Hands-on Nick Miller cements his role at AdBri

Change was in the air. It was October 2018 and AdBri chairman Zlatko Todorcevski was five months into what would prove a short reign.

Nick Miller had the AdBri gig in the bag. But there was one last task before his formal appointment. Britta Campion / The Australian

Nick Miller had the AdBri gig in the bag. But there was one last task before his formal appointment: meeting the Barro family. The billionaire concrete kings own nearly half of AdBri and invited the Kiwi chief executive to a dinner at Kisume in Melbourne’s Flinders Lane for a final grilling.

“They wanted to road-test me before they purchased,” jokes Miller in an interview with The Weekend Australian.

Raymond Barro and his older sister Rhonda were at the table along with former banker and family associate Geoff Tarrant and the Barro Group’s long-serving secretary Ian Alexander.

Change was in the air. It was October 2018 and AdBri chairman Zlatko Todorcevski was five months into what would prove a short reign.

The Barros had further strengthened their grip on the construction materials supplier, regularly using creep provisions to lift their stake to 43 per cent.

But each move by the powerful family also brought with it questions from AdBri investors, with its majority stake raising talk the privately held Barro Group could either launch a takeover of Adelaide Brighton or Barro itself could be swallowed.

While Barro’s stake had been built up over two decades, there were also questions raised in the market from disgruntled rivals suggesting the cosy relationship between the companies may have shut out other suppliers. The competition regulator later dismissed the issue after launching a probe.

Miller was chosen for the role after running NZ construction and infrastructure company Fulton Hogan, which also has a sizeable business in Australia. But his experience handling the Fulton and Hogan dynasties, the private rich-list families that control the NZ company, was also highly prized given the sensitivities around managing conflict protocols at AdBri.

“Zlatko was the chairman at that point. He was attracted to the fact I’d managed two large family shareholders which also had some interesting dynamics in terms of governance matters,” Miller says. “I was really impressed with him when I met him — obviously his strategic foresight in the business but also his approach to governance given the dynamics at AdBri have some complexities around them in terms of conflict protocols.”

Those instincts proved well founded. By early March 2019, Rhonda Barro had been nominated to the board as a third representative of the company with Raymond Barro elected chairman and Todorcevski stepping down after only a year in the role to instead become deputy chairman and lead independent director. The boardroom shenanigans followed a slowdown in the residential housing market, which accounts for one-third of AdBri’s product exposure.

Miller admits those first few months were a test of his credentials. But the 54-year-old also credits the Barro family for backing a longer-term vision even amid significant cyclical volatility.

“When you come into a role like this and when you’re in a company with very long-dated assets — quarries, cement manufacturing or terminals — they’re very difficult assets to get development approval for. So the challenge of a listed company is partly about the short-term-ism whereby you’re very focused on the next six months of results.

“It was bloody good to have that intergenerational thinking around the board table to just remind ourselves about what the long-term future of an organisation like this looks like.”

Miller’s roll-up-your-sleeves approach also impressed Raymond Barro.

“Nick made a strong impression early. It was clear he was a highly capable and experienced candidate to lead AdBri. His personable nature and hands-on approach ensures he gets the best out of his people,” Barro tells The Weekend Australian.

Just when it seemed the boardroom ruckus had subsided, there was a further twist few saw coming. Todorcevski, AdBri’s deputy chairman, phoned Miller on a quiet Sunday morning in mid-June this year to break the news he was jumping ship to become CEO at Boral, one of AdBri’s chief rivals.

“He called me on a Sunday morning to tell me and yes I was very surprised given the portfolio he’d built up as a non-executive director,” Miller says. “Then again, it was probably a bit like the situation I found myself in with AdBri in that these opportunities only come up so often. Boral is one of Australia’s iconic companies and clearly the performance of it has not been where shareholders would like it to be.

“I think given his background with very strong financial and M&A background he’s the right person given the structural issues Boral has to consider.”

The two companies are partners in the Sunstate cement joint venture in Queensland but also rivals in other markets.

“I think at the top level of Boral he will improve the relationship with AdBri, but of course he’s a competitor now also,” Miller laughs.

Rethinking AdBri’s exposure has been at the top of Miller’s priorities, lifting exposure to infrastructure and either selling or developing land to build growth.

“The lack of exposure to infrastructure to me was something that was a bit of an ‘oh shit’ moment because I could see what was going to happen in the housing market,” he said. “And their exposure to infrastructure on the eastern seaboard was very low. And you could see what was going to happen in infrastructure spending.”

Residential construction provides about a third of AdBri’s earnings exposure, with mining above 20 per cent but infrastructure below 15 per cent. An oversupply of apartments and falling consumer confidence have dented demand for AdBri’s products like cement, concrete and aggregates, cutting profits and sparking a $30m cost-cutting scheme.

The Adelaide business had been shy about a full-blown assault on the Australian market under former boss Mark Chellew, but Miller says it was time to rebrand and re-tilt the business even with his management team all working remotely due to COVID-19.

“I remember we had a table at the annual Construction Awards dinner and 50 per cent of people I spoke to that night didn’t know who Adelaide Brighton was,” Miller recalls. “They had this sense that it was a cement business in Adelaide. And it suddenly became apparent when you’re dealing with national construction players that we had to pivot and position as a national provider because the line of sight on our capability was very limited in the infrastructure space.”

Still, he is under no illusions about the challenges of cashing in on the much-hyped infrastructure boom with Boral’s relative failure to tap the opportunity seen as a warning light for some.

“I think the disciplines around infrastructure are very different from the disciplines around residential and light commercial work. You are dealing with a much more commercial, litigious environment where the risk profile is very different. You need the right team on the bus and that’s what I’ve done to build some capacity in that space.”

Longer-term, the potential for a tie-up between AdBri and the Barro Group also appears logical.

“With these things there always needs to be a catalyst with a family business. So is it succession, is it a change in the structure of the market, is it a change in their thinking around ownership of AdBri? They won’t just wake up tomorrow and go ‘we want to do this’,” Miller says. “They’ll have a clear plan.”