Fletcher Building makes $120m loss, chief executive and chair resign

Fletcher Building CEO Ross Taylor. Photo: NZ Herald
Fletcher Building CEO Ross Taylor. Photo: NZ Herald
Fletcher Building has made a $120 million net loss after tax in its interim result and its chief executive has resigned, giving six month’s notice.

Chairman Bruce Hassall is also stepping down at the shareholder meeting later this year.

The company remains in a trading halt till 12.30pm today and the result is a 230 per cent drop in profit.

In the half-year to December 31, 2023, the company made $4.2 billion in revenue, down 1 per cent on 1H23 and ebit before significant items of $264m, down 27 per cent on the $360m previously.

Taylor gave a full-year outlook today too.

"As we look ahead to the remainder of the year, we expect FY24 Group ebit before significant items to be in a range of $540m to $640m with the mid-point assuming a continuation of current market conditions for the balance of FY24," he said.

He cited a backdrop of weaker trading conditions, particularly in the New Zealand residential building sector, where volumes fell 20 per cent.

The $120m net loss after tax is a turnaround on the $92m profit previously.

"Disappointingly, the result was heavily impacted by the $165m significant items provision on the New Zealand International Convention Centre announced on February 5 and a $122, non-cash impairment and write-down on the Tradelink Australia business," today’s announcement said.

The company plans a media conference at 10am, then an investor call at 11am, which is expected to conclude by midday.

Yesterday, Sam Stubbs, the managing director of KiwiSaver provider Simplicity NZ, said that more than one million investors in KiwiSaver own shares in Fletcher indirectly via their funds.

So the company’s fortunes affect many New Zealanders and its performance hasn’t been good enough so he wants boardroom changes.

Forsyth Barr analysts had last week forecast $299m ebit before significant items from today’s result, down 17 per cent on 1H23. Craigs’ analysts estimated $327m ebit before significant items, down 9 per cent on 1H23.

Yesterday, the Herald reported how calls were repeated for changes to Fletcher Building’s board.

On Monday, the company went into a trading halt before today’s result.

Stubbs and Oliver Mander, Shareholders Association chief executive, reiterated previous statements that new directors were needed at the board chaired by Bruce Hassall.

Mander said the crucial factor was risk and what steps the board had taken to mitigate that "because issues keep arising".

Stubbs complained about Fletcher’s continually declining share price, said the board was entrusted with shareholders’ and more than one million KiwiSaver investors’ money yet, every two to three years, something went wrong, with the company saying it would change but suffering disasters continually.

Fletcher is chaired by Bruce Hassall, whose fellow directors are Martin Brydon, Barbara Chapman, Peter Crowley, Sandra Dodds, Rob McDonald, Doug McKay and Cathy Quinn.

Last Monday, the company made provision for $180m losses for the New Zealand International Convention Centre [NZICC] to cost a further $165m and a Wellington car park to cost an extra $15m.

Craigs’ analysts Cameron Parker and Ryan Li have raised many problems with the business including:

• Ongoing uncertainty with the NZICC with around 10 months to run until it is finished.

• No agreed solutions for problems with Wellington International Airports’ car parks dispute.

• Claims on the Puhoi to Warkworth motorway project of around $200m of which Fletcher’s share could be half.

• No visible way forward on its Iplex pipe issues in Western Australia, including any decision from the regulator.

These difficulties had all created a drag on the share price, the Craigs’ analysts said.

Shares on the NZX were trading around $4.19 before the halt, down 23 per cent annually, giving a market cap of $3.2b.