Dry days, hot profits ‘Indian summer’ boosts Bunnings
New Cardno CEO has contract terminated after bribery probe
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
Bunnings Warehouse is also in the UK.