Fletcher eyes prefab move
Fletcher Building is negotiating a lease on a site to build a giant prefabricated home factory in Auckland.
Fletcher chief executive Ross Taylor said prefabricating homes was a key part of the troubled construction giant’s plan to go from building about 700 homes a year in Auckland to more than 1000.
Taylor said Fletcher was keen to participate in the Government’s Kiwibuild affordable house-building programme, and had been talking to Housing Minister Phil Twyford.
He also said about 90 jobs had been cut in a restructure, but most of those people had already left the company.
Taylor said outgoing chairman Sir Ralph Norris would make an announcement about board changes today, indicating his successor has been found.
Fletcher Building is introducing a new operating model, which will reduce overheads across the group by $30 million a year.
The company hopes to improve its operational and financial performance following massive losses on large projects including Skycity Entertainment Group’s international conference centre in Auckland.
The company still expects to report a loss of $660m before interest and tax for the year to June 30, which it announced in February.
But job losses will contribute to up to $95m of restructuring costs.
The overall aim of the strategy is to focus on profitable Australian and New Zealand operations, and sell its Formica and Roof Tile Group businesses.
Taylor said the company had a portfolio of operations, but had lacked a ‘‘clear strategy’’, and it would take three years to turn Fletcher around.
There would be a particular focus on lifting the profitability of its Australian operations, which lagged that of its New Zealand businesses.
There would also be a focus on building the company’s transport and infrastructure division.
‘‘In financial year [FY] 2019 we will focus on stabilising and turning around our existing businesses, while divesting Formica and Roof Tile Group,’’ Taylor said.
‘‘By FY2020 we should be well positioned to deliver solid performance across the portfolio, and from FY2021 onwards we want to be achieving strong revenue and earnings growth year on year.’’
A key plank of the plan was to grow Fletcher’s home-building operation. The Auckland house factory expected to cost $15m to $20m.
Prefabricating homes would cut building times and costs, and trials of products had proved successful, Taylor said.
Fletcher intended to sell its prefab homes to other developers, and the first ones would roll off the factory line next year.
Fletcher’s chief executive of residential and land development, Steve Evans, said: ‘‘Building using panels is one way we can help address the shortage of housing in the New Zealand market ... The level of efficiency and automation means labour shortages will impact less on house building.’’
Macquarie Capital has been appointed to advise on the divestment of Formica Group, which has operations in countries as far flung as Mexico, China and Britain. is