PDL sheds its low-tech operations

Friday 1st June 2001

By Chris Hutching

PDL Holdings chief executive Mark Stewart said yesterday that plans to move one third of its electrical products business to a factory in China were just part of the company's restructuring toward becoming a high-technology business.

He said it was not any kind of defensive move against two rival suitors - French company Schneider Electrical Industries with 28% and Singapore-based Clipsal with 8.2%, whose buying in recent weeks has lifted the share price to a three-year high at $8.02

Asked about the significance of moving the electrical products business Mr Stewart said it accounted for about a third of PDL's business. Approximately a third of those electrical products operations would be affected but staff numbers had yet to be worked out.

"The trouble is that hundreds of companies make these kinds of relatively low-tech products and cheaper than we can. We've had contracting arrangements with this factory for about 10 years now. We must move more toward the more sophisticated end of the market and that's why we're narrowing down our core business and shedding some."

The latest move is more probably a response to falling profitability. Mr Stewart announced to the market a few weeks ago that the pending full-year after-tax profit is likely to be about $1 million less than the $3.18 million profit it reported for the half-year. In the year to March 31, 2000, PDL made an after-tax profit of $4.5 million on sales of $357 million.

"PDL is still facing a number of challenges outside our control - the Australasian building industry slump, material shortages, price rises for basic components, and the low value of the New Zealand dollar. We need to make real changes to stay in the global game."

Meanwhile, the Stock Exchange has written to the company about its diminishing spread of shareholders but has indicated it would expect approaches from the company about delisting.

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