UPDATED: Fletcher Building shares tumble on news of widening loss, Norris leaving

UPDATE:

As of 1.54pm, Fletcher Building shares had slipped again to $6.820, representing a drop of $0.950 or 12.23% since last week’s trading halt was lifted this morning.

EARLIER:

Shares in Fletcher Building have fallen more than 13% since this morning’s announcement that chairman Sir Ralph Norris is finally falling on his sword.

Shares in the troubled company have lost 28.07% (or $2.28) of their value over the past year as negative rumours continued to swirl of losses in the company's business and interiors unit and were confirmed.

They initially dropped $1.03 (13%) to $6.74 when trading resumed following a halt last week.

At time of posting Fletcher Building shares have since risen slightly to $6.910, representing a fall of $0.860 or 11.07%.

As part of this morning’s announcement, the company estimated its building and interiors unit, which is responsible for its major construction projects, will lose a further $486 million in operating profit in the year ending June, bringing the unit’s total losses to $660 million – on top of its loss of $292 million in earnings before interest and tax (ebit) lost in the year ended June 2017.

Sir Ralph said he will depart the company no later than the annual shareholders’ meeting, which is likely to be held in October.

RELATED VIDEO: Jenny Ruth explains the background to Fletcher's trading halt (Feb 8)

(Additional reporting BusinessDesk)

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16 Comments & Questions

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So what happens now? All directors and bosses leave with massive golden handshakes, with the govt left to bale it all out. Oh hang on I'm thinking of Solid Energy here. Oh well at least there's a govt watchdog in place to keep an eye out to prevent this sort of thing from happening again... Oh hang on, do I really need to say it?

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Why would the govt bail out Fletchers? Last time it was the merger with Wright Stephensons whose cashflow and CEO (Sir Ron Trotter) saved them. Let them fail. They are perfect proof of the old maxim, the first generation accumulates, the second consolidates and the third dissipates.

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It really is a Valentines Day massacre at Fletchers !

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Oh so ripe for a takeover and breakup

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Maybe the Chinese might be interested if it is going to go for a song.

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Why would they want it. They would rather bring in one of their own building firms, and then have the job finished while we were still talking about it, and have it all done for a fraction of the price that a kiwi firm would charge. If we had any sense we'd let the Chinese come in and do all the rebuilding that this country needs doing. But all we're good at is letting the objectors hold the country to ransom. What a bloody joke it's become.

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My dad started in the Transport Industry over 40 years ago and remains on the Board until this day. He has always maintained that the Board of Directors of any company needs industry knowledge that's, "One mile wide and ten miles deep"

He felt that Fletcher Building had the polar opposite.

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He sounds like a smart guy. It's a pity Fletchers didn't have someone like him on board, then maybe they wouldn't be in this mess now.

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Is Fletchers the company that gets legislation passed to benefit themselves at the expense of everyone else?
If Fletchers goes does that mean that we can redo all the laws that benefit Fletchers and get a level playing field where houses cost the same low price to build as they do in Australia?

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This stock is grossly overvalued at anything over $4.50 in my view.

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the whole construction model in NZ needs a good shake up. Look at the Auckland CBD being massively disrupted by all these giant projects and they're working less than a third of the hours available in a week, hence they take forever to complete while costs keep soaring. What about all that wasted daylight and weekend time when the sites sit idle??! Let's follow the Chinese model for their Viaduct hotel, import more workers and work longer hours to get these projects finished asap, thus sparing FBU shareholders and CBD businesses more pain! And they'd still have time for specified smoko breaks under Labour's ridiculous new industrial relations legislation.

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Why are the people that priced-up these building jobs at a massive loss, not being held to account? Surely if your being paid a fortune to do a job, it should be done efficiently. Or am I missing something here.

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Ivan, they are called CONsultants. Once they have done their pricing, they disappear.

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I would imagine that these CONsultants, as you call them would have something called malpractice insurance in place. Fletchers need to be thinking along the lines of reclaiming some of their loses by holding some of those responsible for it liable.

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Sounds like a governance issue or lack of.

If I was pricing a job that represented a significant component of my businesses turnover, I would cross check this with an external consultant who has appropriate insurance cover.

Simple business 101, but you often find people in middle management are hired to be yes people. This protects the dictatorship at the top.

Be interested to watch Mark Adamson's career in big business after this. Ralph Norris has probably called it curtains on his.

Selwyn Cushing was never to be seen after his Air New Zealand disaster, other than at the head of his private investment company; who are hoping and praying David Jones keep paying rent on their premises. Good luck with that.

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Eh...hard to make a profit in boom times, huh.

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