Fletcher Building chief executive takes 30pc pay cut as firm suffers $196m loss

Wednesday, 19 August 2020

Fletcher Building chief executive Ross Taylor was paid $4 million, compared to $5.3m the previous year.

Fletcher Building has reported a $196 million loss for the year to June 30, as the construction firm feels the effects of the Covid-19 pandemic.

Earlier this year Fletcher Building announced it would cull 1000 jobs in New Zealand and 500 jobs in Australia.

Chief executive Ross Taylor said the result was characterised by the impacts of Covid-19 and the actions taken to ensure the company was well positioned to navigate the market uncertainty over the next year and beyond.

“Our focus through this period has been on three key areas: the health and safety of our people; enhancing the resilience of our business by managing our costs, cash flows and balance sheet; and ensuring we stay focused on strong customer performance and delivering our strategy,” Taylor said.

* Fletcher Building expects $196m net loss because of Covid-19

* Fletcher Building workers coming to grips with proposed 1000 job cuts

Fletcher Building has reported a $196m loss for year to June 30.

Earlier this year Fletchers announced it would cull 1000 jobs in New Zealand and 500 jobs in Australia. (File photo)

Shareholders were warned of the expected loss last week.

Fletcher Building said the Covid-19 lockdown earlier this year had led to “significant” loss of revenue, lower productivity leading to additional provisioning on the legacy construction projects and one-off restructuring costs as the company prepared for reduced market activity.

Taylor’s remuneration was reduced by 30 per cent to $1.97m with no payment of any short-term incentive for FY20 performance.

However, he was granted a long-term incentive in shares valued at $2m.

Taylor said the job cuts would reduce Fletchers’ cost base by $300m in the current financial year.

“We have sized our business for a market downturn of around 25 per cent in New Zealand and around 20 per cent in Australia, although there is a high degree of uncertainty over the outlook. We will be looking hard at the trends in activity over the next few months and will be ready to adapt and respond if needed,” he said.

Despite the loss, the company’s cash flow and balance sheet position remained strong, Taylor said.

Operating cash flows had “remained robust” at $410m, driven particularly by effective working capital management through the Covid-19 disruptions.

The group’s net debt at June 30 was $497m and it had$1.1b of cash on hand.

Taylor said the construction division had continued to make progress in working through its legacy, loss-making projects.

The company has previously announced that it would raise a further $150m provisions against historical construction projects.

“While this was disappointing, Fletcher Construction, through a reset of bid margins and disciplines now has a $2.4 billion forward-order book of new work with a materially better margin outlook and lower-risk profile.”

Shareholders would not be paid a final dividend.

Taylor said he would travel back to Australia in late September and planned to stay there for the rest of the calendar year.

“You can’t do quick trips any more, so spend a couple of months there and then come back again. Do another quarter in NZ. That will be my life for the coming period while Covid-19 has border restrictions.

“There are 5000 people in Australia and it does get quite disconnected.”