WELLINGTON, New Zealand--Construction and building materials firm Fletcher Building Ltd. (FBU.NZ) said its full-year earnings were down sharply after losses in its construction division.
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Net earnings for the year were 94 million New Zealand dollars (US$68 million), down 80% from NZ$462 million the prior year, Fletcher Building said. Net earnings before significant items slipped 23% for the year to NZ$321 million.
Revenue for the period was NZ$9.4 billion, up 4% from NZ$9 billion.
The company will pay a final dividend of 19 NZ cents a share, bringing the total payout for its fiscal year to 39 NZ cents.
Fletcher's buildings and interiors unit, part of its construction division, reported a NZ$292 million loss after issues including "inadequate project management" and capacity pressures in New Zealand which hurt two major projects, one in Auckland and another in Christchurch.
In July Fletcher downgraded its earnings outlook for the second time in four months due to losses in the buildings and interiors division, and said its then-chief executive Mark Adamson would leave the company.
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On Wednesday, interim chief executive Francisco Irazusta said in a statement that while the loss from the division was disappointing, he was confident the building and interiors business will improve with new leadership and governance now embedded.
"Following a complete review of the B+I portfolio a significant amount of change has already been implemented--including improved project governance and processes for current and future projects and enhanced bidding rigour," he said.
"We now have new management in place and highly capable leaders in construction Chief Executive Michele Kernahan and B+I general manager David Kennedy, who brings with him over 30 years' construction experience. Under their leadership B+I will be a more focussed business, targeting key sectors and clients and incorporating appropriate risk premiums into margins."
Mr. Irazusta said Fletcher Building would continue to benefit from strong macro-economic condition during its current fiscal year.
"In Auckland we need over 13,000 new houses built a year to meet population demand, however in the last year only around 10,000 were consented, which we believe translates to around 8,000 being built," he said.
"This means there is a shortfall of 5,000 houses in the last year alone--so we expect elevated levels of activity to continue, despite some cooling in the Auckland market in the near term."
He also said infrastructure investment would remain robust.
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(END) Dow Jones Newswires
August 15, 2017 17:27 ET (21:27 GMT)