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NZ's Fletcher Building says CEO stepping down, cuts earnings guidance
[WELLINGTON] New Zealand's Fletcher Building Ltd said chief executive Mark Adamson would step down, and the company also cut its earnings guidance for the second time in four months, pushing share prices to their lowest in a year.
Fletcher Building said it expected operating earnings to be approximately NZ$525 million(S$529 million), down from previous guidance of NZ$610-$650 million. It revised down its guidance as losses at its building division were bigger than expected.
The move follows an earnings downgrade in March, and the same cost overruns are the cause, it said in a statement.
Fletcher Building Chairman Sir Ralph Norris said it was "very disappointing" to see further losses in the building and interiors business and that "the Board believes it is the right time for Mark to leave ... to allow a new CEO to lead Fletcher Building through this period and into the next phase of its strategy." The company's share prices saw their biggest daily drop since March 2017, when earnings guidance was last downgraded.
Share prices fell more than 8 per cent to NZ$7.39, its lowest since March 2016.
"I am disappointed to finish my tenure on the back of a challenging result in the Construction Division, however I am proud of what has been achieved over the last five years," Mr Adamson said in the statement.
Construction costs have risen by half in under three years, as New Zealand's economic boom faces capacity constraints and labour shortages.
Francisco Irazusta will take over as interim CEO, effective July 24, and the company will start a process to appoint a new CEO, it said. Irazusta joined the company in March 2015 and is currently the chief executive of the international division.