Conglomerate businesses do not work. Wesfarmers has come from $45 to $15 and Futuris $2.50 to 60 cents. Good business sense will tell you that you cannot manage multiple businesses well and the synergies are neglible. Look at Suncorp, are they a bank or an insurer? They don't even know and that's probably why they've gone from $22 to $8.
Hills have held onto poorly performing businesses that are now dragging them down. They have absolutely no money and were just about giving the fielders business away. They went big into rain water tanks and now that would be turning very ugly. They are at the mercy of the retail monster Bunnings/Wesfarmers and they would dictate pricing. Discretionary spending is waning by the day and this will directly affect the majority of Hill's business. Are you going to buy a wheelbarrow in this climate?
While in Adelaide for business last week, the front page of the Advertiser spoke about the new headquarters that Hills were going to build in the CBD? They've deferred it and are being taken to court by builders, architects etc. for outstanding bills which run into the millions. I've just got to ask why go to the CBD, when you are in the largest industrial area?
As for the medium term outlook, it's going to get a whole lot worse, the half yearly result will be awful and don't bet on a good divi, it will be token money and retail investors will be angry. They will start offloading their good businesses just to survive, (because the others are worthless in this market) and that will be the beginning of the end.
Hillsy will be $2.00 after the half year and down be surprised if it goes much, much lower.
It's over for the great icon (imo)
P
HIL Price at posting:
$2.39 Sentiment: Sell Disclosure: Held
