IBISWorld sees local manufacturers competing with low-cost imports and this includes the automotive manufacturing sector. Manufacturers’ Monthly reveals the winners and losers of 2017 across the industry.
Continuing its hot streak from last year, Aristocrat Leisure posted over a 33 per cent increase in revenue in 2017. There was strong performance from the international divisions from the gaming machine manufacturer. This is due to its American and Asian markets contributing to a significant increase in revenue.
Aerospace and defence manufacturer Boeing Australia, who manufactures advanced aerospace components increased its revenue by 20.8 per cent in terms of their revenue – the major reason behind this big increase was due to the rise in defence contracts in the country.
Despite the downturn for local automotive manufacturing, Ford proved that its shift in business strategy has paid dividends with the company posting gains in their latest financial reporting year books. These profits have been achieved on the dealer’s front, which means they have sold a lot more vehicles in sales terms and their production volume has risen 15 per cent as compared to last year. Their big year is largely attributed to the Ranger vehicle that is assembled in Thailand.
Another winner on the list, Kilcoy Pastoral, has improved on its performance with strong investments coming from abroad since the $100 million investment from the New Hope Group in 2013. This has since allowed for growth across all its business units and assets that paved the way for future growth.
There are lots of big winners on the F&B front with Fonterra leading the charge posting a revenue increase 11.4 per cent in their latest financial reporting year. Despite lower milk volumes due to poor weather in parts of the season, the business delivered by prioritising higher value advanced ingredients and growing the sales of these in-demand and specialised products.
Agricultural chemical company Nufarm increased its revenue by 10 per cent. The group generated increased sales in both of its crop protection and seed technologies segments across all regions.
The Nufarm business executed a strategy to regain volume and market share, and Australia and New Zealand sales increased by 18 per cent. The company restructured manufacturing facilities, which resulted in lower fixed costs; better plant utilisation, and improved efficiencies. This ensured that the company can be price competitive for customers, and furthermore, the higher sales volumes have helped secure more of the benefits from the restructuring.
On the constructions side of things, Brickworks benefitted greatly from the construction boom along the east coast of Australia and also pursued land and development activity to offset potential declines in the construction industry.
Up six places from last year’s ranking with a revenue increase of 13.1 per cent, leading fibre cement siding manufacturer, James Hardie, has recently agreed to acquire Germany’s Fermacell GmbH from Xella International SA for $723 million.
Fermacell is Europe’s number one fibre gypsum board manufacturer, with more than 70 per cent share in this market. According to James Hardie’s CEO Louis Gries, the acquisition would provide the company with a robust growth platform for expanding its fibre cement business into the large and affluent European market.
Among the losers, with the final closure of its manufacturing facilities in Australia this past October, Holden’s sales have hit a 22-year low because of what the company describes as “insurmountable economic challenges”. This includes the high cost base in comparison to its Asian counterparts, insufficient economies of scale, the fluctuating Australian dollar and competitive market forces. Moving forward, the company hopes to have a resurgence from a lacklustre year by relocating its manufacturing facilities which would in turn help them with their cost base and economies of scale.
Conoco Philips’s revenue has decreased by over 31 per cent. This is because of the completion of many large-scale liquefied natural gas (LNG) processing trains in Queensland, Northern Territory and Western Australia. This trend has continued since the previous year’s 30 per cent drop year on year.
Dropping off the Top 100 List is GUD Holdings which dropped 27 places to 123rd with their revenue down by 28.5 per cent. The sale of two underperforming businesses coupled with the close of the Masters hardware brand, which they supplied a lot of products to, and the withdrawal of Oates Products from Woolworths, have impacted revenue.
ABB Group Holdings have declined due to lower order volumes and variations in the value of the greenback.
Although British Petroleum (BP) still ranked among the top 10 performers for 2017, there was a significant decrease in its revenue. This was probably caused by the delay in the decision of its acquisition of Woolworths, which is still pending a decision on by the Australian, Competition Consumer Commission (ACCC).
With the sale of the sexual wellness division earlier this May, Ansell’s revenues have dipped. The medical manufacturer is looking forward to a return into the black following the offloading of the division with a renewed focus on the medical industry market.
With supply shortages caused by drought conditions, and increased demand in export markets, which caused the company to scale back its operations, NH Foods’ revenue declined by 19 per cent, according to their latest financial year reports.
The result of the decline, according to IBISWorld, is probably due to a decline in meat consumption that was expected in 2016-17 together with the supply shortages affecting this company during the year. Tey’s Australia faced a similar situation with their revenues dipping by nearly five per cent.