Fletcher Building, New Zealand's largest construction company, in trading halt
Fletcher Building is one of the trustworthy conglomerates favour operating in more than 40 countries. They are into manufacturing and distributing world-leading building and construction products and services. Fletcher Building business comprises of over 34 businesses and hundreds of brands.
The journey of Fletcher Building is truly commendable. Within a very short span of time, they have set new horizon in their domain. The overwhelming success they have achieved is due to hard work, innovative thinking, and pioneer spirit. Businesses for sale in Auckland and other parts of Newzealand have benefitted a lot from this.Their commitment towards health, safety and environment is really amazing. The best part of this company is that they reduce the adverse effect of manufacturing, construction and extraction operations. Additionally, they support and invest in the communities. Owing to their leadership quality, they manage health and safety risk.
New Zealand's largest construction company is going through a bad phase of time. They suffered a huge economic loss and hence, as a result, they have been asked for the trading halt. The reason behind this halt was to review the performance of the building and interiors unit. In the broad spectrum, their shares cannot be traded on stock exchanges in New Zealand or Australia. This order will remain until the company provides an update on its finances.
The shareholders in annual general meeting pass this order to look for the root cause of this loss. Fletcher Building in 2017 has taken the decision to issue two profit warnings. First one is to cut its guidance for the 2017 financial year. The second one is to remove the chief executive officer. The reason behind removing is a fiscal problem at some of its largest projects. The company conveyed that shareholders are losing trust in the company and said that this process is a disaster and cannot generate profit.
Due to this second warning, the New Zealand Shareholders Association asks the entire board of directors for re-election.
As per the stats, company approximately earning is between $680 million and $720m in end of the year. Fletcher is going through difficult time as they face a financial crunch.
Fletcher Building has already registered a loss of $292 million in the previous year. $160 million loss is registered this year in its building and interiors section.
The shareholders come to the conclusion that there is something wrong in the process. Hence they have halted the business and start reviewing both reviewing and interior sections. The second review was done with the assistance of KPMG. It created confusion among the society that this process is owned by KPMG or not. The second myth was that they will take a lilent approach towards this problem.
The shareholder says that the business as a disaster and the result of this share of Fletcher's drop by 5.3 percent.
In order to overcome the issues, they have taken some serious steps. The step is an immediate pay cut. A lot of protests was registered due to this decision. They are demanding better pay. The outcome of the meeting of shareholders was really amazing; they not only sacked chief executive but also made vital changes to the management. These remedial measures were taken into the count to combat the loss.
Sir Ralph Statement
Sir Ralph reveals the truth that company is going to separate the losses from the building and interiors division. This loss elimination will give a clear picture of the total profit gained during the financial year. The sole vision behind this strategy was to give transparency for the investor. The entire measures were taken after accepting the responsibility for loses.
Sir Ralph also conveyed that construction industry is a dynamic industry and can impact the market. He also said that some of our projects were complex and required several years to complete. Hence, during the time, process develop risk can impact our financial position.
Fletcher Building didn’t say anything about the review of KPMG. They even refuse to reveal the truth whether this review had an adverse or good effect on the investor. What’s the reason behind this harsh decision of halting the trade?
While responding to the ASX, Fletcher Building reveals that "review" is going on. Trading is to be on halt, till the final decision come. The company is taking this matter seriously as it is a huge loss. It is very hard to draw any conclusion on the basis of these statements. But you can clearly see negative atmosphere prevailing around the company.
Some of the analysts were in the favour of company decision. They were happy with the way company responded to the crisis. An immediate pay cut is the only solution.
At that time New Zealand sharemarket is on the peak and on the other hand, Fletcher Building investor suffered a huge financial loss. The share market falls more than 15 percent in 12 months. Due to constant capital loss, people are taking a negative view, as they are not getting the actual numbers.
New CEO Announced
Fletcher Building has appointed the new chief executive. He is going to be responsible for all the further transactions. He will commence his office next month. New chief executive Ross Taylor replaces Mark Adamson. He was previously holding the position of chief executive of engineering and manufacturing company UGL. The new CE has lots of experience and can help with useful information. There are a lot of planning in the pipeline which will be very soon a reality.
It was really sad to hear shares in Fletcher Building are facing the capital crunch. Hence, the shareholders were forced to take some bold steps. Due to this, major constructions contracts came into scrutiny. Shuffling in the board members was held. The only vision behind this change is to overcome the loss.