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NZ's Fletcher Building annual profits plunge, dragged by rising costs
[WELLINGTON] Fletcher Building Ltd, New Zealand's biggest construction firm, posted a far larger-than-expected 80 per cent drop in full-year profits after project delays and spiralling costs.
The Auckland-headquartered firm said on Wednesday its net profit in the year to June 30 was NZ$94 million (S$92.98 million), down from NZ$462 million in the prior twelve-month period.
The result represented the lowest net earnings in five years and missed analyst estimates of NZ$195 million, according to Thomson Reuters I/B/E/S.
The company's performance was hurt by a NZ$292 million loss in its building business, which stemmed from delays, combined with higher labour and materials costs, hampering two major projects in Christchurch and Auckland.
"The loss resulted from a combination of complex design issues, inadequate project management and stretched resourcing in a capacity constrained New Zealand construction market," Fletcher said in a statement accompanying its annual report.
New Zealand's building boom is slowing down and costly delays at major projects have forced Fletcher to twice slash its annual operating earnings forecasts, prompting former CEO Mark Adamson to step down in July.
The company's operating earnings before significant items fell 23 per cent to NZ$525 million, in line with Fletcher's latest guidance.
Fletcher announced a final dividend of NZ$0.19 per share, down from NZ$0.20 the previous year.