Chief Strategy Officer / Australia
Decisions that made the company smaller before they made it better
- Group revenue, year to June 2026
- A$1.86bn
- Bricks, plasterboard, windows and frames across five states
- Strategy, corporate development and energy colleagues
- 16
- Four direct reports at the Melbourne head office
- Less gas per square metre on Brisbane line 2
- 38%
- Hybrid heat-pump dryer, commissioned March 2026
Decisions & consequences
01Walking away from a roof-tile business at the 2021 peak
In November 2021, four months after I became chief strategy officer, Pindarra Roofing Limited came to market. It made concrete and terracotta tiles in three states and would have put a fourth Marrangal product on many of the houses that used our bricks. Its vendors sought about A$410 million, 11.5 times EBITDA of A$35.6 million for FY2021, a year swollen by federal home-building grants and record approvals for detached houses.
Our managing director and two directors favoured a full bid. Their case was serious: roof tiles suited our brick customers, few such businesses remained, and a competitor would buy it if we did not. My trough case was less comfortable. If detached commencements fell 25 per cent, which our model suggested was likely within two years as the grants ended and interest rates rose from their low base, Pindarra's EBITDA would fall to about A$19 million. At A$410 million our return would sit near 6 per cent against a 9 per cent cost of capital for several years.
I recommended a walk-away price of A$300 million and wrote it into the board paper. The board accepted it narrowly, and the managing director accepted the outcome with visible reluctance. In March 2022 a rival paid A$395 million. Two analysts called our restraint a missed opportunity.
We kept the cash. Over the next two years Pindarra's earnings, as reported by its new owner, fell by about 40 per cent. In July 2024, with approvals still weak, we bought Kurrawong Frame & Truss, a south-east Queensland frame maker running at about 70 per cent of capacity, for A$96 million, 5.8 times EBITDA of A$16.5 million. In FY2026 it earned A$19 million of EBITDA on A$150 million of revenue without new investment, and a builder can now order frames, windows and bricks from us together.
Every acquisition paper now opens with the trough-case value and the walk-away price, both approved before negotiation starts.
I would do two things differently. I presented the trough case as one figure; a range would have shown the directors who disagreed how much of their view it already accepted. And I would have drawn up our list of downturn targets in 2021 rather than 2023, because we lost about eighteen months finding Kurrawong.
Closing Bendarra's oldest kiln instead of relining it
Kiln 1 at our Bendarra works, on Melbourne's northern fringe, was built in 1976 and could fire about 42 million bricks a year. By 2022 its refractory lining was due for replacement at a cost of A$31 million, and the gas contract it shared with our other Victorian kilns expired in June 2023. The offers we received for a new three-year contract were close to double the expiring price. On those terms gas would rise from about a fifth of the kiln's cash cost to nearly a third. Interest rates were rising and Victorian approvals for detached houses were falling.
Our three Victorian kilns, with combined capacity of 172 million bricks a year, were producing about 111 million: 64 per cent utilisation. The two newer kilns, Kiln 2 at Bendarra and the kiln at our second Victorian works, could absorb almost all of Kiln 1's volume and used about 11 per cent less gas per thousand bricks.
The general manager of our masonry division wanted to reline. He argued that a downturn was the wrong moment to surrender capacity we would need when the cycle turned. Our sales director added that only Kiln 1's firing produced a dark clinker-blend range that some architects specified by name, worth about A$12 million a year. The union and the local council were concerned for the 72 people who worked on the kiln. I recommended closure, the managing director supported it and the board approved it in April 2023.
The kiln was last fired in September 2023. We redeployed 38 of the 72 people and paid redundancy to 34. Victorian kiln utilisation rose to 86 per cent. Masonry's EBIT margin rose from 6.2 per cent in FY2023 to 9.1 per cent in FY2026, on lower volumes than in 2022. We lost most of the clinker-blend range for a year; by 2025 we had recreated two of its four colours on Kiln 2, recovering about half of its revenue.
Since then each kiln's remaining life has been set in the same board paper as its gas contract.
I would give the town more time. Five months' notice was lawful and enough for redeployment, but it was short for a community that had lived beside the kiln for forty-seven years. I would also have consulted architects about the clinker range first.
Taking a smaller grant for a dryer we could connect
In 2024 the plasterboard joint venture approved a second line at its Brisbane plant: A$265 million to add about 28 million square metres of board a year and replace board it had been importing to cover shortfalls in Queensland. Plasterboard is dried in long gas-fired dryers, and the dryer would set the line's energy use for twenty years.
A federal programme that co-funds industrial decarbonisation offered two routes. It would contribute up to A$62 million towards a fully electric dryer, using heat pumps and electric boilers, or A$28 million towards a hybrid in which a heat-pump stage recovers heat from the dryer's exhaust and a gas stage completes the drying. The electric design needed a new connection of about 32 megawatts, which our network operator said would take four to five years. The hybrid needed about 9 megawatts, which an upgrade of the existing connection could supply within eighteen months.
The choice divided the room. Our head of sustainability argued for the electric design: it was the only route to our goal of cutting Scope 1 and 2 emissions by 35 per cent from FY2020 by FY2030, and the larger grant halved its premium. Hayatsu's engineers preferred a conventional gas dryer of the kind they had built many times. I recommended the hybrid. A line waiting five years for power would leave Queensland short of board through its period of highest need, while a gas-only dryer would fix our largest energy exposure for two decades. As Marrangal's nominee on the joint-venture board I set out all three options with their connection dates, gas use and grant conditions, and the board chose the hybrid.
We gave up A$34 million of potential support, and our 2030 emissions path now falls about four percentage points short of the goal unless we electrify the final stage later. The line was commissioned in March 2026 at A$272 million, 3 per cent over budget. It uses 38 per cent less gas per square metre than line 1 and reached 92 per cent of planned output in its first six months.
Every proposal for a thermal asset now shows its electrification path and the connection it would need.
I would have lodged the application for the larger connection in 2024 regardless, as an option. Lodging it only in 2026 cost us two years in the queue.
Closing our extrusion press and leaving apartment towers to importers
When I became general manager of Marrangal's windows and doors division in January 2017, it earned A$380 million of revenue at an EBIT margin of 2.1 per cent. Two problems sat behind that figure. Our extrusion press in Melbourne's south-east, installed in 1989, ran at 58 per cent of capacity and needed A$24 million of work to stay reliable. And our commercial team was winning high-rise apartment tenders at a loss, against imported window systems from Chinese fabricators priced 25 to 30 per cent below ours. That work brought in about A$61 million of revenue a year.
I proposed three moves together: close the press and buy standard profiles from an Australian extruder and a Malaysian one; withdraw from high-rise apartment windows; and invest A$19 million in an insulated-glass line making double-glazed units to order for detached and medium-density homes. Our operations director opposed closing the press. He argued that we would lose control of lead times and of the dies that shaped our profiles, and that suppliers would have no reason to put us first in a shortage. Our national commercial sales manager opposed leaving apartments, a book of work he had spent a decade building. The managing director backed the plan, and the board approved the investment in late 2018.
The press closed in mid-2019. Of the 85 people who worked there, we redeployed 31 to the glazing line and made 54 redundant, and we gave up A$61 million of revenue. By FY2021 revenue had nonetheless grown to A$455 million, helped by stimulus for new homes, double-glazed units had risen from 9 to 41 per cent of the windows we made, and the EBIT margin reached 8.4 per cent.
The operations director's warning proved partly right. In 2021, as shipping schedules collapsed, deliveries from our Malaysian supplier slipped by seven weeks during the busiest months the industry had seen in years. The backlog cost about A$9 million in lost sales and expediting, and some builders moved to competitors for a season.
The division now decides what to make by weight, urgency and fit, not by habit.
I would have kept ownership of our dies, held a strategic stock of single-sourced profiles, and split every profile family between two suppliers from the first day.