Fletcher chairman resigns over losses
A grim-faced Sir Ralph Norris has resigned as chairman of Fletcher Building, saying the board had to be accountable for the troubled building group’s massive construction losses.
Norris had planned to stay in the job until next year, but decided at the weekend to step down in the face of a $486 million increase in the projected losses for Fletcher’s troubled building and interiors (B&I) division on 16 major construction projects.
‘‘It’s fair to the shareholders for somebody to take accountability,’’ Norris said.
Fletcher shares dropped 13 per cent when trading restarted yesterday.
They fell $1 to $6.67 each on the NZX, an hour after the company said the B&I losses had risen to a total expected loss of $660m in the current financial year.
Explaining what went wrong, Norris said: ‘‘There is no single point of failure.’’ He brushed off any suggestions of fraud, saying it was ‘‘incompetence’’ that led to the financial woes.
‘‘One of the significant issues is the information flows through to the board were not as fulsome as they possibly could have been.’’
Norris was clear that his departure was his call and said he had the board’s support had he wished to continue.
He said many parts of Fletcher were in better shape than when he arrived. There had, prior to his appointment, been some questionable acquisitions by the company.
‘‘Nearly all those businesses have improved over the last three to four years,’’ Norris said.
Norris’ career has included successful stints as managing director of ASB and chief executive of Air New Zealand. He is currently chairman of Contact Energy.
He would remain as Fletcher chairman until his replacement was found.
As for his future, Norris said he was realistic enough to accept that the B&I events would attach a stigma to his name and reputation.
He was undecided about future governance roles, saying that, in time, he hoped people would judge his legacy on his successes.
Chief executive Ross Taylor said the B&I division would be restructured to focus just on completing current projects and that it would not bid for new work.
But, Taylor said, there would be no fire sale of assets, and the building giant’s lenders remained supportive.
Negotiations with its lenders were ongoing as it had breached its banking covenants. It expected to have completed negotiations by the end of March.
Taylor, who has been in the top job for just 10 weeks, said he believed there would be no further increases in projected losses on the 16 troubled construction projects.
The scale of the losses on SkyCity’s Auckland convention centre was particularly extreme. Other troubled projects included Auckland’s Commercial Bay, Christchurch’s justice precinct and the Christchurch Airport hotel.
Taylor stressed that, excluding B&I, Fletcher was performing well, and the losses announced yesterday would be spread over the coming three years.
The overall company had strong cashflows and the increased B&I losses had no effect on the firm’s ability to trade or pay its bills.
Taylor said the new numbers on expected losses followed a review of 16 B&I projects, accounting for about 90 per cent of the construction backlog, and included input from KPMG.