Fletcher share price tumbles after $120m loss, CEO quits

Wednesday, 14 February 2024

Fletcher Building chief executive Ross Taylor has a six-month notice period.

Fletcher Building has reported a $120 million loss for the first half of FY24.
Its chief executive and board chair are both stepping down.
The fire at the New Zealand International Convention Centre has been a big problem for the building company.

Trading has resumed for shares in Fletcher Building, and the price has dropped significantly.

Shortly after trading started again at 12.30, shares were changing hands for $3.49, down from $4.16 when the halt began.

Earlier on Wednesday, the company announced a loss after tax of $120 million in the first half of the 2024 financial year, and its chief executive, Ross Taylor, resigned.

Chairman Bruce Hassall also said he would step down from the board.

Michael Sherrock, head of equities at Nikko Asset Management, said the share price would be volatile through Wednesday afternoon.

“The market does not like it, which is not a surprise.”

Taylor said trading conditions were materially weaker, particularly in the New Zealand residential sector.

Nelson St in Auckland’s CBD is closed as fire crews battle a fire at the SkyCity International Convention Centre, the scene of a large fire that burned for weeks in 2019.

He said volumes were down 20%, and the company’s results was heavily affected by the $165m it had to put aside for the troubled New Zealand International Convention Centre and a $122m non-cash impairment and write-down on the Tradelink Australia business.

Fletcher Building is losing money on the convention centre being built for SkyCity Entertainment Group after a fire in October 2019 resulted in extensive damage which delayed the project and escalated costs.

In New Zealand, revenue for the materials and distribution divisions was 8% lower than the same time last year.

However, this compares to overall market volumes which were 15% lower.

The market decline was driven primarily by the residential sector, which weakened by around 20%, to which these divisions have a 60% exposure.

“In a more challenging trading environment, the New Zealand materials and distribution divisions performed solidly… The divisions proactively managed price and costs to help offset increased competitive intensity and ongoing inflationary pressure,” Taylor said.

“For our residential and development division, the house sales market was a relative bright spot in New Zealand, with improved buyer activity, especially first-home buyers, and a stabilising of house prices after 18 months of decline.”

The Australian division had delivered results broadly in line with the year before, despite a softer market he said.

But a review of the Tradelink business combined with disappointing results led to a $122m non-cash impairment and write-down in its carrying value.

He said the board would not pay an interim dividend.