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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Scouring: Cavalier Merger Would Extract 'Monopoly Rents' - Godfrey Hirst

A merger of Cavalier Wool Holdings and New Zealand Wool Services International's two wool scouring operations would create a monopoly, says carpet maker Godfrey Hirst. The Commerce Commission on Friday released its second draft determination on the merger, maintaining its view that the public benefits would outweigh the loss of competition. More>>


Scoop Review Of Books: She Means Business

As Foreman says in her conclusion, this is a business book. It opens with a brief biographical section followed by a collection of interesting tips for entrepreneurs... More>>


Hourly Wage Gap Grows: Gender Pay Gap Still Fixed At Fourteen Percent

“The totally unchanged pay gap is a slap in the face for women, families and the economy,” says Coalition spokesperson, Angela McLeod. Even worse, Māori and Pacific women face an outrageous pay gap of 28% and 33% when compared with the pay packets of Pākehā men. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news