Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fulton Hogan slows Australian growth as FY profit drops 89%

Fulton Hogan slows Australian growth goals as annual earnings plunge 89 percent

By Paul McBeth

Nov. 26 (BusinessDesk) - Fulton Hogan, the privately-held construction company, has slowed its growth aspirations across the Tasman after problems with a joint venture in New South Wales eroded earnings, leading to an 89 percent drop in annual profit.

Net profit sank to just $7.9 million in the 12 months ended June 30, from $73.9 million a year earlier, which departing chairman Ed Johnson described as a "disappointing and totally unacceptable group performance" in the company's annual review, mailed to shareholders. Revenue grew 12 percent to $2.73 billion, in line with budget.

"Absolutely we've had a tough year, but we are very confident between the board and myself we have the business back on track, back to a stable position, and our performance in the first quarter would underpin that," managing director Nick Miller told BusinessDesk. "We've had a very strong performance out of the business across the first quarter."

The Christchurch-based company's earnings plunged after it took a $27.4 million charge on associate companies and jointly controlled entities, including its Pacific Highway joint venture in NSW, which has been beset with wet weather. Fulton Hogan has taken a $55.6 million provision for future losses in its current liabilities on its joint venture.

The construction firm delayed its annual meeting until mid-December as it negotiated the details of the problematic Australian project, having already revoked a planned share buyback in October. Fulton Hogan expanded its footprint across the Tasman last year, buying out its partner in Victoria-based Pioneer Road Services.

Including a revaluation of land, and losses on cash flow hedge reserves and foreign exchange, Fulton Hogan posted a loss of $7.1 million, compared to a comprehensive profit of $99.7 million in 2011.

Miller said the company is slowing its growth aspirations in Australia after building its presence across all states and territories in the world's 12th biggest economy, which was "critical to our strategy." The company rejigged its Australian operations to attract more specialists in its two work streams - industries and construction.

"Part of it has been around reducing overhead structure, but also focusing on what's important. We're confident we now have that under control and the business is running well," he said.

The board declared a final dividend of 5 cents per share, taking the annual payout to 11.5 cents, down from 20 cents paid in 2011.

Fulton Hogan delayed the next two buyback instalments for Shell New Zealand to let it consider a potential acquisition of some resource-based assets in New Zealand.

Miller said the company is focusing on strengthening its balance sheet, through increasing its retained earnings and selling some non-core assets such as forestry and land. Those funds will be put towards repaying debt, he said.

Fulton Hogan had current liabilities of $532.3 million as at June 30 and non-current liabilities of $772.9 million.

Miller was upbeat about the coming year, with a forward-order book of $3.7 billion, saying "the underlying business is still very solid and is well-positioned for the future."

Fulton Hogan will continue to pursue a 'zero harm' health and safety policy after four workers died in the financial year in four separate incidents, and has introduced a number of new initiatives to improve the culture and behaviour around safety, Miller said.

"That rocked us to the core - Fulton Hogan has always had health and safety as a number one priority," he said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news