New Fletcher chief could slash again
Fund manager sees more writedowns on the cards
Mark Adamson’s replacement at Fletcher Building may write down the value of more assets at the country’s biggest construction company, says a fund manager.
The firm’s board is on the hunt for a new chief executive after Adamson’s immediate departure and the search i s expected to take months, not weeks.
On Thursday Fletcher made the shock announcement that it needed a new CEO, was expecting to make operating earnings of about $ 525 million for the year ended June 30 — down from the $ 610m-$ 650m it forecast in March — and was writing down the value of two businesses by $ 220m.
Outgoing boss Adamson has forfeited $ 8m worth of shares. A disclosure notice to the New Zealand stock exchange yesterday revealed Adamson forfeited 1,061,652 shares worth $ 8,014,105.
Castle Point fund manager Stephen Bennie said he expected whoever was chosen for the role would write down the value of more assets.
Bennie said often the first thing a chief executive did when coming into a problematic situation was to make more writedowns, so their starting point was as low as possible.
“A new CEO has got no vested interest in what has been before. I would expect more writedowns.”
The writedowns already made put question marks over what Fletcher Building’s final dividend would be, Bennie said.
The company will announce the final dividend at its annual result next month.
Some big Fletcher investors favour former lawyer and the company’s for- mer construction division chief Mark Binns to be the new chief executive.
But 61- yearold Binns, who is retiring as the chief executive of Meridian Energy in December, on Thursday night refused to comment on whether he is keen on the role.
Nor is he talking about what is going on at the company where he worked for 22 years and was its longest- serving divisional chief, eventually heading Fletcher’s giant infrastructure division which included construction.
Rickey Ward, JBWere New Zealand equity manager, said Binns was many people’s top candidate for the surprise post. “That’s who the market is talking about as straight away top- ofmind,” Ward said.
“It’s Mark Binns because he’s liked and he’s been in the business for some years. It’s people behind the scenes, trying to join the dots. I’m yet to come across one investor who dislikes Mark Binns. He starts to tick a lot of the boxes,” Ward said.
Approached for comment on Thursday evening, Binns said: “I’m not prepared to comment on anything to do with Fletcher Building or any market rumour I’m going back.”
Another Fletcher shareholder said the company’s next chief executive needed to have a strong operational background rather than a consulting or financial one.
“Fletcher need someone who’s a hard- nosed practical [ executive], not a consultant. They’ve got enough of those,” the investor said. “It would be a mistake to go international unless that person was really outstanding because markets Down Under are quite different to the rest of the world.
“The bulk of the New Zealand and Australian construction market has monopolies or duopolies. The new CEO needs a firm understanding of that market context.”
Binns and his wife Louise have kept their Parnell home and are understood to be planning to return here around Christmas.
He has headed Meridian since 2011 and said last month it had been a hard decision to leave.
Earlier this decade he was widely expected to become Fletcher’s CEO. But instead, the board picked Adamson, who started in 2012.
Fletcher’s board has never picked a New Zealander as chief executive in its 16- year history. The company was first headed by Australian Ralph Waters, then compatriot Jonathan Ling before British- born Adamson.
Chairman Sir Ralph Norris on Thursday said the board was seeking “someone well- rounded with a good mix of skills who has demonstrated success in other management positions. We’re looking for someone of a very high calibre and obviously with very good leadership skills.”
Before he left for Meridian, Binns was seen as the only New Zealander at Fletcher who had a strong chance of becoming chief executive.
Despite that, he never made it to the top, but as chief executive of the infrastructure division led Fletcher’s efforts to rebuild Christchurch.
Binns was seen as a likely contender when Waters stepped down to become chairman. Ling, relatively new to Fletcher compared with Binns, was appointed instead.
For now, international division chief executive Francisco Irazusta is in the hot seat from Monday.