Major Australasian contractor releases annual result

One of Australasia's biggest infrastructure, resources, roading, civil engineering and residential development businesses pushed up annual profit 11.3 per cent to make $168.7 million.

Fulton Hogan, the family owned Christchurch-headquartered business which employs 6300 people, just declared its net profit after tax for the June 30 2016 year, up from last year's $151.6 million.

EBITDA was $336 million, EBIT $250.4 million and profit before tax $232.7 million.

Nick Miller, managing director, said revenue of $3.1 billion was 5.9 per cent up on last year's $2.9 billion in an environment of challenging market conditions and increased international competition.


The business, which also has quarrying, asphalt, construction and pre-cast concrete manufacturing operations, has finished the Lincoln Road and Causeway project in West Auckland and integrated new hard rock and gravel quarries it bought in the year. Those are the Fowlers quarry in east Auckland, the Buchanan quarry near Masterton and the two Perry quarries in the Waikato, Miller said.

"Increased demand for housing in Auckland and Christchurch has seen the company accelerate its land development activities at subdivisions in Auckland - Millwater and Pokeno - and Christchurch - Halswell and Lincoln. To continue to meet housing demands we have invested in a future land for development in Auckland, which is subject to future zoning and consenting," a company statement said.

Miller said the business had sold more than 900 residential sites for housing in Auckland and Christchurch in the year.

"Replenishment of our land stocks is essential, so we have bought land at Pokeno south of Auckland and land adjacent to the Millwater project at Orewa," he said.

At Millwater in the Silverdale/Orewa area, the company is working with the Wayne Francis Family Trust, about 3500 residential lots have been created and around 70 per cent of development work has been completed.

"Our role is to get product to market as quickly as we can," he said of Auckland demand.

"Thousands" of new places will be built beside Millwater and at Pokeno, Miller said, although the two sites are still subject to zoning and consenting processes.

"Those two sites will have in excess of 3000 residential lots in addition to what we've done today," he said.

Fulton Hogan said it was also expanding in Australia.

"Steps towards diversifying the Australian construction business included growing its presence in the national broadband network, renewable energy, heavy rail and defence business markets. A more selective approach to targeting projects with differing risk profiles and procurement models has positioned the Australian construction business for this and future years," the statement said.

Fulton Hogan has won $1.9 billion worth of work in the year to June 30, 2017 and Miller said that was up 10 per cent.

The Australian order book was strong after the company won some big projects, Miller said. Those include the 30km widening of the Melbourne's Monash Freeway and an extension of broadband works.

"We generated $1.6 billion revenue out of Australia in the year and $1.4 billion in New Zealand and about $70 million in the Pacific Islands," he said.

"Market conditions in New Zealand will remain challenging in 2017, particularly with the conclusion of the Stronger Christchurch Infrastructure Rebuild Team," the company statement said.

In 2013, the company it wanted to eliminate fatalities after six workers were killed in the space of just three years.

Fulton Hogan has won $1.9 billion worth of work in the year to June 30, 2017


Today, Miller said the strong financial result was matched by the company's safety record "with the group recording our lowest total recordable injury frequency rate, a 28 per cent improvement on last year. We have made progress in harmonising our safety systems across New Zealand and Australia, with both countries now operating on similar legislation. We will continue to challenge all parts of our business in our efforts to achieve zero harm, as even one injury is too many."

No deaths had been recorded in the latest year.

"That 28 per cent improvement is a great step forward in health and safety," he said.

Miller leaves the business at the end of March next year after seven years as managing director. The company is yet to appoint a replacement. Miller said he planned to "spend some time with my family and consider my options."