Fletcher Building is reporting it will make zero profit from the Puhoi to Warkworth (P2W) motorway project.
The company’s Strategy, Capital Structure and Trading Update April 2018 document says hurdles are expected for the major infrastructure operation.
The announcement is part of Fletcher’s plans to raise $750 million in a discounted offer to shareholders and sell its Formica and steel roof tile businesses. This is to stabilise its financial woes of an estimated $660m FY18 loss.
The P2W project site team has “identified risks and forecast cost increases associated principally with earthworks and aggregate supply on the project”, the report says.
The $709.5 million motorway project is a 50-50 joint venture between Fletcher and Spanish infrastructure company Acciona.
“The partners are now working actively on a range of options to mitigate these risks.
“At this point, Fletcher Building is reporting a nil margin for the P2W project,” it says.
Construction officially started in 2016 as one of the Government’s Roads of National Significance.
Work will extend the four-lane Northern Motorway 18.5km from the northern end of the Northern Gateway Toll Road at the Johnstone’s Hill Tunnels, to State Highway 1south of the Kaipara Flats Road intersection, north of Warkworth.
It is set to provide more reliable travel times, a better freight connection between Northland and the rest of the upper North Island freight triangle of Auckland, Waikato and Tauranga, and support inter-regional and national economic growth.
It is due to be open for traffic by late 2021.
