Dark before the dawn for Fletcher Building, says Adamson

Mark Adamson says Australia is the biggest challenge. Photo / Nick Reed

Building materials subsidiaries involved in insulation, pipes and other products have dominated Fletcher Building's $78 million goodwill writedown.

Fletcher chief executive Mark Adamson yesterday announced $150 million of significant items were written off, well up on last year's $32 million, made up of $78 million goodwill impairment, $65 million site closures and $7 million disposal of business costs.

Chief financial officer Gerry Bollman explained how that $78 million comprised $32 million written down on insulation, building and interiors business Forman Group; $30 million on Australia's Stramit, which is a major manufacturer of roll-formed steel building products, including roof and wall cladding, guttering, fascia, purlins, flooring and structural formwork; a further $15 million was written off Tasman Insulation, which makes Pink Batts; and $1 million was written off Humes Pipeline Systems, the largest pipeline and pipeline systems supplier to New Zealand's infrastructure market.

Des Hunt of the Shareholders Association backed the business in which he holds shares.

"This is the first time in 10 years that it's got some direction. The board in particular lacked vision. It's become more effective and that has resulted in the focus on their core activities, rather than buying their way out through acquisitions which has been a disaster, so it's a company which is more customer-focused," Hunt said after the briefing.

Adamson said his focus was not so much on past investments but on Fletcher's financial performance and although he did not rule out acquisitions, he was dealing with legacy issues.

"I'm sitting here ... very confident. We're in a consolidation phase," Adamson said, explaining how a list had been drawn up of companies with problems.

"We've taken Laminex and Formica off but they were there for a while. Australia is the biggest challenge to date," he said, adding that 80 per cent of the management team were new and saying how other assets could be sold - "anything from zero to $950 million".

Forsyth Barr research head Andy Bowley said the annual result was not surprising.

"The result was largely in line with what the market was expecting. The share price drop in recent days followed by the recovery today suggests there was a bit of relief with what eventually came out.

"As for the significant items, we were aware of a fair few of them prior to the results.

"It highlights there's a lot of remedial action going on in the group," Bowley said, citing a structurally weaker margin outlook for Forman's issues and excess capacity for Stramit's problems.

Adamson said: "This is the dark before the dawn."