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Boss aims for Boom revival

Boom Logistics' new CEO has staked his own money on getting better returns, writes Christopher Webb. Brenden Mitchell,
By · 6 Sep 2008
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6 Sep 2008
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Boom Logistics' new CEO has staked his own money on getting better returns, writes Christopher Webb.

SOME executives might have been wary about taking the reins at Boom Logistics, the biggest crane operator in the country.

The shares had been crunched from close to $5 to under $1; and profits nearly halved in the latest June year.

But the disappearance of the boom at Boom didn't deter Brenden Mitchell.

The 49-year-old former Brambles executive has been running Boom for the past 130 days and he's well and truly settled in and, hopefully, on top of the group's problems.

"It's like being at home now," he says when asked how he is finding it.

"It's got a lot of similarities to the industrial services-type businesses that I've been involved in."

Boom floated in 2003 and it is now an amalgam of more than 20 businesses bought along the way, with 607 cranes and 1450 employees on its books. Clients include BMA , BHP Billiton, BlueScope Steel, Alcoa and, as projects occur, Leighton, Transfield and Multiplex, to name a few.

For a time, it set the investment community on fire, selling at some six times its float price, but now it is back to more or less where it started.

Its pre-tax profits improved from $13 million in 2004 to $52million in 2007, but the latest figure was $28 million. Sales advanced every year and now top $400 million a year.

Something went badly wrong at Boom and Mitchell is the third person to sit in the managing director's chair during the past couple of years.

It's a company that expanded too quickly, and while its sales grew, profits have fallen in each of the past couple of half-yearly periods. It needed someone to turn the show around.

Mitchell, 49, who was raised on a farm near Portland and went from Heywood High School to Monash University, where he got a science degree and later did a business degree part-time, might well have the background to turn the show around.

He spent 12 years with Brambles, where the highlight was a posting to England to turn around the Cleanaway municipal business, which was involved in everything from waste collection and street cleaning, to garden maintenance and recycling.

"That business was performing quite poorly when I arrived but there were a lot of good people, so it was fairly straightforward in terms of galvanising the senior management team, focusing on the core issues and delivering a turnaround," Mitchell says.

By the time Brambles sold the business, the return on investment had tripled in less than three years.

Boom's directors and shareholders will be hoping he achieves a similar turnaround at their company. He explains his decision to take the job from May 1 like this:

"Typically, when businesses are brought together, you're bringing together different ways of operating, and different cultures. All these smaller businesses operate in a different way, so if you're trying to make it all work, then you have to develop a fairly common process that can handle the most complicated of them.

"That's what I thought might be the problem (at Boom), and in talking to the board, and talking through the issues, that became more evident.

"It was an opportunity to bring skills to the business, and I like the industrial services framework dealing with major customers, where you can differentiate quality and service. So it just looked like a great opportunity to me."

A new team has been assembled and head office is now at 21 people, compared with five a couple of years ago.

"The point is, we needed to bring a disciplined approach to all the operations, a consistent approach. We hadn't had a chief information officer or a strong head of IT and systems in the business previously. You have to bring quality people to these positions."

Mitchell is not about to criticise Boom's previous management and when he talks about the period before he joined, he uses the word "we". He doesn't blame anyone.

"It doesn't serve any purpose and I say 'we' because, since May 1, Boom's been mine. If you're going to lead a business you have to own it, that's my view," he says.

And when it comes to owning shares in the company, he has made one big statement.

Last month he bought 200,000 Boom shares at $1.09 each with his own money, as distinct from a boardroom hand-out. He now owns 500,000 shares - more than anyone else on the Boom board.

When asked about the share buying, he says: "I can see the value in the business. As chief executive, I've got a little bit of control over the destiny, so having money here compared to a few other places makes a lot of sense to me. I suppose I am signalling to the market that I'm very confident about the business."

But he is not claiming victory quite yet.

"There are still plenty of challenges that we've got to address and as we tackle each one something else will come up - another challenge - and that's what makes the role exciting really."

He says if a company doesn't have a lot of skill and a lot of passion, then you've got a problem.

"But we do have a lot of skill in the business - maybe it wasn't brought together and focused appropriately - and there's certainly a lot of passion for the business, and we've got a really good customer base," he says.

Mitchell points to Boom's revenue growth and says that the company is well positioned in its markets - crane hire, crane sales and service, and the access division, including travel towers.

But he says that while the company grew fast, there was a lag in getting various internal systems in place.

"There were a few issues that weren't picked up early, which you could say was because of the way we grew," he says.

"It's a matter of dealing with the internal issues. If you can deal with the internal issues, then this business is a very strong business, because in the last 12 months our business has had an overall 17% revenue growth - 10% in crane hire and 43% in crane sales. So if the after-tax profit is not there, then you can't blame the revenue."

He reports that some external things - such as bad weather in NSW and Queensland - did affect results. So too did crane contracts in remote areas.

Some of these contracts were fulfilled by flying in people to do the work.

"Those sort of costs weren't foreseen - the resources boom is a little bit more than anyone expected at the time the contracts were written - but the other costs associated with some of the systems integration issues and the like were internally caused."

According to Mitchell, the way to fix Boom's difficulties is to deal with the internal problems.

He reports that every single one of Boom's tower cranes is out on hire. Mitchell is relishing the move from a very big company such as Brambles to one valued by the market at about $170 million.

Asked whether it has been a shock to the system, he responds: "No. It's more exciting. The chief executive officer of a small-cap, working with a very supportive board, can get to shape things and do things faster than you can in a larger corporate.

"Brambles was a good corporate and I enjoyed all my time there. Sometimes it could be a bit frustrating, whereas here we can address the issues, make a decision quickly and get things done."

He is optimistic about the future. "We can see the way back quite clearly and I think, with a focused, disciplined approach, we can deliver very good results for our shareholders."

And he seems to have the support of the troops. "He's been a breath of fresh air in the place," said one employee leaving head office the other day.

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