If you’re in the world of architecture and construction then, like me, you’ll be stunned and horrified at the extent of the pile of bad news coming out of Fletcher Construction. Having declared a loss of $292 million last year, and $660 million this year, the total combined loss is $952 million over the last two years – almost a billion dollars. Coming from New Zealand’s (formerly) best and biggest construction firm, that’s a real shocker and a hugely sad day for the country, as well as for Fletchers.
What is even worse is that they have announced that they will no longer be seeking any further additional projects in the ‘vertical sector’ – which in layman’s terms means that they are quitting the high-rise construction sector. I’m stunned and deeply saddened.
Fletcher Construction have, effectively, built this country, or at least a huge chunk of it. They built state houses in the 1930s, they built dams across New Zealand and built power stations to power our country. They built half the tower buildings in Auckland and Wellington, and these were normally the better half – the buildings of quality, not the dross that makes up the rest. They built (I think) the main Railway Station in Wellington and they built the Hospital here as well.
It’s a sad day.
Levi – correct on the Wellington Railway Station.
History of Fletchers here: https://fletcherbuilding.com/about-us/our-history/
Looking at the share tracking part of their site, for the 8-year period, have a gander at what happened to it on 13 Oct 2011.
This was caused by negative revision of their next financial earnings by only 10-20%, not the massive fresh clusterfuck. Share price dropped ~16% then, compared to not quite 14% now. Makes you wonder….
The next chapter in the Fletcher book may well be the last one. Bring back the family who ran it so successfully for so many years!
From Gyles Beckford at Radio New Zealand:
“Today has turned out to be Fletcher Building’s St Valentine’s Day massacre.
It’s the day the company’s profitability, economic value, reputation and integrity as a public investment were gunned down.
Its shares today closed down 72 cents – or 9.2 percent – at $7.05.
The writing has been on the wall for some time as it drip-fed the bad news of cost overruns, writedown in asset values and restructuring costs as it battled the vagaries of the global construction and building products markets.
It’s had to contend with cheap competition from the likes of China, the slowdown in housing markets around the world following the global financial crisis and the fluctuations in currencies on its multinational business.
But it often crowed about the benefits of its multi-billion dollar pipeline of big construction projects here and abroad, which were the backstop and defence against fickle markets and demand.
It is now clear that Fletcher Building chased almost any and every big job going. It was lead contractor in the Christchurch earthquake rebuild, the International Convention Centre in Auckland, airport developments in the three major cities, a new prison and a new apartment and commercial development on Auckland’s waterfront.
But by its own admission the company has botched the basics of pricing, scheduling, and supply.
Sir Ralph Norris, the Fletcher chairman, has spoken of quantity surveyor estimates, which were as much as 100 percent wrong, rising building costs and the flow of communication from management to the board as some of the reasons for losses.”