SYDNEY, AUSTRALIA — A downturn in the Australian plastic pipe market has seen Sydney-based building manufacturer James Hardie Industries Ltd. sell its pipe division for A$121 million (US$82.9 million), A$20.9 million (US$14.3 million) below book value.
Dutch plastic pipe manufacturer Wavin BV and Sydney-based nonferrous metal manufacturer GE Crane Holdings Ltd. formed a joint venture to buy the pipeline division.
The sale includes seven Australian manufacturing sites, two New Zealand sites, a Singaporean manufacturing and distribution operation, and a 45 percent stake in a Malaysian joint venture operation, GK Hardie Sdn Bhd, which it established with Kuala Lumpur-based manufacturer George Kent Sdn Bhd.
GE Crane will pay A$89 million (US$61 million) of the purchase price, and own 75 percent of the Australian and New Zealand businesses and a 50 percent share in the Asian businesses.
Wavin will pay for and control the remaining share.
In Australia, James Hardie is one of the two largest manufacturers of PVC pipes and pipe fittings. In New Zealand the company has a 50 percent market share.
In the financial year ended March 31, James Hardie's pipe division recorded sales of A$234.7 million (US$160.9 million) and profit of A$700,000 (US$480,130).
Keith Barton, managing director, said the Australian pipeline business has been affected by ``a downturn in housing and other markets'' it serves, producing unsatisfactory results.
``These factors, combined with ongoing challenges faced by the pipeline industry, warranted a very realistic approach to sale price expectations,'' he said.
John Ingram, GE Crane managing director, said James Hardie's profit for the five months through Aug. 31 improved from the previous year and he expects a ``satisfactory return within two to three years.'' He said the pipeline division, renamed Iplex Pipelines Australia Pty. Ltd., will have ``good strategic fits with existing activities.''
GE Crane manufactures and distributes copper tube and plumbing products.
According to Barton, the pipelines sale will allow James Hardie to focus on its international fiber cement business.