Appointments: Owens moves ahead after a costly restructure

DISAGGREGATED PIECES: The decision-makers had to bring together the various parts of the company into one, says Phil Pritchard

Owens Global Logistics is back on track toward real profits again after costs of a $5.6 million restructure and new branding last year sent earnings plummeting, says the transport company's chief operating officer Phil Pritchard.

Mr Pritchard stepped into his new role after chief executive Ian Newman suddenly resigned four weeks ago, saying only that the reasons for his departure were personal. The former shipping senior executive had headed Owens for 18 months.

Mr Pritchard was Mr Newman's deputy after working as group general manager for finance. Meanwhile, the company is being headed by executive chairman Norman Geary until a new CEO is found.

The restructuring costs dragged Owens' profit in the year to March down to $276,000, from $6.1 million for the previous year, and almost halved the share price which has been around 85c.

But Mr Pritchard pointed out that the $1.44 million first-half profit for the current year was expected to be followed by a "significantly" better second half with 2001 looking strong.

"The longer term looks very promising since we have consolidated and put the organisation in shape," he said. "We have a clear strategic direction and a strong management group - we are looking at growth. The restructure and rebranding was an investment for the future in market image, profile and what we are attempting to portray in the marketplace.

"We had to bring together the various parts of the company into one. They were disaggregated pieces and did not give the customer a view of what Owens could offer.

"We are a global logistics provider with multi-products, transporting perishable and dry goods by sea, road and air and we can package the lot. Not every customer wants multi-service but if they do, we have it.

"Before the new image there was confusion, a legacy of the past when the organisation grew with acquisitions, but now we have a clear direction."

Mr Pritchard said the $400 million turnover company was actively growing its more attractive markets such as domestic road transport, international freight forwarding and its Hire Pool operation. Other segments which were attractive but without the same opportunities for growth included Australian road transport and container parks.

"They earn their capital costs but do not have the same growth potential. The board wants to expand with organic growth and acquisitions, where there are a number of initiatives being followed," he said.

"Refrigerated cargo is a part of the group we have been developing and last month cautiously re-entered the sea-based US trade we withdrew from last year after four or five years' operation due to problems with on-carriage beyond the West Coast. New arrangements have hopefully sorted those problems out.

"We have a strong domestic presence in New Zealand and Australia and logistics providers had a good time of it during the Olympics, although it fell off after the Games.

"There was a strong build-up to the Olympics, stocking product into New South Wales from other states to satisfy the Games' needs while international exports of perishables fell away - the vegetables for Asia went to the Games instead, with very high stock levels.

"But international markets are starting to pick up with a significant turnround in the perishable business by sea and air, most to Asia from New Zealand and Australia with air freight to the US West Coast.

"We have our own facility at Los Angeles to manage perishables into the US and the eastern seaboard but cargo space can be a difficulty."

Mr Pritchard, who is president of Swimming New Zealand, graduated from Auckland University in 1979 with a BCom in accountancy and joined Fletcher Challenge in its timber operation before moving into broader IT and HR management roles in the mid-1980s.

He was managing director of Fletcher's meat businesses and was involved in the restructure of Wrightson, the acquisition and subsequent sale of Rural Bank to National and was finance director for Fletcher's forests division before joining Owens Group in 1997.

He said an important growth area for Owens was in a new IT project called Shared Services, begun in late 1999 and scheduled for completion in May or June, in which all the group's units would use a single system to cut costs and improve efficiencies.

"About half of our business units are now supported by the Shared Services Centre," Mr Pritchard said.

"We had about 12 back-end systems and they are being consolidated into one and that will have a big role in cost reduction and improved business information with a more robust and accessible data-base.

"And it will enable growth in B2B - a key area in logistics where we expect to do a lot of business with our customers."

Philip Pritchard

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