Fletcher eyes pre­fab move

Marlborough Express - - FRONT PAGE -

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

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