Redundancies, factory closures and Formica writedowns all add up

The recession, factory closures and writedowns on $1 billion Formica in the US and Europe cost Fletcher dearly.

Abnormal items in yesterday's annual result were $360 million. Last year, they stood at zero.

Some analysts questioned the nature of the accounts, asking why more writedowns were not made last year to smooth results.

"This is unorthodox to say the least," one analyst said.

The biggest hit was the $157 million writedown as an adjustment to asset-carrying values: A $56 million writedown in Formica goodwill, $65 million writedown in fixed assets within Formica mainly in Europe, a $23 million hit on a PlaceMakers' retail management information system and cut in the value of Laminex assets of $13 million.

The $100 million capacity reduction was blamed partly on the closure of the Laminex particle board plant at Kumeu and the medium-density fibreboard plant at Welshpool, Western Australia.

The $60 million writedown came from a tax benefit expected in 2007 when Fletcher bought Formica.

The $43 million redundancy cost came from an 18 per cent cut in people working at Fletcher's concrete business, a 15 per cent cut in staff at Laminex and Formica, rollforming and coated steel branch closures and opening Stramit's manufacturing and distribution centre in Melbourne.