Fletcher Building in halt ahead of earnings guidance and new CEO

Fletcher Building has entered a trading halt as it gets set to reveal its new chief and alter earnings guidance.

Former Fletcher Building chief Mark Adamson. A new chief executive is expected to be announced tomorrow morning.

New Zealand-based Fletcher Building is in a trading halt ahead of an announcement that may result in significant writedowns and pending the appointment of a new chief executive.

The financial performance of two of the company’s largest building and interiors projects and the impact of that performance on its earnings guidance for the financial year are currently being reviewed.

Fletcher, reported an 80 per cent fall in earnings after tax to $NZ105 million for the 2017 financial year, with operating earnings plummeting 62 per cent, dragged down by the Building and Interiors business unit, which recorded a $NZ292m operating loss.

“It is very disappointing to see further losses being reported in our Building and Interiors business, particularly when the vast majority of the remaining Fletcher Building business units have performed so well during the year,” chairman Sir Ralph Norris said in July.

It came despite the company establishing a review into the business and projects in the division late in the 2016 calendar year and led to new management and governance processes.

In March, the company downgraded its operating earnings forecast for the financial year after reviewing around 55 per cent of the backlog in its construction division, which includes the Building and Interiors arm.

The company’s construction division, which includes the Building and Interiors arm, reported a $NZ204m loss for the year to June 30.

The company said it is considering a CEO appointment and expects to make an announcement prior to market opening tomorrow, after Mark Adamson resigned in July as the company slashed its guidance and announced that impairments could hit $NZ220m.

Francisco Irazusta, CEO of Fletcher’s International division, was appointed interim CEO while the board searched for a new chief executive.

“We expect the trading halt to cease on October 25 with the announcement of earning guidance for the 2018 financial year,” Fletcher told the ASX.

Fletcher Building (FBU) last traded at $7.22.