Fletcher Building Ltd. (FBU.NZ) said Thursday its annual profit could be as much as 19% below prior guidance and that CEO Mark Adamson was stepping down.
Fletcher Building forecast its operating earnings before interest, tax and significant items, or Ebit, for the year to June 30 would be approximately 525 million New Zealand dollars (US$386 million) after it realized losses for the buildings and interiors business unit within its Construction division would be worse than it previously thought.
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The company in March had already lowered its FY2017 EBIT estimate to between NZ$610 million and NZ$650 million, from NZ$720 million to NZ$760 million previously, due to losses in the buildings and interiors unit.
"It is very disappointing to see further losses being reported in our B+I business, particularly when the vast majority of the remaining Fletcher Building business units have performed so well during the year," said Chairman Ralph Norris.
The company has had to spend more money on one of the major projects behind the first guidance downgrade in March, and another major project is taking longer than expected, it said in a statement. It also expects less profit "on a number of smaller projects" in its construction division.
Fletcher Building hasn't specified the two major projects.
The company also said Chief Executive and Managing Director Mark Adamson is leaving, and the board has appointed Francisco Irazusta as interim CEO, effective July 24.
"The board believes it is the right time for Mark to leave the company, to allow a new CEO to lead Fletcher Building through this period and into the next phase of its strategy," Mr. Norris said.
Meanwhile, Fletcher said a review indicated that the value of two business units, Iplex Australia and Tradelink, are likely to be subject to an impairment charge of about NZ$220 million once it finalizes its financial statements in August.
An impairment of this nature would be reported below the EBIT line and have no impact on cash earnings, it said.
Write to Ben Collins at firstname.lastname@example.org
(END) Dow Jones Newswires
July 19, 2017 17:35 ET (21:35 GMT)