June 16, 2017 / 1:51 AM / 2 months ago

BHP's new chairman built reputation on Amcor turnaround

A handout photo dated April 19, 2017 shows Ken MacKenzie, a former Australian packaging executive, who has been named as mining giant BHP Billiton's next chairman. BHP/Handout via REUTERS

SYDNEY (Reuters) - BHP's new chairman Ken MacKenzie, an avid sailor, is not afraid to rock the boat.

In his first two years running Australian packaging group Amcor Ltd, Canadian-born MacKenzie replaced 75 percent of the firm's top 80 managers.

He implemented an aggressive turnaround plan, oversaw a company-changing $2 billion acquisition of the Alcan packaging businesses and pushed through a spin off of its Australian boxes and bottles arm.

"He comes from a very strong background, very focused on shareholder value creation, very disciplined in his approach there. On that basis he's a very sensible, sound appointment," said Rohan Walsh, a portfolio manager at Karara Capital, which owns shares in both BHP and Amcor.

Named on Thursday to succeed Jac Nasser as BHP chairman from Sept. 1, MacKenzie's early challenge will be to deal with calls for a revamp at the world's biggest miner from activist shareholders.

U.S.-based fund Elliott Management has released a roadmap for change, accusing the BHP board of approving "disastrous acquisitions and poorly timed share buybacks", and pushing for an exit from its U.S. oil and shale businesses.

MacKenzie's track record, which included a near doubling of Amcor's return on capital to 20 percent and boosting its share price 150 percent over 10 years, could put him in good standing with Elliott.

A trained engineer with a passion for sailing, he implemented a turnaround plan at Amcor called "The Way Forward".

It was billed as "an aggressive get-fit program" for the company. The objective was simple: Amcor's different businesses were to have strong positions in their markets. Businesses in weak positions were to be fixed, sold or closed.

In 2010, he snared Alcan's packaging arm from then-distressed Rio Tinto for what was considered a very attractive $2 billion price and then built on that business.

"The Alcan acquisition was very much his crowning glory," said Macquarie analyst John Purtell, who covered MacKenzie's reign over Amcor.

Investors saw the acquisition as extremely well timed, greatly increasing Amcor's scale and diversification.

MacKenzie, 53, was also responsible for the demerger in December 2013 of Amcor's Australasian paper and packaging and U.S. distribution businesses, which has allowed Amcor to focus on higher-returning businesses.

"His track record in terms of boards is probably a little bit untested at the moment, but as a CEO I think he was very effective," said Andy Forster, a portfolio manager at Argo Investments, a shareholder in both BHP and Amcor.

Still, MacKenzie, a French and German speaker who only joined the board of BHP last year, is taking on a company with its hands in many pies around the world.

"BHP's a large complex diverse business. It's not an easy ship to manage. There are challenges in this role, clearly," Karara's Walsh said.

Reporting by James Regan and Sonali Paul; Editing by Richard Pullin

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