Kudos goes to the man with the paper cup

By Mark Reynolds

Between the lines

It is rare to see Carter Holt chief executive John Faraci at a company presentation without a paper cup in his hand.

Since Carter Holt bought paper cup maker Continental Cup a couple of years ago, Mr Faraci has sipped from one of the company's products whenever he has made a presentation to analysts or the media.

It would be easy to dismiss this as a publicity contrivance, but in Mr Faraci's case there is sincerity in his action.

Ask anyone with any knowledge of the New Jersey-raised Mr Faraci and they will tell you he has been dedicated to the success of Carter Holt since taking the helm of the company in 1995.

His workrate is the stuff of legend, with a Faraci day routinely beginning at 4.30 in the morning, and often ending after dark.

It is said that his capacity to zip through 15-hours on little more than a dose of caffeine has left many of his colleagues breathless.

Mr Faraci's view on his effort is modest: "I've been privileged and have enjoyed working with some fine people at Carter Holt.

"I think performance and enthusiasm for the company has changed and we can feel good about the progress we have made, Mr Faraci told the BusinessHerald.

But as Mr Faraci prepares to leave New Zealand, after nearly four years in charge of what is now our second-largest listed company, it is worth reflecting on some substantial changes he has made in his time at the helm.

They are changes that occurred in trying circumstances. Prices for the pulp, paper and wood products that are the mainstay of Carter Holt's business suffered a savage commodity-cycle downturn over the past three years, while markets in Asia were crushed by economic turmoil.

All through this, Mr Faraci steadfastly introduced a programme to make Carter Holt more internationally competitive.

It inevitably involved selling off some operations and the reduction of costs through redundancies and a rationalisation of the company's contractors.

But Mr Faraci's programme has gone far beyond a new cost structure. Even its competitors have been forced to concede that Carter Holt is now a much more customer-oriented company.

Through a series of relatively small acquisitions, the company has firmly focused on developing a much stronger Australasian customer base.

So much so that it now earns half of its profits in Australia, compared with just 3 per cent five years ago.

And despite the tight budgets it has had to work with, the company has spent about $250 million a year on capital expenditure over the past four years.

This expenditure has been undertaken mainly to upgrade production plant and stay internationally competitive.

Mr Faraci is the first to acknowledge there is more work to do like sorting out the intriguing situation whereby a quarter of Carter Holt's assets are tied up in Chilean company Copec.

Nonetheless, analysts at the release of Carter Holt's March-year profits on Friday agreed that Mr Faraci deserves kudos.

"Without his commitment, the company would be in trouble. He is leaving the company in good shape to compete, was one senior share broker's judgment.