THE DISTILLERY: McNamee applause

Brian McNamee could well be Australia's greatest chief executive in recent history, leaving Paul Perreault with big shoes to fill.

Many would agree with the suggestion Brian McNamee is to CSL, as Don Argus is to BHP Billiton and Wal King is to Leighton Holdings. In actual fact, CSL's rise from obscurity to global powerhouse proportionally eclipses BHP, and CSL’s stability today contrasts with the situation Leighton finds itself in. There’s a case to be made that McNamee is the greatest executive Australia has produced in the modern era.

He’s not gone yet by the way; this isn’t the wind-up music. It’s just a reflection of the applause from two business commentators after CSL’s profit upgrade for the final reporting period that McNamee will be at the helm before handing over to CSL Behring president Paul Perreault in mid-2013.

The Australian’s Bryan Frith says the anticipated 20 per cent increase in CSL profits over the next year on a constant currency basis equates to a $US1.23 billion.

"What is pleasing for CSL and its shareholders is that the forecast does not include any windfall gains. CSL said the improved outlook was largely underpinned by the performance of the blood products division, CSL Behring. Moreover, a number of factors have contributed, including a higher level of sales, a better sales mix and improved efficiencies across the supply chains. In other words, the company is simply doing things better, cutting costs, improving marketing and distribution, and in the process increasing margins.”

Business Spectator’s Stephen Bartholomeusz explains how the latest buyback brings the total from recent years to $4.5 billion and could well mean that as Perreault takes the chief’s seat, another buyback could be underway.

"The scale of the capital management program has already created a novelty within CSL’s accounts – it has more than wiped out its ordinary share contributed equity and has had to be quite creative in its accounting to overcome the wiping out of its capital base. It has created a share buy-back reserve. The buybacks, with the top and bottom-line growth CSL has been generating and the 20 per cent annual compound growth in research and development spending through McNamee’s tenure, are a testimony to CSL’s disciplined growth and its ability to reconcile strong levels of re-investment in the business with a focus on shareholder returns. Barring something unforeseen, Perreault will inherit a group in near-pristine condition and a set of very, very high expectations to live up to.”

Meanwhile, with Mark Carnegie rekindling the title of ‘shareholder activism,’ Fairfax’s Malcolm Maiden writes that these players are frequently categorised as merger and acquisition operatives, but that’s only accurate some of the time.

"Shareholder activism very rarely involves a full bid, and in that respect questions about the funding resources Carnegie's group has behind it are wide of the mark: activism is a ''capital-light'', medium-term strategy that involves the acquisition of a seed holding, often using derivatives, and then an attempt to recruit other shareholders in what is, in essence, a political campaign for strategic change. Activist fund operators raise money from wealthy investors and institutions in much the same way other ''alternative investment'' vehicles including hedge funds and private equity funds do, and charge similar fees, with bonus fees applying to above-market returns. Their backers understand that successful plays will be outnumbered by ones that fail to gain traction, and invest in the belief that the average return will beat the market.”

And The Australian’s editor-at-large Paul Kelly makes the compelling case that the power shift from east to west – domestically, not globally – is stronger than perhaps the east coast cities imagine.

"As the centre of Australia's economic gravity moves towards Western Australia, which generates 45 per cent of our exports with its state-of-the-art mining and energy sector, the west is now staking another bid – for intellectual leadership in how Australia sees the world. The Sydney-Canberra-Melbourne east coast elites face an inevitable challenge from the west, more confident than ever, successful in huge project management and, with 40 per cent of its population born overseas, claiming to be more multicultural than the eastern states.”

Elsewhere, Fairfax’s economics correspondent Peter Martin reports that there are two more interest rate cuts coming from the Reserve Bank of Australia, according to estimates from the Organisation for Economic Co-operation and Development.

Fairfax’s Ross Gittins passed on the conclusions of University of Adelaide economic historian Ian McLean that Australia’s enduring economic strength over almost two centuries comes down to more than simply being the ‘lucky country’. Gittins says McLean "gives much of the credit to the quality of our economic and political institutions,” much of which were inherited from the British.

The Australian Financial Review’s Chanticleer columnist Tony Boyd says export sensitive companies should give up any hope of short-term currency relief. Global forces will keep the Australian dollar up.

Meanwhile, The Australian’s John Durie broadly welcomes the suggestion from former Victorian premier John Brumby for a new anti-dumping agency based in Melbourne, which would report to the federal attorney-general.

Durie makes the sensible argument that unfair trade practices should be investigated, but the structure’s primary goal should be to advance the national interest.

The Australian Financial Review’s Matthew Stevens argues that the Senate Committee’s review of Bill Shorten’s proposed amendments from the Fair Work Act has failed to give a definitive explanation of why the changes should be implemented, even from the committee’s ALP members.

And finally, The Australian Financial Review’s Jennifer Hewett explains how NBN Co chief executive Mike Quigley has just moved into a new apartment in Sydney’s CBD, but his upgraded copper line broadband connection "frequently freezes when he’s trying to download video” (the connection is rubbish).

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