of 25 years. Mr Berwan's four children cried out about the "gas" smell when they were younger but the family would not move house.
While others try not to open windows or dry washing on the line when the smell is at its worst, Ms Ofa "got over it" years ago. She said the factory had an upside for the suburb, providing jobs for many residents. Her grandfather worked there, as did several other family members. But the last, her cousin Casa Hala, was made redundant this year after more than a decade with the company.