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Fletcher Building shares were mauled by investors after the construction giant revealed its Building + Interiors division's losses for 2018 will be more than four times higher than previously estimated - $660 million at the earnings before interest and tax level.
Chairman Sir Ralph Norris resigned and Fletcher would post no interim dividend.
Crucially, after breaking its banking covenants, Fletcher has secured a waiver from one of its two main lenders, both with a total $2.4billion in the pot, with negotiations under way to secure new terms by March 31.
Yesterday's downgrade was the fifth in the past year.
Fletcher's shares reopened yesterday from last week's trading halt, initially plunging 13% to $6.67, then retraced some losses to end the day at $7.06.
After B+I booked a $292 million loss last financial year, Fletcher announced a $160 million B+I loss provision last October, but yesterday added a further $486 million for project losses, plus added in overheads and others costs; predicting the full-year 2018 B+I loss to amount to $660 million - all totalling $952 million.
Of 14 B+I projects under the most recent review, most were on fixed-price contracts and are collectively worth $2.3billion and were almost 60% complete.
Fletcher has ring-fenced the B+I predicament, and excluding that loss the Fletcher group is expecting earnings before interest and tax in a range of $680 million-$720 million, with cash flow increasing from $635 million last year to $700 million.
The B+I losses are expected through the books over the next three years.
Forsyth Barr broker Damian Foster said the announcement saw a ''massive lift in losses'', which collectivity would amount to $952 million over both 2017 and 2018.
The ''key uncertainty'' was Fletcher's negotiations with its financiers, having breached covenants with the commercial bank syndicate and US private placement lenders.
''Key unknowns are the debt contract terms,'' Mr Foster said.
He noted that in addition to new equity and reduced dividend, Fletcher had the option to sell assets, which could include its Formica laminate business, which Mr Foster valued at about $1billion.
Craigs Investment Partners broker Peter McIntyre said the review announcement was ''really disappointing'' and questions remained over its debt funding; given Fletcher was still negotiating with the $US1.3billion private placement lenders.
Ultimately, Fletcher would have to write off the $952 million B+I losses, given neither B+I nor any other assets were tagged for sale yesterday.
''Fletcher's was winning contracts at any costs ... I wonder if quality control went out the window, so much so that's the end of B+I,'' Mr McIntyre said yesterday.
Fletcher chief executive Ross Taylor said while focusing on completing the B+I commitments, the company's broader construction business continued to benefit from favourable market conditions and strong growth.
''While the B+I provisions are large, they are phased over a number of years and do not impact our ability to trade with our customers or suppliers or pay our bills,'' Mr Taylor said in a statement.