Leading paint maker DuluxGroup (DLX) is planning a major shake up of some of its east coast distribution and manufacturing facilities.
The company says it will spend $165 million building a new paint factory in Melbourne, scale down its facility at Rocklea in Queensland (which was damaged by the 2011 floods) and revamp distribution centres in Sydney.
The paints, coatings and garage doors group warned that some 60 jobs will be lost as the 50-year Rocklea plant moves to operate at “a reduced manning level”, while a number of other jobs could go in the Sydney shake-up.
DuluxGroup managing director Patrick Houlihan said in a statement to the ASX the new factory will set up the group’s Australian paint business – its key profit centre – for decades.
“We’ve spent considerable time evaluating various options drawing on expertise from the global paint industry,” he said in yesterday’s statement.
"This investment further strengthens our product quality, innovation, customer service and cost competitiveness."
The $165 million cost of building the new factory is expected to be offset by lower investment at Rocklea and the expected sale of Dulux’s Glen Waverley operations in Melbourne.
The total net cost to the company will be $130 million over three years, plus a $9 million provision, with some of that (not specified) being redundancy costs.
Construction of the new factory is expected to commence late this year in the north of Melbourne.
DLX 1Y – Dulux to build new Melbourne paint factory
Besides the losses in Brisbane, an unspecified number of jobs will be lost in the revamp of two Sydney distribution centres which will be owned and operated by Linfox.
The move comes three weeks after Dulux bought the small, but iconic Sydney paint company, Porters, which has had a solid position in the Sydney heritage paint sector for decades.
“The addition of Porter’s to our portfolio of iconic brands will broaden our product offering within the architectural and decorative paints market,” Mr Houlihan said in the statement issued on February 25.
“With sales of less than $10m, Porter’s would not have a material impact on earnings in the near term. However, it has a strong colour, texture and design focus, which we can build on over the longer term.
“We will retain the unique character and essence of Porter’s as a premium, design focussed brand while leveraging DuluxGroup’s capability, particularly in the area of sales and marketing,” said Mr Houlihan.
Because of Dulux’s strong position in the paint market, the Porters buy will need ACCC approval.
Dulux shares rose 2.2% to $6.36 yesterday, just under the recent year high of $6.39.
