Fletcher Building, New Zealand's largest construction company, in trading halt

Tuesday, 24 October 2017

New Zealand's largest construction company has added intrigue to an already torrid year, asking for its shares to be halted from trading a day ahead of its much anticipated annual general meeting.

So far in 2017 Fletcher Building has issued two profit warnings, announced the departure of its chief executive over financial problems at some of its largest projects and faced calls for its entire board to submit to elections to be reappointed.

On Tuesday, a day before protesters were due to picket outside the company's annual general meeting, Fletcher Building was granted a trading halt, meaning its shares cannot be traded on stock exchanges in New Zealand or Australia until the company provides an update on its finances.

Fletcher Building said it had asked for the halt because it was reviewing the performance of the Building + Interiors unit, which was being assisted by a second review by KPMG into the units two largest projects.

* Fletcher's problems highlight construction's age-old strains

* Fletcher Buildings expects earnings could be up to $150m less than forecast**

The company has refused to say which projects are covered by the KPMG review, whether the company expects the review to offer good or bad news for investors, or even why it opted to seek a trading halt a day before the announcement.

In a statement to the ASX, Fletcher Building said the 'review' was ongoing, without saying whether it was referring to its own review or KPMG's.

Shares were expected to remain in the trading halt until Wednesday. 'The company is taking the necessary time to carefully consider this matter.'

Analysts said the statement was so limited it was hard to draw any conclusion about Wednesday's update, but negative sentiment surrounded the company.

'Coming from a once bitten, twice shy, or twice bitten, thrice shy even, then it's understandable people will be taking a fairly negative view until they get the actual numbers through,' Grant Davies said, investment advisor at Christchurch-based Hamilton Hindin Greene said.

Fletcher Building has had well publicised problems with the Justice Precinct in Christchurch, which has been hit by a series of repeated delays and cost increases.

Other major projects in the division include the convention centre at SkyCity and Precinct Properties' Commercial Bay development, both in Auckland.

At a time when the New Zealand sharemarket's benchmark NZX-50 is surging to new highs, investors in Fletcher Building have suffered, with shares falling more than 15 per cent in 12 months.

In March the company cut its guidance for the 2017 financial year, which ended on June 30, by $110 million because of troubles in some of its major projects.

In July it announced another profit warning as it announced chief executive Mark Adamson was leaving the company.

Days after the second profit warning, the New Zealand Shareholders Association (NZSA) called for the company's entire board of directors to put themselves up for reelection at Wednesday's AGM.

NZSA chief executive Michael Midgley said on Tuesday that it was difficult to read anything into Fletchers' statement because of the limited information, but shareholders would await Wednesday's announcement with interest.

'There'll be an awful lot of people listening with acute interest.'