In Australia and New Zealand, we laid the foundations for future growth. This included strengthening our customer facing teams to focus on our key segments in the region – building, infrastructure and agriculture – and extending our operational excellence programme across the region.
We have significantly improved our ability to supply sustainable pipe products through our recycling and product lifecycle programme. We also divested our businesses in South-East Asia (in Malaysia and Singapore), in line with our strategy to focus on core growth markets.
Market review
Market volatility due to COVID-19
The year has been characterised by rapidly changing market demand and volatility in activity by segment in our APAC markets, associated with the impacts of COVID-19.
Government support and low interest rates drove an upturn in demand within the building segment during the second half of the year. In contrast, infrastructure has been impacted by low business confidence and lighter than expected government stimulus. The agriculture segment had a mixed performance due to adverse weather conditions in key geographies.
From contraction to recovery in Australia
The COVID-19 pandemic led to a severe contraction in economic activity in Australia during March. An aggressive approach to virus containment resulted in a series of strict regional lockdowns across the year, impacting local business confidence and market activity.
Economic conditions recovered slowly as containment measures were eased in May, and government fiscal policies provided much needed support to the Australian economy.
Resilient economy in New Zealand
Although the New Zealand economy was significantly impacted by a four-week nationwide lockdown in April, the balance of the year saw a resilient economic response as the building market rebounded from the early uncertainty.
The New Zealand Government’s COVID-19 stimulus programme prioritised employees and impacted businesses with reduced focus on major infrastructure in 2020. As a result, fewer major infrastructure projects went ahead in the year. However, a higher dairy pay-out improved confidence among farmers, encouraging them to invest in new farm water management systems.
Low interest rates also helped boost residential new builds, although restrictions on migration due to the pandemic have hampered efforts to accelerate building demand overall.
Our commitment to plastic recycling in Australia
In contrast to single use plastics that have been highlighted for their negative environmental impact, our plastic pipes and fittings have an extremely long lifespan, making them a smart and sustainable choice for pipelines. In Australia, we are investing in the equipment we need to increase the use of external recyclate.
In most of our plants across our APAC region, we have on-site facilities to shred or granulate plastic waste products, and to micronise PVC materials. Our customers can already return off cuts for recycling, and we are providing facilities to regional councils for the disposal of HDPE and PVC as an alternative to landfill.
Strategy and performance
Focus on our competitive position
The COVID-19 pandemic has dominated activity in a volatile year. The safety of our employees has been paramount, and they have responded both rapidly and impressively to the challenges.
Market conditions and low-cost imports have increased the need for a strong focus on our competitive position this year. Delivering added value for our customers through reliable supply, quality and differentiated products has proven crucial.
The highly competitive Australian market has driven some changes in our market landscape in 2020, with a reduction in competitor footprints in some segments. Our teams have responded well to support key customers and increase our capacity in the building segment to meet customer needs.
Global shortages in PVC resin, combined with freight imbalances in Asia, have required extremely close management of the supply chain. With an increased emphasis on our sales and operations processes, our supply chain has been well managed, and our local teams maintained continuity of supply for our key customers.
Recognised for product and service excellence
Despite the volatile market, our businesses across the Division have had some great successes with new products and innovations during the year. Our Australian teams were recognised for product and service excellence, winning both the Nutrien/CRT supplier of the year and the Think Water supplier of the year awards.
RX Plastics performed strongly in its export markets, in particular via K-Line North America, achieving an impressive sales increase compared to last year.
Our Marley Rainwater Systems category also saw a strong uplift in business compared to 2019, even with several weeks of lockdown. This excellent result has been helped by a wide range of products, such as the popular spouting and downpipe rainwater systems, and the new era leaf, debris and water diverters that allow for increased efficiency in rainwater harvesting.
Rainwater harvesting with a Twist
The award-winning Twist water diverter from our New Zealand business, Marley, provides consumers with a simple means of collecting fresh, clean rainwater when used with a rainwater tank. Recent droughts, particularly in the Auckland region, have created water shortages in urban areas. This has contributed to a huge increase in demand for our Twist product in 2020.
Improved footprint
A number of projects to rationalise our footprint were completed in the year, including the closure of our factory in Wagga Wagga, and the consolidation and expansion of our Smithfield facility, both in New South Wales. We continued the consolidation of our warehouse network; while maintaining our award winning service levels.
In New Zealand, we consolidated our manufacturing into three facilities and brought together warehouses in other key locations. We made further efficiencies by optimising fittings manufacture into a regional facility in Adelaide.
While this consolidation has improved efficiency, a limited labour pool in the COVID-19 environment has been a challenge for our manufacturing teams. They have responded well by balancing their sales and operations plans and operating assets to manage cash flow, market demand and supply chain challenges.
New platform for G-Set™ irrigation systems
Agriculture is a primary industry in New Zealand, and farmers are looking for smarter, more efficient ways of irrigating their land. Working with a local provider, our technical team has developed a new cloud-based control platform for our G-Set™ irrigation system, giving farmers real-time access in almost all environments.
Looking ahead
In 2021, we will focus the business on further improving how we serve customers in our key markets.
Our main areas of focus will be the effectiveness and reliability of our delivery model for sustainable high-performance products, improving our customer service experience, and overall, making it easier for customers to deal with Aliaxis. This is supported by our ongoing commitment to improving safety, and developing our people through a focused capability and talent development programme.
We are ready to maximise the growth opportunities in key markets in the years ahead. We will do this by continuing to build our innovation capability (product leadership), extending our operational excellence programme (competitive supply base), and working closely together as a team (unlocking our regional synergies).
EMEA
Strengthening relationships and staying connected with customers and colleagues has been crucial to the resilience of our operations across Europe this year.
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