Fletcher Building posts record loss at Building + Interior unit
The country's biggest construction company has been hit with a resigning chair and a projected $660m in losses.
Fletcher Building shares have fallen 13 percent after the company announced Sir Ralph Norris will step down as chairman.
The announcement was made in the wake of a further $486 million provision for project losses at its Building + Interiors unit.
Fletcher CEO Ross Taylor joined Mark Sainsbury on Morning talk to discuss the projected losses.
Fourteen of the unit's 73 projects, worth $2.3 billion, are loss-making or 'on watch', the country's largest building firm said on Wednesday.
Fletcher shares dropped $1.03 to $6.74 when they resumed trading in the morning. They have dropped 23 percent in the past 12 months.
The projected 2018 loss for B+I has been widened to $660m on an earnings before interest and tax basis from a previous estimate of $160m.
Sir Ralph is to step down at the 2018 annual meeting toward the end of the year, having presided over a board that dumped former chief executive Mark Adamson after profit warnings that were driven by problems at B+I.
New chief executive Ross Taylor says the new provisions were informed by a review of 16 B+I projects, accounting for about 90 percent of the construction backlog.
We’re not getting out of construction overall.
"We have a very big infrastructure business, so they’re all running well in markets making reasonable profits” he told Mark Sainsbury.
“What we’re seeing in vertical construction is quite a different dynamic where the market is moved to very high contractual risk and very low margins and so that’s what we’re getting out of.”
Listen to the full interview with Fletcher CEO Ross Taylor above.
Some of the content of this article appeared earlier on Newshub.co.nz
Morning Talk with Mark Sainsbury, weekdays from 9am-noon on RadioLIVE and streaming live to the ROVA app on Android and iPhone.
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