IT might be every little boy’s dream to run a company that owns trucks and diggers, but yellow goods group Emeco Holdings’ new CEO Keith Gordon gives little indication of living out a childhood fantasy.
IT might be every little boy’s dream to run a company that owns trucks and diggers, but yellow goods group Emeco Holdings’ new CEO Keith Gordon gives little indication of living out a childhood fantasy.
Instead, Mr Gordon sees the opportunity to head Emeco in a matter-of-fact way, a logical step to getting back to hands-on management after a couple of years in a more corporate role at Wesfarmers, where he handled the integration of Coles and then oversaw a portfolio of industrial divisions, including coal mining.
As part of a desire to get back running a major company with growth prospects, the former Wesfarmers executive wanted exposure to the resources sector but felt he lacked the direct mining experience.
“While I had coal reporting to me (at Wesfarmers) my skills were not in mining,” Mr Gordon told WA Business News.
“In Emeco I bring skills in management without needing direct mining experience.”
Emeco, a mining equipment hire company, is virtually in a league of its own, without directly comparable rivals in this industrial arena.
Included in the S&P 200, the company has struggled to keep pace with the index since the middle of last year when long serving CEO Laurie Freedman announced his decision to retire.
Emeco shares have traded at 70 cents recently, valuing the company at around $450 million, a shadow of its value at listing in 2006 after a $1.1 billion capital raising bought out private equity players, which had doubled their money in just two years.
Arriving on the scene at the beginning of December, Mr Gordon has moved quickly to rationalise the company’s operations. In mid February, he announced the closure of the group’s European business and downscaling of its US operations.
These will result in restructuring charges of almost $30 million this financial year, along with up to $15 million in impairment charges on the carrying value of its global rental fleets as well as on inventories of equipment and parts for sale.
While the rationalisation could be seen as a new CEO making hard decisions, Mr Gordon doesn’t quite view it that way.
“They were just decisions that needed to be made,” he said.
“I was not brought in for that reason.
“Laurie was ready to retire, but you do get to see things through a fresh set of eyes.”
Some of the rationalisation centres on assets acquired in and around the time of listing, a period of great buoyancy when the company was looking to build a growth story to excite the markets.
Mr Gordon believes there is still a growth story for Emeco, including in North America where it has shifted operational headquarters from Houston to Edmonton, representing a strategic shift from declining US coal production to Canada, where the company has exposure to the growing oil sands sector in Alberta.
The company also has operations in Indonesia, which will remain a core focus and, of course, Australia, which is home to more than half its 800 staff.
Mr Gordon brings a broad-ranging perspective to Emeco steeped in more than a decade of experience at Wesfarmers where he started in agricultural merchandiser Landmark. During his time he headed Wesfarmers business development unit and ran CSBP.
Wesfarmers has a well-known focus on shareholder value and that clearly comes out in the discussion with Mr Gordon, who believes he brings several key skills to the Emeco operation.
“Where the company was in its evolution it was timely to really ramp up some of the financial discipline,” he said.
“Return on capital is the key focus for us, that is consistent with other places I have been.”