A Brambles master class in succession planning

A forklift operator stacks empty wooden pallets.

Woolworths’ Gordon Cairns must be looking at Stephen Johns at Brambles and marvelling at what a well-handled succession looks like, with the change from Tom Gorman to the UK-based Graham Chipchase.

Granted, it helps when the company is being run well, as Gorman has demonstrably done at Brambles in his seven years in the job.

Today’s numbers told the story, with return on capital edging higher to 17.2 per cent excluding recent acquisitions and earnings before interest and tax forecast to land between nine and 11 per cent, well above the consensus expectation of seven per cent.

There were some quibbles about working capital hitting operating cash flow but, in large part, Gorman has the company firing and, as Johns confided, he has transformed the company from a pallet supplier to a supply chain solutions company.

His replacement, former Exam boss Graham Chipchase, is ideally positioned to take this further given his packaging background in fast moving consumer goods.

Big tick to Gorman and Johns for the way this handover was handled.

Better still the change won’t happen until February next year and the market hadn’t really been speculating about a change.

Granted the appointment of an outsider has its risks and it remains to be seen what will happen to existing management once Gorman heads back to the US.

Cairns took his time to replace Grant O’Brien at Woolworths and it is too early to evaluate how Brad Banducci is performing.

But Banducci has been tasked with fixing a basket case, which is no easy task in the high-profile supermarket business.

While Banducci works his magic, the next issue in line for Cairns is Grant King at Origin who has led the company for the last 22 years.

Today’s numbers showed the company, while reporting a statutory loss of $589m, is actually on the verge of achieving the game plan laid out by King.

The Gladstone LNG project is obviously damaged goods due to the oil price but seers like Andrew Mackenzie at BHP figure the oil price is more likely to rise from here and, on any read, the worst is clearly behind Origin on this investment.

It is long gas at the right time and well placed to profit from the conversion to renewables energy.

In other words, with the second train at Gladstone up and running, there has never been a better time to change person sitting in the chief executive’s chair.

The company is still mulling a corporate split between its retail and wholesale operations, which would obviously change the CEO role and its demands.

Cairns has a couple of options. He can delay the transition and make it harder for the replacement in the process by trashing value or he can move quickly and get on with the job.

That’s what Bramble’s Johns did (with style) and now it’s over to Cairns to do likewise.