Fulton Hogan, the privately-held construction company, has slowed its growth aspirations across the Tasman after problems with a joint venture in New South Wales eroded earnings, leading to an 89 per cent drop in annual profit.
Net profit sank to just $7.9 million in the 12 months ended June 30, from $73.9 million a year earlier, which departing chairman Ed Johnson described as a "disappointing and totally unacceptable group performance" in the company's annual review, mailed to shareholders. Revenue grew 12 per cent to $2.73 billion, in line with budget.
"Absolutely we've had a tough year, but we are very confident between the board and myself we have the business back on track, back to a stable position, and our performance in the first quarter would underpin that," managing director Nick Miller told BusinessDesk. "We've had a very strong performance out of the business across the first quarter."
The Christchurch-based company's earnings plunged after it took a $27.4 million charge on associate companies and jointly controlled entities, including its Pacific Highway joint venture in NSW, which has been beset with wet weather. Fulton Hogan has taken a $55.6 million provision for future losses in its current liabilities on its joint venture.
The construction firm delayed its annual meeting until mid-December as it negotiated the details of the problematic Australian project, having already revoked a planned share buyback in October. Fulton Hogan expanded its footprint across the Tasman last year, buying out its partner in Victoria-based Pioneer Road Services.