Bonza’s administrators sack all staff as prospects for a sale dry up.

Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at or at Banking Day.

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I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.

This is episode number 20 in our series for 2024 and today’s date is Friday June 14

First, I’ll be talking to Chris McNamara, the CRO of Remote and he’ll talk about how it is strategically advantageous for businesses to consider remote work as part of their acquisition and retention strategy.

And I will talk to AMP Capital chief economist Shane Oliver about Australia’s latest inflation figures.

But first, let’s talk to Chris McNamara

So what’s happening in the news.

Peter Dutton has escalated the climate wars by declaring the Coalition will not release its 2030 emissions reduction target until after the next election, while also accusing the pro-climate teals of being closet Greens who are out of touch with their voters. As the teals returned fire, saying the opposition leader had given up on winning back the crucial Liberal seats, Prime Minister Anthony Albanese, who announced Labor’s 2030 target when in opposition, said Mr Dutton had effectively abandoned the Paris climate accord. In doing so, he would subject cost-of-living-weary voters to another climate change election, which they did not want, he said. “This is not a sensible policy, this is an abandonment,” he said. Confirming the Coalition would junk Labor’s legislated target to reduce emissions by 43% on 2005 levels by 2030 because, he said, it was unachievable and would drive up power prices, Mr Dutton said voters would have to wait until after the election to know his plans. “We’ll look at the prevailing economic conditions after the next election, and we’ll make announcements in due course,” he said. He said the Coalition remained committed to net zero emissions by 2050 but the trajectory to get there need not be linear, meaning the Coalition would bank on nuclear power doing all the heavy-lifting on carbon emissions reduction sometime after 2040. A strategist said, Liberal voters who switched to teal at the last election because of climate change would be far less likely to return to the fold, and younger voters want action up-front on climate change. They see 2050 as too far away to be of consequence, the strategist said. Mr Dutton needs to win about 20 seats to form majority government and the orthodox view is that this will be impossible without regaining some or all of the teal seats. Amid growing nervousness among Liberal moderates about the impact of the fracturing of the climate breakout, one strategist said it would have some appeal in the suburbs and regions. But it would play poorly in the six once-safe seats the Liberals lost to the teal movement at the last election, due largely to the Coalition’s record on climate change policy.

French building materials giant Saint-Gobain has received approval from Australia’s Foreign Investment Review Board for its $4.3 billion takeover bid of CSR. The board of CSR agreed to the $9-per-share bid from Saint-Gobain in late February and shareholders will vote on the proposal at a scheme meeting scheduled for Thursday. CSR is one of Australia’s oldest companies, after being founded as a sugar refiner in 1855. CSR told the ASX on Tuesday that Saint-Gobain had received written approval from the federal government that it had no objections to the takeover. CSR shares gained 1¢ to close at $8.96 on Tuesday. The CSR board reiterated on Tuesday that it unanimously recommended the takeover bid by Saint-Gobain. Another of the ASX-listed building products groups, cement maker Adbri is set to fall to foreign ownership on Wednesday, when shareholders vote on a proposed $2.1 billion buyout by Irish company CRH, which is listed in New York and London. CSR makes Gyprock plasterboard, PGH bricks and pavers, Monier roof tiles and Hebel lightweight building blocks. It also has a 25% stake in the giant Tomago aluminium smelter in New South Wales. A $29 million loss from the aluminium division in the 12 months to March 31 was a handbrake on CSR’s overall results. The Tomago smelter has battled against volatility in aluminium prices and soaring electricity costs. CSR reported in mid-May a 6% rise in net profit after tax to $231 million for the 12 months ended March 31. CSR chief executive Julie Coates said the core building products business generated a solid 8% rise in earnings before interest and tax to a record $294 million, pushed along by price rises and cost discipline. Margins in the building products business increased to 15.5% from 14.9%.

Former federal treasurer Peter Costello has resigned as the chairman of Nine Entertainment after days of acrimony following an altercation with a journalist in Canberra Airport. Mr Costello was appointed chairman in 2016. He will be succeeded by Catherine West, a former Sky executive in the United Kingdom and Nine’s current deputy chairman. Nine confirmed Mr Costello’s resignation on Sunday afternoon. His exit follows a lengthy board meeting on Friday, convened hours after Mr Costello was involved in a messy altercation with a journalist. A reporter from The Australian ended up sprawled on the    ground after filming himself peppering Mr Costello with questions about Nine’s handling of the departure of television news boss Darren Wick. Nine’s share price has fallen to $1.40, down 30% this calendar year. It is at its lowest price since the start of the COVID-19 pandemic when it fell to about 94¢. Mr Wick was paid out, and allegations from multiple staff emerged of his drunken and lecherous behaviour in reports published by The Sydney Morning Herald, The Australian and Sky News Australia. Mr Costello rejected the suggestion he had touched The Australian’s journalist on Thursday evening. “There was no assault. He was backing back, he hit an advertising placard. I did not lay a finger, or a fist, or anything else on him,” he said. Regardless, the interaction piled pressure on Mr Costello, who was accused of behaving aggressively towards a working journalist.

Nonetheless, Costello did not leave gracefully. He had a shot at the new chair West in his statement announcing his decision.  “The Board has been supportive through the events of the last month and last few days in particular. But going forward I think they need a new Chair to unite them around a fresh vision and someone with the energy to lead to that vision for the next decade.”*%7CMMERGEEM%7C*, according to a recent CreditorWatch study. There are a variety of sub-industries feeling the strain, but according to the report, those with the highest proportion of business failure in the last 12 months were:

  • Fuel retailing (5.4%)
  • Food retailing (5.4%)
  • Other store-based retailing (4.96%)
  • Non-store retailing and retail commission-based buying and/or selling (4.49%)
  • Motor vehicle and motor vehicle parts retailing (4.27%)

The Treasury has forecast incoming tax cuts and cost of living incentives in the budget, but CreditorWatch are sceptical as to whether this will affect consumer spending habits. In a statement, the organisation said spending will likely stay down “until there are two or three cuts to the cash rate.” The rising cost of living is driving many of these trends, with non-essential spending becoming more and more of an afterthought. However, CreditorWatch noted that the food industry in particular has shown continued resilience. This sub-industry faces its own issues, with things like higher proportions of overdue invoices and a trend of consumers moving away from smaller food suppliers in favour of value supermarket chains. Food was recognised as performing better than other store-based retailing. According to ABS data referenced by CreditorWatch, spending is down year-on-year on household goods (1.4%), clothing, footwear and personal accessories (-2.5%) and department stores (-1.3%).

Chemist Warehouse’s $8.8 billion merger with Sigma Healthcare raises “common sense” competition concerns as the company will own more than 16%  of the country’s retail pharmacies, a Singaporean hedge fund research firm says. Analysis by Wickhams Hill suggests the merged company – with 864 outlets under the Chemist Warehouse, MyChemist, Amcal and Discount Drug Stores brands – will become the only major pharmaceutical group in Darwin and control 68% of Melbourne’s market, excluding the small, community-sector chemist outlets. At a national level, Wickhams Hill’s analysis said the combined group would own 16.1% of the country’s retail pharmacies, or 47.7% of the market if the smaller, independent operators were excluded from the calculation. Nationally, the group would account for 17.1% of all pharmacies in city areas, said Wickhams Hill analysts Lloyd Moffatt and Jordan Green. Without independent operators, the new group would represent nearly half of the market across those areas, followed by Wesfarmers-owned Australian Pharmaceutical Industries, with 21%. Despite opposition from the influential Pharmacy Guild, which represents the small chemists, the market has priced little chance the deal – the sharemarket’s largest reverse listing –  will be blocked or substantially recut by the Australian Competition and Consumer Commission (ACCC).

Bapcor’s three profit downgrades and 27% share price decline in 12 months have an opportunistic suitor sizing up the $1.49 billion automotive parts retailer.  Bain Capital has made a $1.83 billion buyout proposal for Bapcor, the struggling automotive parts retailer told investors on Tuesday morning. Bapcor runs the Autobarn, Autopro, Burson and Midas chains and has 1100 outlets selling car parts to mechanics and to motoring enthusiasts. It disclosed Bain’s offer.  Bapcor said that it had received an unsolicited, conditional and non-binding proposal at $5.40 per share from Bain after the sharemarket closed on June 7. Bapcor shares closed at $4.36 on Friday. The shares were above $7 late last year. Bapcor, which was known as Burson Group until 2016, listed at $1.82 in 2014. More recently, it has been forced to downgrade profit expectations three times in a year. The last one in May, a disclosure which sent its shares tumbling 35% in a day, wiping more than $500 million in sharemarket value. The company had performed well under its former chief executive, Darryl Abotomey. However, he was forced out by the board in 2021. Margie Haseltine, the chairwoman, said it was “an opportunity for Bapcor to install a more contemporary leadership and management approach to drive the company’s growth”. Noel Meehan was installed as chief executive, but left after two years. Mr Meehan brought in consulting firm McKinsey & Co, and their work was the basis for a program known as Better Than Before designed to deliver $100 million in extra profits by 2025. Paul Dumbrell, a former V8 Supercars driver was announced as Mr Meehan’s successor in February. However, he surprised shareholders by announcing he had changed his mind on May 1  one day before he was meant to start.

Lion, one of the largest drinks groups in the world, intends shutting a craft brewery in inner Sydney that has been operating for 36 years as rising costs, a shrinking beer market and consumer spending cutbacks take their toll. Lion, which makes XXXX Gold and Tooheys, said it would shut the Malt Shovel Brewery in Camperdown by the end of August and transfer brewing of products to other plants in northern NSW and Geelong in Victoria. The move follows a decision three weeks ago by Asahi, its largest rival, to close one of its own craft beer operations in Victoria. Asahi, Australia’s biggest beer company after the acquisition of Carlton & United Breweries for $16 billion in 2020 shut down the Matilda Bay Brewpub in Healesville in Victoria’s Yarra Valley on May 19 after five years of operation, citing high costs. A string of small craft brewers around Australia have already collapsed in the past few months as rising costs and consumer spending cutbacks mean they are no longer viable. Lion and Asahi, which have much stronger balance sheets, are feeling the same pinch in an overall beer market that has shrunk by 6% in the past five years. Lion managing director James Brindley said staff at Malt Shovel had been informed of the “difficult decision” of a proposed closure at the end of August. He said beer producers were in a difficult period, with overall volumes declining in Australia by 100 million litres since 2019. The Malt Shovel brewery makes a range of beers including James Squire, Eumundi, New Belgium and Little Creatures. That production will be transferred to other Lion sites.

Hundreds of employees of embattled budget airline Bonza have had their employment terminated after two months without pay.  Company administrators told the 323 employees they were terminated immediately.  Administrators Hall Chadwick set a deadline of last Friday for potential buyers to submit offers to buy the airline.  No offers were received.  Bonza still remains in voluntary administration, meaning employees are not yet entitled to the federal government’s Fair Entitlements Guarantee for unpaid wages.  Hall Chadwick partner Kathleen Vouris said the administrators were investigating possible insolvent trading.  About 200 staff joined the meeting, including a weary-looking former CEO Tim Jordan who did not say anything. Several employees vented their anger that the meeting started 15 minutes late with one saying it was “very disrespectful” to keep hundreds of staff waiting.

Generation Z are changing the way work is done across the country through their quick adoption of AI, leaving their boomer bosses and colleagues behind. Those born between the years 1996 and 2012 are adapting to the technology faster than any other cohort, according to the EY Future Consumer Index Report on AI. EY’s chief technology officer Katherine Boiciuc said the generational shift, which many tech experts have long forecast, was now becoming a reality. Gen Z’s quick uptake would begin to change the way the older generations worked, as younger more technology-proficient workers influence new AI systems and tools. “I think that we will start to see a large reverse mentoring or intergenerational mentoring programs,” Ms Boiciuc said. “We’ll start to see Gen Alpha and Gen Z team members reverse mentoring more senior leaders in the organisation on how they are using AI to transform the way they work.” Ms Boiciuc was commenting on the back of EY’s index which found that Gen Z’s AI comprehension had more than doubled over the past 12 months, from 14% to 33%. Millennials were not closely following their young counterparts, while Gen X and Baby Boomers had even less comprehension. Baby Boomers appeared to be the least interested in improving their skills, with their comprehension rate not rising at all over the past year. Across workplaces more broadly, about 71% of respondents claimed to have some understanding of AI, up from 67% in October last year. That finding could relate to the slower or lack of adoption from Baby Boomers, as not all of the Gen Z cohort are of working age – with the youngest just 12 years old. Part of the growing divide in the adoption of AI could be put down to the speed at which the technology was developing and the vast difference in digital environments.

And that’s it for this week. And next week, I’ll be talking to Anthony McClure, the managing director of Silver Mines.

And I will talk to Indeed economist Callam Pickering about the latest unemployment figures.

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Wishing you all a safe and healthy week. And looking forward to bringing you Talking Business next week