Fulton Hogan to keep subsidy
AUCKLAND: Engineering and civil construction giant Fulton Hogan will retain about $33.3 million received from the wage subsidy scheme, despite recording a bumper $211 million net profit for the year to June 2020.
The privately owned company, founded in Dunedin in 1933, said it wished to maintain a conservative financial position amid global and local uncertainties.
The strong result — up 27.7% on the previous year — allowed the firm, which has its head office in Christchurch, to pay out $83.78 million in total dividends for the 2020 financial year.
Major shareholders include the company’s founding families, the Fultons and Johnstones, whose net worths were estimated at $450 million and $315 million respectively in 2019.
Fulton Hogan, which is involved in a mix of private and public construction projects, including major road maintenance and government infrastructure contracts, released its financial statements on Friday.
Its balance sheet showed total assets of $3.16 billion at June 30, 2020, and net equity of $1.2 billion.
Total borrowings at that date were $774.8 million, while employee entitlements totalled $149 million. Net debt declined to $400.7 million at balance date.
Total revenue for the year was flat at $4.6 billion.
Fulton Hogan initially received $34.3 million in wage subsides to cover 4883 staff as the country went into Covid19 lockdown in late March. The Ministry of Social Development’s employer search tool shows the current figure at $33.315 million.
‘‘At the end of September, following a full reconciliation we made a partial reimbursement to MSD,’’ a Fulton Hogan spokesman said when asked if the company intended paying back any of the taxpayer money.
‘‘Our intention is to retain the remaining wage subsidy in line with the objective and criteria of the scheme.’’
The comments come as some companies come under public pressure to return wage support payments after posting increasing profits. Retailer Briscoe Group last month announced it was returning $11.5 million as sales rebounded after lockdowns.
Briscoe had earlier reported a $28 million halfyear profit and announced a $20.3 million dividend payout.
Fulton Hogan is facing different challenges from Covid19 and said in its annual report it needed to maintain a conservative financial position due to an uncertain outlook both here and overseas.
Given the uncertainty, the board decided to declare a reduced final dividend of 33c a share — down from 36c last year — taking the annual dividend to 57c compared with 60c in 2019.
‘‘After a strong firsthalf financial performance across most of our business, the subsequent impact of Covid19 caused significant business interruption in the second half of the year, in particular in New Zealand,’’ managing director Cos Bruyn said.
‘‘The abrupt and severe curtailment of works during the sixweek . . . lockdown saw over 70% of the company’s 4500 New Zealandbased employees unable to work.
‘‘This situation was actively managed, with directors, and New Zealandbased executives and other employees taking a 20% cut in remuneration, and special leave provisions put in place for employees. With the support of the . . . wage subsidy scheme, and significant financial commitment from Fulton Hogan, all New Zealandbased employees, working or not, were able to be maintained on 80% pay as a minimum, despite the company incurring a significant loss in New Zealand in April.’’
In New Zealand, Fulton Hogan has picked up annual maintenance work, winning Dunedin City Council, Wellington City Council, Rotorua District Council, Christchurch City Council and NZ Transport Agency contracts.
However, Mr Bruyn said the outlook remained uncertain on both sides of the Tasman; local government in both countries faced lower budgeted incomes, along with deferred capital expenditure in the private sector, as companies moved to strengthen their balance sheets in the short term.
There was also uncertainty about fiscal stimulus programmes in both Australia and New Zealand. — The New Zealand Herald