Fletcher chief under fire over project missteps and strategy

Troubled construction giant Fletcher Building is expected to part ways with its chief executive amid claims the New Zealand-based company made risky decisions on big projects.

Fletcher Building could part ways with its CEO as early as Wednesday.

Troubled construction giant Fletcher Building is expected to jettison its chief executive on Wednesday amid claims the New Zealand-based company made risky missteps on large projects. 

Fisher Funds chief investment officer Ashley Gardyne said the company’s current challenges came despite New Zealand having one of the strongest housing and construction markets globally over the past decade.

“This calls into question the ­effectiveness of their governance and business strategy,” Mr Gardyne said. “Taking risks on large construction projects – and on offshore businesses – have added complexity and distracted from what were a strong and dominant building products businesses ­domestically. In our view the business has become too complex, carries too much debt, and needs to return to its core.”

Fletcher, which is listed in both New Zealand and Australia, entered a trading halt on Monday ahead of the release of its half-year results on Wednesday.

It has flagged an earnings downgrade and the potential exit of chief executive Ross Taylor after taking hefty writedowns on projects in New Zealand.

Former NZ prime minister Jacinda Ardern with Fletcher Building chief executive Ross Taylor in 2019. Picture: Getty Images

The company, whose businesses include Hume, Laminex New Zealand and Iplex, traces its roots to 1909, when James Fletcher built his first house with Albert Morris in Dunedin. It now employ almost 15,000 people in New Zealand, Australia, and the South Pacific

Investors have been selling off its shares on the back of further cost blowouts on the New Zealand International Convention Centre and Wellington International Airport. Fletcher shares are down almost 18 per cent this year.

Fletcher Building’s board was reportedly meeting on Tuesday to discuss Mr Taylor’s future and a turnaround strategy for the business. Last week, the company dismissed speculation it was con­sidering an equity raising after shareholders had raised concerns about its debt level and potential for further provisions related to defects with its Iplex pipes in Western Australia.

Earlier, a company statement noted “that Mr Taylor may consider his position once the board released its half-year results”. The board was meeting Tuesday to consider potential financial provisions and impairments.

Fletcher warned earlier this month that it expected pretax costs to rise by $NZ180m ($170m), including $NZ165m to complete the New Zealand International Convention Centre after a fire and $NZ15m for remediation at the Wellington International Airport car park project.

Fletcher Building is the subject of a shareholder class action flowing from its string of profit warnings in 2016 and 2017. It relates to Fletcher Building’s disclosures regarding its building and interiors business in that period that was the source of hundreds of millions of dollars in impairments and losses. The losses led to the exits of then CEO Mark Adamson and chairman Ralph Norris.