Fletcher Building chairman Sir Ralph Norris is stepping down in light of the firm’s heavy financial downgrades.
The business recently announced a further $486 million in projected losses. It leads to a total projected loss of $660 million for the 2018 financial year in its Building and Interiors (B&I) division.
Norris says he will resign no later than the company’s next 2018 annual shareholders’ meeting to allow for an “orderly transition” of the board.
“I remain committed to providing leadership continuity during this time, and will continue to support my fellow directors and management in setting a new strategic direction for the company.
“Fletcher Building remains a great and solid business. I have every confidence it will weather this storm, and once again deliver our shareholders the value they expect and deserve,” Norris says.
Fletcher Building chief executive Ross Taylor says the new grading was informed by a review of 16 projects accounting for around 90% of the construction backlog.
The forecast is also based on external input from independent construction experts and KPMG.
“The provisions we have announced … are informed by a considerable amount of further project analysis, and while we continue to target agreed completion dates across the portfolio, we have factored in significant cost and timeline contingencies.
“Our absolute focus is finishing our remaining B&I projects within these provisions and to a high quality for our customers,” Taylor says.
“To achieve this, we are refocussing the entire B&I business on project delivery only, and ceasing all bidding on vertical construction projects in New Zealand.
“This will allow us to direct all resources in B&I to the completion of the current book.
“While our broader construction businesses continue to benefit from favourable market conditions and strong growth, the B&I market sector remains characterised by high contract risk and low margins.
“Unless these dynamics change we will no longer work in this sector,” he says.
“Our discussions with the banks have been constructive. We have received a waiver from our commercial banking syndicate for the breach of covenants and they have confirmed the availability of continued funding while we renegotiate terms,” Taylor says.
