Aussie icon Victa sold off as climate change hits manufacturing
Thursday, June 5, 2008/
GUD managing director Ian Campbell says sale of the company’s iconic lawnmower brand Victa was partly driven by the fact that climate change has made the business unsustainable.
While Victa Lawncare has posted strong sales in the past 12 months after good rain on the eastern seaboard, Campbell describes the financial performance of the business in the last few years as “lumpy” and that is unlikely to change.
“To be perfectly honest, I look at the long-term averages and the forecasts and particularly in the southern states I don’t see water restrictions changing. No rain means lawns don’t grow and people don’t need lawnmowers.”
Campbell admits he never thought he would be worrying so much about the impact of weather patterns and climate change on manufacturing, but the impacts on GUD’s business – both negative and positive – have been marked. Climate change and water restrictions have made things tough for the company’s spa and pool products division, but helped boost sales in its Davey pumps business.
Victa was sold to US firm Briggs & Stratton, which has been a supplier of four-stroke engines to Victa for many years. In recent years, GUD has sought to cut costs at Victa by sourcing some four-stroke engines from China, and Campbell believes Briggs & Stratton’s decision to approach GUD about buying Victa was prompted by a desire to capture more four-stroke engine sales in Australia. “They wanted to keep the volume of engines that they had been used to. I think that they could see that they were going to lose it all to China.”
Campbell hopes to take the $23 million in proceeds from the Victa sale and make acquisitions in areas that are less exposed to the vagaries of the weather. “As a listed company, investors expect consistency of earnings. In lumpy businesses, it is really hard to deliver that consistency,” Campbell says. “We are looking at a couple of things now that are non-seasonal.”
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