Fletcher Building has gone into a trading halt while it reviews the financial performance of one of its units
Fletcher Building shares plunged by 5.3 per cent when the market opened this morning.
The shares opened at $7.55 on the back of new guidance for the 2018 financial year, which revealed the company's building and interiors unit would take a $160 million hit.
Two protests are volleying for attention outside Fletcher's AGM in Auckland today.
Striking Fletcher workers from First Union are picketing the meeting, after pay negotiations with the company broke down.
Another group of protesters are voicing their opposition to Fletcher's Ihumatao housing development.
Fletcher Building has revealed for the first time the projects causing the pain - outing the Justice Precinct in Christchurch and New Zealand International Convention Centre in Auckland.
The projects were widely thought to be the builds weighing on the company but before today the firm would not confirm it.
The Justice Precinct and the Convention Centre accounted for about $193 million of losses at the company's Building + Interiors unit in 2017.
Fletcher Building also expects they will also drag down the unit this financial year, hitting B+I by about $100m in 2018.
That accounts for about 80 per cent of the $125m project losses in 2018.
All directors on the board are to take a 20 per cent cut in fees for the next 12 months effectively immediately.
According to Fletcher's last annual report, chair Ralph Norris earned $435,000. Other directors earned roughly $200,000.
Shane Solly, fund manager at Harbour Asset Management, said the news was dissapointing.
"It's important that [Fletcher] resets expectations and the business to go forward constructively," Solly said.
A spokesman for SKYCITY said the company remains comfortable with the contract it has in place with Fletcher.
"Our mutual goal is to deliver an asset New Zealand will be proud of for decades to come, and we remain confident of achieving this," he said.
"We have not been notified of any change to the schedule for completion of the NZICC and fully expect that we will be in a position to successfully host our first bookings in the new centre in 2020."
Norris offered a personal apology to shareholders today.
"Mistakes have been made and responsibility ultimately rests with the board. As we stated at our full year results briefings, we fully accept this responsibility," he said.
The company said today it had not named the projects previously because of "strict confidentiality clauses in our contracts".
"We take our obligations to our clients very seriously," the company said.
"Unilaterally deciding to ignore our contractual requirements would simply put at risk our client relationships and our ability to win work in the future, which is not in the best interests of our shareholders," it said.
"However, in the face of these extenuating circumstances and shareholder demand, we have been able to gain agreement from our clients to make an exception in this instance.
The convention centre was one of the projects reviewed recently by KPMG, the others being Commercial Bay in downtown Auckland and the Puhoi to Warkworth and Hamilton City Edge Expressway projects.
"In three out of the four projects reviewed, KPMG's forecast outcome is broadly in line with management's expectations - risks and opportunities exist on each project, however final margins in all three cases are expected to be positive. The key issues identified relate to the [conference centre]. which has already been identified as a major contributor to the company's losses in [2017]," Fletcher said today.
