Dry days, hot prof­its ‘In­dian sum­mer’ boosts Bun­nings

New Cardno CEO has con­tract ter­mi­nated af­ter bribery probe

Weekend Gold Coast Bulletin - - BUSINESS - LIAM WALSH JOHN DAGGE

CARDNO has dumped its chief ex­ec­u­tive of­fi­cer fol­low­ing his en­tan­gle­ment in a bribery probe, only one month af­ter he started at the Bris­bane-based en­gi­neer.

The fir­ing of Andy Good­win means Cardno has now had seven CEOs in four years and a share price that re­mains far off highs.

In a stock­mar­ket an­nounce­ment yes­ter­day af­ter­noon, Cardno said Mr Good­win’s con­tract had been ter­mi­nated “ef­fec­tive im­me­di­ately”.

Mr Good­win was for­mer man­ag­ing di­rec­tor of SMEC Hold­ings and started at Bris­bane-based Cardno last month. One in­dus­try source said Cardno had re­cently held an event in Hawaii to in­tro­duce Mr Good­win as CEO to the com­pany’s se­nior man­agers from Aus­tralia and the Amer­i­cas.

The Aus­tralian Fed­eral Po­lice on Thurs­day con­firmed they were in­ves­ti­gat­ing al­le­ga­tions of “for­eign bribery and re­lated dis­hon­esty mat­ters” that re­lates “to cur­rent and for­mer high of­fice hold­ers of SMEC Hold­ings”.

Mr Good­win’s lawyer, Howard Rapke of Hold­ing Redlich, has said his client main­tained he had al­ways acted ap­pro­pri­ately.

Fair­fax Me­dia had pre­vi­ously re­ported Mr Good­win had been named among SMEC peo­ple in search war­rants al­leg­ing the in­ves­ti­ga­tions was look­ing at a con­spir­acy to in­ten­tion­ally falsely deal with ac­count­ing doc­u­ments and to de­feat jus­tice.

Cardno had been aware of the probe in­volv­ing Mr Good­win but had made no stock­mar­ket an­nounce­ment un­til yes­ter­day. The con­tract tearup was due to “his fail­ure to fol­low the law­ful direc­tions of the board in re­spect of the re­cent is­sues re­lat­ing to SMEC”.

“The ter­mi­na­tion does not re­late to any new ev­i­dence re­gard­ing the Aus­tralian Fed­eral Po­lice in­ves­ti­ga­tion into SMEC,” Cardno said.

Cardno chair­man Michael Alscher, man­ag­ing part­ner of its ma­jor share­holder Cres­cent Cap­i­tal, is tak­ing over day to day op­er­a­tions. A 6000-plus em­ployee busi­ness, Cardno works on projects from toll roads to en­vi­ron­men­tal re­ha­bil­i­ta­tion.

Mr Good­win had left SMEC to take up the Cardno job on a base pay of $US575,000 ($A751,000), and a short-term bonus of up to $287,500. THE hot and dry start to the year is set to boost earn­ings at hard­ware ti­tan Bun­nings, in­vest­ment bank Mor­gan Stan­ley says.

Mor­gan Stan­ley an­a­lyst Thomas Kierath said the In­dian sum­mer be­ing ex­pe­ri­enced across the na­tion’s main cap­i­tal cities was likely to pro­vide Bun­nings with a handy lift at its up­com­ing quar­terly earn­ings up­date.

The warmer months are the key trad­ing time for Bun­nings as con­sumers carry out ren­o­va­tion and gar­den­ing projects.

Mr Kierath said across the five state cap­i­tals, there were an ex­tra five dry week­end days in the three months to March com­pared with the same pe­riod a year ear­lier, and Syd­ney’s rain­fall was half what it was last year.

There weather read­ings were set to fat­ten the bot­tom line of the na­tion’s big­gest hard­ware chain, he said.

“Help­ful weather con­di­tions year-on-year should drive an im­prove­ment in Bun­nings,” Mr Kierath said.

While the weather was likely to pro­vide a help­ful boost, Mr Kierath said a slow­down in the hous­ing mar­ket clouded the longer-term out­look.

“Most hous­ing in­di­ca­tors are point­ing to softer con­di­tions over the com­ing 12 months, which we think slows Bun­nings’ like-for-like sales,” he said.

Drinks heavy­weight Co­caCola Amatil and gro­cery sup­plier and Mitre-10 owner Met­cash were also likely to re­port a weather-re­lated earn­ings boost, Mr Kierath said.

Wes­farm­ers, which owns Bun­nings along with a swag of other ma­jor re­tail chains, will re­lease its third quar­ter earn­ings later this month.

Any uptick in the Aus­tralian Bun­nings oper­a­tion will be wel­come given its at­tempt to take the brand into Bri­tain has so far fallen flat.

The first ma­jor move by new Wes­farm­ers chief Rob Scott has been to an­nounce a spin-off, due next fi­nan­cial year, of su­per­mar­ket chain Coles into a sep­a­rately listed com­pany.

Spec­u­la­tion yes­ter­day swirled around Wes­farm­ers that it had taken a small share­hold­ing in strug­gling New Zealand con­struc­tion group Fletcher Build­ing.

Any hold­ing could sig­nal that Wes­farm­ers is pre­par­ing to make a takeover of­fer for the loss-mak­ing Fletcher, which is listed on the Aus­tralian bourse. Shares in Fletcher, which has a mar­ket value of more than $4 bil­lion, surged by more than 13 per cent in in­tra­day trade.

The group is­sued a state­ment say­ing it had “no knowl­edge of Wes­farm­ers own­ing Fletcher Build­ing shares there­fore it can nei­ther con­firm nor deny the re­port”.

Wes­farm­ers de­clined com­ment.

Shares in Fletcher ended the day 8.5 per cent at $6.34. Shares in Wes­farm­ers shed 0.2 per cent to $41.04.

HELP­FUL WEATHER CON­DI­TIONS YEAR-ON-YEAR SHOULD DRIVE AN IM­PROVE­MENT IN BUN­NINGS

AN­A­LYST THOMAS KIERATH

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Pic­ture: MEGA

Bun­nings Ware­house is also in the UK.

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