Mark Binns: 'Read my lips. I'm not going to Fletcher'

Retiring Meridian Energy chief executive Mark Binns definitively ruled himself out of interest in either taking over the leadership of Fletcher Building or of becoming a director of the troubled construction company.

Binns was a respected senior manager at Fletcher Building before he left to lead Meridian in January 2012 ahead of the state-controlled renewable electricity generator and retailer's partial privatisation in 2013.

He was widely touted as a possible contender to replace Mark Adamson, who was fired by the Fletcher board last month after the company announced a second major earnings downgrade in the current financial year and the publication of an internal email in which Adamson expressed pithy views about the company's culture and executives in parts of the business.

"There's been a lot of speculation that I might be going to Fletcher Building either as CEO or as a director. Read my lips: the answer is that I will not be," said Binns. "I am retiring. I will be taking some director positions and will have some outside business interests, but I agreed with my wife about six months ago what those were and Fletcher Building is not in the tea-leaves".

Mr Binns declined to discuss whether he had either been approached by Fletcher Building to replace Mr Adamson or had considered applying.Speaking at a briefing on the company's earnings for the year to June 30, Binns said that while he was not leaving Meridian until the end of the year, he would hand over the day to day running of the company to the CEO-elect Neal Barclay, who has served in senior management positions across the business in the last nine years, from Nov. 1.

In specific comments on the company's performance in the last year, Binns said it was notable that there was almost no discussion of the potential for the Rio Tinto-controlled aluminium smelter either to announce its closure or a reduced demand for electricity.

The smelter is Meridian's largest single customer, consumes around one-seventh of the country's total electricity production and has been subject in recent years to constant speculation as to its commercial viability.

Binns said that "the smelter is now in my view in a far better position than it has been in my five and a half years".

In answer to questions, Binns acknowledged Australian media speculation about metals giants Glencore and US-based Century Aluminium were "circling" the Australasian smelters and other aluminium production assets owned by Pacific Aluminium, the bundle of assets that Rio Tinto has sought a buyer for in the past.

"We will just have to wait and see how that all goes," said Binns. "If I was going to own a smelter, I would rather own a smelter in New Zealand than Australia."

That was less because of the volatility of Australian energy prices than the potential for Australian metals producers not to be able to secure the energy supplies required to maintain operations.

"There are real issues around energy security in Australia", where he said energy policy had become "incoherent", with renewable energy target planning apparently bogged down and the volatility in prices and threats of retail price regulation in Victoria potentially leading to a slow down in customer growth in its Powershop operations, which launched in Queensland during the last financial year.

Meridian reported flat earnings for the year to June 30, reflecting a strong first-half performance offset by dry conditions in the South Island that limited its ability to generate electricity from its southern hydro dams.

Net profit was $197 million, up from $185 million the year before, but on its preferred measure of earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments (ebitdaf), earnings were just 5 percent up on the previous year at $653 million.

The result was achieved on total revenues of $2.319 billion, from $2.375 billion the previous year and total expenses of $1.666 billion, compared with $1.725 billion.

The shares edged up 0.2 percent to $2.95.

Cut Fletcher some slack

Meanwhile, Mr Binns also said critics of the Fletcher Building board of directors "don't know a lot about construction" if they think it's unusual for a building company to experience financial difficulty in a bull market.

Speaking after delivering his last earnings briefing as chief executive of Meridian Energy, Binns appealed for those criticising the Fletcher Building board to "cut them a bit of slack."

"They've acknowledged mistakes were made. The real test is what they do now to fix it. Let's move forward rather than pulling history apart."

It was not uncommon for construction companies to suffer financial difficulties at the height of a building boom because of the way escalating prices for sub-contractors and materials could swiftly change the economics of large projects.

"Everyone wants Fletcher Building to survive," he said, describing it as a "proud company" with more than a century of history.

"It can survive. I'm confident that the directors will make the right decisions. Let's focus on the future, not the past."

(BusinessDesk)