Fletcher shares halted as construction review looms over earnings; new CEO pending

Tuesday 24th October 2017

Fletcher Building shares are in a trading halt ahead of tomorrow's annual meeting as a review of its Building + Interiors (B+I) business unit hangs over the company's 2018 earnings outlook, and with a new chief executive set to be announced.

Auckland-based Fletcher downgraded earnings twice last year as escalating construction costs and a lack of oversight on major building projects saw the B+I unit come under pressure. After booking a series of one-time impairment charges Fletcher had said cash flow was set to improve in the 2018 financial year, although an independent KPMG review of its two biggest projects in the B + I construction division is under consideration ahead of tomorrow's AGM, when the company expects to provide earnings guidance.

"The company is taking the necessary time to carefully consider this matter. We expect the trading halt to cease on Wednesday 25 October 2017, with the announcement of earnings guidance for the 2018 financial year," it said in a release to the stock exchange.

Fletcher also said it expects to announce a new CEO prior to market opening tomorrow.

The AGM in Auckland was already expected to be contentious. Earlier this month, chair Ralph Norris said the company has taken on board criticism from the NZ Shareholders' Association about the company's performance and communication with investors and plans to address issues including directors' fees at this month's annual meeting. The NZSA surveyed its members for their views on Fletcher last month with almost 90 percent of the 250 members who participated wanting changes at board level including 8 percent who wanted the entire board dumped.

Fletcher shares last traded at $7.96 and have dropped 25 percent this year

(BusinessDesk)

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