Fletcher Building expecting Ihumātao solution soon

Wednesday, 19 February 2020

It's been a tough few months for Fletcher Building.

Fletcher Building has remained mum on the ongoing talks regarding Ihumātao's future but has warned that the project can't drag on forever.

Fletcher chief executive Ross Taylor said that fortunately he felt confident that a resolution was not far away.

'We've respected this process and stood back as requested while various parties work through and discuss outcomes. Our most recent view, as we continue to work with senior levels of government is that the situation is close to resolution and we can hopefully come to an agreement in the short-term.'

Protesters outside Fletcher Building's Auckland headquarters. Plans for 480 houses next to Stonefields, a sacred reserve, have been up in the air, amid negotiations between local iwi and Auckland Council.

However, he declined to say how much the company was losing since pausing development in July last year and re-stated the company's right to ownership of the land.

Prime Minister Jacinda Ardern and Fletcher Building chief executive Ross Taylor speak to media during the convention centre fire in October last year.

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'The reality is that we are the legal owners of a piece of land that is fully consented and is empathetic to iwi considerations and the adjacent Stonefields site and which we're entitled to develop.

An impression of Sky City's 300-room hotel which was due to open in 2020 adjacent to its fire-damaged international convention centre.

'Fletcher Building has done our very best to allow for the parties to reach an agreement over an extended period, but we are not in a position to hold off development indefinitely.'

Fletcher had planned to build 480 houses at Ihumātao, south Auckland, but many Maori disagree with the project, which is next to the Ōtuataua Stonefields historic reserve, an area of archeological and cultural significance to Maori.

Protestors claim the development land was confiscated illegally in the 1800s.

Taylor also declined to get into specifics on when the repair work would begin on SkyCity's New Zealand International Convention Centre, which caught fire last October.

But he did repeat SkyCity's recent advice that major work was likely to resume mid-this year, although it was unlikely to be finished in time for the Apec leaders week next November.

'The damage we found inside the building was significant. The fire has affected secondary steel that supports the roof and holds up key elements of equipment.

'Areas of the facade adjacent to the roof will likely need to be replaced. And there is significant water damage to both equipment and finishes.'

Fletcher Building, the country's largest construction company, was reporting its first half results.

The company made a net profit of $82 million, down 8 per cent on the previous six months to December 31.

But Taylor said the business had stabilised after a horror year of losses in commercial construction two years ago.

Interim revenue was down 5 per cent to $3.96 billion, which was 'in line with market conditions' such as tougher conditions in Australia and legacy costs from some commercial projects.

Taylor said the company's balance sheet was strong, cash flow was improving, and he reconfirmed guidance of full year profit of between $515m and $565m.

Nearly 30 per cent of Fletcher Building's revenue stems from residential housing, with 16 per cent from commercial construction and 22 per cent from infrastructure.

In housing, Fletcher Residential's revenue dropped to $224m, down from $251m a year ago, but the company said there was strong demand and it expected better results in the second half of the year.

Its formerly troubled construction arm continued to lose money, making $774m compared to last year's interim revenue of $866m.

Profit was $14m versus $17m last year, which partially reflected the acceptance of smaller projects, Taylor said. Excluding legacy costs, the company said revenue was up 3 per cent and it would remain in the vertical construction sector for selected clients.

Its Australia businesses, which make up a third of its revenue, saw revenue fall to $1.45b, from $1.56b previously, but Taylor said cost cuts were bearing fruit.

As a result, it was selling its Rocla concrete pipe business and expected that to happen this year.

Back in New Zealand, the company, which is New Zealand's only local manufacturer of plasterboard, announced a new state-of-the-art plasterboard facility in Tauranga.

The plant will create around 100 permanent regional jobs and would mean the company could more easily recycle plasterboard. This would greatly boost its aim to reduce its carbon footprint by 30 per cent in the next 10 years, Taylor said.

Fletcher Buiding shares closed yesterday at $5.18 a share, off a year-low of $4.32 last August and a peak of $5.64 in January.