Fletcher Building will quit bidding on large commercial construction projects, but will keep its other three construction-related divisions in operation: Infrastructure, Higgins and South Pacific.
It is committed to completing the Auckland International Convention Centre, although that alone is expected to result in a loss for Fletcher of more than $400million.
In outlining the estimated $660million Building + Interiors (B+I) shock loss expected for full year 2018 yesterday, Fletcher chief executive Ross Taylor said a decision had been made to refocus B+I work solely on project completion.
''While the B+I market sector remains characterised by high contract risk and low margins, we will no longer participate.
''If these market dynamics change in the future, we would reconsider our position,'' he said in a statement.
When asked why provisioning had risen from $160 million last October to $660 million, he said the first review was only of two projects, not 19.
He said Fletcher's residential division would continue to operate, as would the infrastructure business, to complete existing projects and bid for new ones.
''The infrastructure sector benefits from more appropriate margins, better contract conditions, and alliance models that reduce risk,'' he said.
The Auckland convention centre and the Christchurch Justice and Emergency Precinct were the main contributors to the B+I losses.
Mr Taylor said the target completion date for the Auckland conference centre and Hobson St hotel remained as agreed with SkyCity, but Fletcher had provisioned for significant cost and timeline contingencies.
It would cost $887million to complete by July next year, booking an estimated $410million loss.
He said the Christchurch justice precinct was ''99% complete'', with the client occupying the building, and he expected practical completion to be awarded at the end of February.Its loss is estimated to be $156million.
''While our broader construction businesses continue to benefit from favourable market conditions and strong growth, the B+I market sector remains characterised by high contract risk and low margins.''
