The Hills Ltd board has lost patience with entrepreneurial chief executive Ted Pretty as profits sink at the group, opting for a steadier approach rather than the pursuit of large offshore acquisitions championed by the former high-flying Telstra executive.
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Mr Pretty departed the company on Wednesday, but his tenure effectively came to an end after a strategy day on May 23 when the top executives and board gathered. It had become clear that the diverging views about how to take the next step at Hills had widened too far, with the board frustrated at falling profits in the core business as the lofty offshore expansion plans were still being pursued.
On Wednesday Hills chairman Jennifer Hill-Ling officially said Mr Pretty, who spent two-and-a-half years in the role, would be immediately replaced by Grant Logan, the Hills chief operating officer.
Ms Hill-Ling, the daughter of Bob Hill-Ling who ran the company for 27 years until 1992, said the board had "reviewed and refined the company's strategy and committed to consolidating its existing businesses and growing, both organically and by acquisition, within Australia and New Zealand".
The Hill-Ling family hold 7.5 per cent of Hills and have watched their investment tumble in value, along with other shareholders. Hills shares were trading at $1.70 in August, 2014 and dropped a further 5 per cent on Wednesday to 59¢. Ms Hill-Ling is the granddaughter of Harold Hill-Ling, who took Hills onto the stock exchange 57 years ago with his business partner and brother-in-law Lance Hill, the inventor of the Hills hoist.
The decision to part ways with Mr Pretty came after an action-packed period at Hills. Mr Pretty joined as chief executive in September 2012 and he spent the first two years of his stint selling poorly performing businesses, and repositioning the company into one focusing on electronics, security systems and healthcare technology.
He also struck a controversial deal late in 2014 where Hills handed control of its famous Hills hoist clothes line and laundry products brand to an outside firm for the first time in 70 years. It signed a deal with supermarket chain Woolworths, which gained control of the Hills range of clothes lines, clothes care and garden sprayers spanning 240 products.
But Hills warned in late April that it had been hit hard by a downturn in orders in its security and communications business as customers reduced capital spending. The falling Australian dollar was also eating into profits, Hills said.
Bad news accelerated
The bad news accelerated a severe tumble in the Hills share price as investors cottoned on to the fact that the transformation was proving much harder than anticipated.
Mr Pretty, who was well-known for his penchant for wearing a black skivvy during his time as a top-ranking Telstra executive in the late 1990s, remained ambitious right up until the end and was eyeing large-scale acquisitions overseas.
Hills said on Wednesday, there was no change to underlying net profit after tax guidance but there will be changes to statutory profit forecasts because of one-off costs of about $5 million associated with due diligence costs on acquisitions that won't be progressed, and also costs for Mr Pretty's departure.
Mr Logan is a former chief financial officer of Goodman Fielder and Bayer Limited. Ms Hill-Ling said Mr Logan's main focus will be ensuring the company "generates consistent returns" for shareholders.
