PacBrands and clever management

How the worm turns.

Remember how a year or so ago Pacific Brands was in the news because they were sacking local staff, moving all of their production offshore and closing down their Australian manufacturing operations?

And their CEO - Sue Morphet was exposed as just another executive on an outrageous salary.

All of which was justified on the basis of having to tweak and fine tune the business to make it operate better - for the shareholders.

Well, yesterday at their annual general meeting all of this was exposed as the BS that it is.

As a result of their inability to manage their exposure to currency movements, it was revealed that the business is down around $40 million.

So they apparently needed to move their Australian manufacturing offshore to take account of a cheaper cost base in Asia. They also had to sack over 1000 staff and pay their CEO and other executives enormous sums to ensure that they had the best possible management.

But they stuffed up their currency hedging and are now in the red to the tune of $40 million as a result.

I wonder if anyone else has noticed the contradiction. If you send manufacturing offshore then you obviously need to pay much more attention to your currency risk - why didn't they?

I wonder what their next great idea will be? Sell their products locally in peso's and eliminate the currency problem.

PacBrands shareholders should be revolting.