Fletcher cost rises blamed for big loss
New Zealand’s largest construction company, Fletcher Building, has posted a full-year loss of $190 million and won’t pay shareholders a dividend.
This contrasts with a profit of $94m in the 2017 financial year.
Fletcher Building chief executive Ross Taylor said there had been volume and revenue growth across its New Zealand and Australian businesses.
‘‘But these gains have been more than offset by increased costs and our need to invest ahead of plan to meet higher than anticipated market demand,’’ Taylor said.
Losses in Fletcher’s Building and Interiors (B&I) division ‘‘have been maintained’’ at the $660m level that was announced to the market in February, the company said.
Revenue for the year was $9.5 billion, while cashflow from operations was up $153m on the prior year, at $396m.
In New Zealand, the company’s Residential and Development division performed well, growing revenue and earnings, the company said, and accounting for 24 per cent of revenue. Overall, the division pulled in about $575m for the year.
Fletcher said its Australian gross revenue increased, with all businesses achieving positive sales growth and performance improvements. However, operating profits decreased, as the majority of businesses were affected by increased input costs.
The company would focus on growing its core businesses, stabilising its construction division, and completing the divestment of two non-core businesses, Formica and Roof Tile Group.
‘‘In both New Zealand and Australia we expect activity in the residential sectors to decline slightly, while activity in the nonresidential, commercial and infrastructure sectors is likely to increase.’’
In February this year Fletcher shocked markets when it announced $660m in losses from its B&I division, leading to chairman Sir Ralph Norris standing down. He had planned to stay in the job until next year.
At the time Norris blamed the loss on poor project management, design changes, and a lack of resources, specifically workers.
‘‘A boom in any business is almost as bad as a bust, because you end up with a situation where resources get short, [and] the ability to price becomes compromised,’’ he said at the time.
Fletcher has a market capitalisation of about $9b, about 20,000 employees across 40 countries, and about 50 businesses including Fletcher Construction, PlaceMakers, Winstone Aggregates, Rocla Quarry Products, Gerard Roofing, and Pink Batts.
Fletcher said: ‘‘In line with the company’s dividend policy to pay dividends in the range of 50 [per cent] to 75 per cent of net earnings before significant items, no final dividend was declared.’’
Subject to satisfactory trading performance, dividends will resume in the 2019 full year.