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Fletcher CEO Mark Adamson to step down

Fletcher CEO Mark Adamson to step down, Irazusta named interim CEO from next week

By Jonathan Underhill

July 20 (BusinessDesk) - Fletcher Building chief executive Mark Adamson has stepped down, with Francisco Irazusta named as interim replacement, and chairman Ralph Norris says the board deemed it the right time for new leadership. The announcement came with a profit warning and a $220 million impairment.

The profit downgrade follows a 15 percent cut to guidance to full-year earnings in March as a result of overruns at two major construction projects. Today, the Auckland-based company said operating earnings were about $525 million in the year ended June 30, down from its earlier guidance of $610 million to $650 million. Its results would include an impairment "of up to $220 million against its Iplex Australia and Tradelink business units.

The company said as work had continued on major projects in its Building + Interiors business "it has become apparent that losses in B+I will exceed those previously estimated."

"It is very disappointing to see further losses being reported in our B+I business, particularly when the vast majority of the remaining Fletcher Building business units have performed so well during the year," Norris said. In addition, a review of the carrying value of its business units had led to an impairment of Iplex Australia and Tradelink.

"While we do see progress in these business units the board felt it was prudent to recognise that the near to medium term estimates of profitability in each business are not aligned with current carrying values,” Norris said.

The company has scheduled a conference call for analysts and investors for 11am New Zealand time. Irazusta, currently CEO of Fletcher's international division, would lead the company starting on Monday while it embarks on a search for a permanent replacement for Adamson.

"I am disappointed to finish my tenure on the back of a challenging result in the construction division, however I am proud of what has been achieved over the last five years – most notably the turnaround of Formica, double-digit earnings growth in distribution, our acquisition of Higgins and the significant progress in our residential development division,” Adamson said in the statement.

Fletcher shares last traded at $8.09 and have declined 12 percent in the past 12 months while the NZX 50 Index gained 8.1 percent.



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