NZX to investigate Fletcher Building after company dumps CEO, issues further profit warning
By Rebecca Howard
July 20 (BusinessDesk) - The New Zealand stock exchange said it will be investigating Fletcher Building's additional profit warning for the year ended June 30 and the departure of chief executive and managing director Mark Adamson.
"NZX will be making enquiries into today’s disclosures, given FBU’s continuous disclosure obligations under the listing rules," the NZX Head of Market Supervision Joost van Amelsfort said in a release. Separately - in accordance with NZX’s routine surveillance processes - "trading ahead of today's announcement will be assessed in detail," it said.
Also, "this is in addition to NZX’s ongoing investigation into the disclosure of FBU’s previous earnings downgrade in March 2017," it said.
James Smalley, director at brokerage Hamilton Hindin Greene, said he hadn't noticed any unusual trading that would trigger concern. "We haven't seen anything untoward," he said, adding that the market was already "tentative" on the stock given the company's initial downgrade.
Earlier today, Fletcher Building took the unusual step of dumping its chief executive, Mark Adamson, who leaves immediately with the loss of share options and other incentives as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. The stock dropped 8.4 percent to a 16-month low of $7.41.
Operating earnings in the year ended June 30 were about $525 million, down from $682 million in 2016 and below the $610 million-to-$650 million range the company gave in March, when its slashed earlier guidance by about 15 percent because of problems with two major construction projects. Today it said losses at those projects, which it hasn't identified, would be larger than expected and also announced a $220 million impairment against its Iplex Australia and Tradelink business units.