‘The buck stops with us’: Fletcher Building’s CEO and chairman to step down

By Tracy Withers

Investors were dumping shares in New Zealand’s largest construction company, Fletcher Building, after it reported a first-half loss and said chief executive Ross Taylor will leave the firm later this year.

Taylor has provided notice to the board of his retirement, Auckland-based Fletcher said in a statement on Wednesday. He has a six-month notice period, which he will serve in full if required, to facilitate an orderly handover to his successor, the company said. Chairman Bruce Hassall will also step down at the annual meeting in October.

Fletcher Building’s shares tanked on the disappointing earnings result and its leadership turmoil.
Fletcher Building’s shares tanked on the disappointing earnings result and its leadership turmoil.Credit: Paul Jeffers

“As part of the privilege of leading, we both recognise that the buck stops with us and believe it is important for us to take accountability for some of the recent issues we have had at the corporate level,” Hassall said on a conference call with reporters.

“It is in the best interest of the business for us to hand over to a new CEO and a new chair who will be able to focus on leading the organisation forward.”

Taylor took the helm in November 2017, inheriting a troubled construction unit that was crippled by cost blowouts across a number of projects, particularly a new convention centre being built in Auckland.

He sold non-core assets and reduced debt, but the company suffered a further setback when a serious fire meant significant delays and more costs to repair damage at the site.

“We both recognise that the buck stops with us and believe it is important for us to take accountability for some of the recent issues we have had at the corporate level.”

Fletcher chairman Bruce Hassall

Fletcher navigated through the pandemic lockdown by cutting costs and emerged well-positioned to handle a construction boom sparked by record-low interest rates. However, in the past year cooling economic growth has curbed housing demand while the company has been embroiled in allegations that its Iplex Australia unit was supplying faulty pipes.

It continues to refute those claims. It also revealed further provisioning for the convention centre this month.

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“The provisions we’ve been having to make as we got our mind around this have been very disappointing,” Taylor said. “It would be a major understatement to say the convention centre has been a challenge. The complexity of what the team had to take on post the fire in 2019 is unique in my 40 years in the construction industry.”

Still, “it’s really important to set the tone here in the organisation and our culture that when these things happen, accountability is taken from the top,” he said.

News of Taylor’s departure comes as the business reported a first-half loss of NZ$120 million ($112.7 million). The company also wrote NZ$122 million off the value of another Australian unit, plumbing supplies company Tradelink, and said it wants to sell that business.

No dividend is being declared for the first half to preserve the company’s balance sheet settings, and management projected full-year earnings before tax and items of NZ$540 million to NZ$640 million. That’s down from an average analysts’ forecast of NZ$672 million.

The stock fell 8.65 per cent to $3.38 on the ASX, and slumped a record 13.2 per cent to $NZ3.61 in Wellington.

Bloomberg

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