Convention centre delay

SkyCity says the $700 million convention centre which Fletcher Building is building for the company is now expected to finish later than first anticipated. In an announcement to the stock exchange yesterday SkyCity said that Fletcher Construction has provided an updated programme of works for the New Zealand International Convention Centre (NZICC) in Auckland’s CBD. “The updated programme currently indicates practical completion for both the NZICC and the Hobson Street hotel around the middle of 2019.” SkyCity had earlier said that the project was due to finish in the first three months of 2019. “SkyCity remains comfortable with the contractual arrangements we have with Fletcher Construction and the project remains on-budget,” the company said. Fletcher Building chief financial officer Bevan McKenzie said three major factors had caused the latest surprise operating earnings guidance downgrade from $610m-$650m to $525m for the year to June. The first factor was due to further losses on a major contract now nearing completion which he said had incurred higher costs. That represented half the total change in full-year earnings, McKenzie said. The second was an update on a major project due to be completed in 2019 “due to a change in the programme” which had led to estimated losses accounting for a quarter of the earnings reduction, he said. McKenzie said the third factor was a reduction in profitability of other projects to be finished in the next six to nine months. When Fletcher announced its earlier profit downgrade in March, a Citi Research Equities analyst believed one project was the $700m SkyCity project. The second, due to finish soon, was said to be Christchurch’s Justice and Emergency Precinct.