Fulton Hogan have posted a net profit of just $7.9 million for the 12 months ending June 30th, a drop of 89% from the previous year’s $73.9 million due to a problematic joint roading project in New South Wales.
The Christchurch-based company took a $27.4 million charge on associate companies and jointly controlled entities, including its Pacific Highway venture with Leighton Holdings in NSW, which has been affected by bad weather.
The NZ$900 million project to upgrade a section of highway lost 71 days to wet weather in the first six months of 2012.
Fulton Hogan has taken a $55.6 million provision for future losses in its current liabilities on the joint venture.
Along with project issues; difficult trading conditions and a potential acquisition opportunity led to the company revoking a share buy back offer in June – due to take place in October – and delaying its annual general meeting from November to December 19.
Departing chairman Ed Johnson told shareholders in an annual review that the company results were a “disappointing and totally unacceptable group performance.”
“Absolutely we’ve had a tough year, but we are very confident between the board and myself we have the business back on track, back to a stable position, and our performance in the first quarter would underpin that,” managing director Nick Miller told BusinessDesk. “We’ve had a very strong performance out of the business across the first quarter.”
Fulton Hogan expanded into Australia last year, buying out its partner in Victoria-based Pioneer Road Services.
While profit was thin, revenue rose 12% to $2.7 billion for the year to June.
Miller was upbeat about the coming year, with a forward-order book of $3.7 billion, saying “the underlying business is still very solid and is well-positioned for the future.”
The company has also received Overseas Investment Office (OIO) approval to sell forestry estates in Otago as it looks to dispose of non-core assets in a bid to strengthen its balance sheet.
3013ha of forestry land has been sold to Forestry Fund 9 NZ, a subsidiary of global investment manager GMO, after completing a sale and purchase agreement in June.
The privately-held construction firm is also selling land it has built up over the past 80 years.
