Email anger downs Fletcher boss
Fletcher Building chairman Sir Ralph Norris has come to the defence of departed chief executive Mark Adamson over his responsibility for the company’s heavy construction losses.
Contrary to rumours, Norris said Adamson had ‘‘done a very good job of improving the culture in this organisation’’ and was rated highly in a staff satisfaction survey by its top executives.
Rather, he said Adamson’s departure in July had been triggered by an ‘‘inappropriate email’’ that he had sent ‘‘in frustration’’ to other staff about the troubled construction arm.
‘‘Mark and I had a discussion – he was already coming to the end of his tenure.’’
However, Norris said Adamson would have been quick to say that as chief executive he was ‘‘100 per cent accountable for this result, the good and the bad’’.
Fletcher Building has reported a 23 per cent plunge in net profit before significant items for the year to June 30.
Net profit fell to $321 million – or $94m after a $222m impairment on two Australian businesses.
But the profit was dogged by Fletcher’s building and interiors unit, which does the bulk of its construction work and booked a heavy $292m loss.
The losses were largely ascribed to two projects – the Skycity Convention Centre in Auckland, and one the company would not identify but is believed to be Christchurch’s Justice and Emergency Services precinct.
Calls for Fletcher’s board to also bear some of the disappointment were countered by Norris, who said the board ‘‘absolutely’’ took responsibility but believed a better year was ahead.
He was also ‘‘very confident’’ the company had met its continuous disclosure requirements, in response to a question about the NZX investigation in that area.
Norris laid the blame for the construction losses on inadequate project management, design changes and lack of resources, particularly a lack of staff in the current building boom.
The delays on the $700m Skycity Convention Centre were a case in point, he said.
‘‘We identified a start date for that project that was earlier than we should have committed to, because again it comes back to that resourcing issue. We weren’t able to resource up that project fast enough at the beginning.’’
Fletcher was going to be more choosy about the contracts it took on, Norris said, but he could not confirm the company had pulled out of the Waikeria prison privatepublic partnership.
Both Norris and current chief executive Francisco Irazusta said that if it were not for the building and interiors division’s poor performance, the company would have had a record year.
All the other divisions were enjoying strong growth, and there had been big changes in the leadership of the construction arm.
Asked whether the board and chief executive had moved fast enough when the problems became clear, Norris said problems first became apparent last September but had not created any concern for its earnings guidance.
‘‘There was a view any additional costs or losses in construction would be more than offset by the better performances in our other businesses.’’
The division’s contracts were put under closer watch, and it wasn’t until an emergency board meeting in March that the full extent of the problems was clear.
‘‘We came to a conclusion that we should take a worst-case approach,’’ Norris said.
A second profit warning in July followed a realisation that even the offsets it had believed would come to pass should be wiped.
Shares in Fletcher Building rose 10 cents to $8.30 after the result. Its share price has ranged this year from $11.02 in September last year to $7.47 in July.