HEB Construction, which was bought by France's Vinci Group in 2015 for 43 million euros, sank into the red last year after it wrote down the value of a major project by almost $31 million.
The Drury-based company reported a loss of $23.5m in the 12 months ended August 31, compared to a profit of $8.2m a year earlier, financial statements lodged with the Companies Office show. That included a $30.8m provision for losses on completion of an onerous contract. While the company declined to give details of the contract it came during a period when HEB was working with Fulton Hogan for the final two of four bridges they were contracted to build on the Huntly Bypass. At that stage, the imported steel from China used on the bridges was found to be below New Zealand standards.
"Profit has been impacted by a full projected loss provision in compliance with IFRS (International Financial Reporting Standards), on a large multi-year project," an HEB spokeswoman said in an emailed statement, declining to comment on whether it was the Huntly Bypass contract. "This is a conservative, prudent position and management is working to improve the performance as the project progresses."
HEB's revenue dropped 20 per cent to $333.3m from a year earlier, which the spokeswoman said was due to internal adjustments to comply with accounting standards and reduced revenue from "two projects which were in full swing in 2015". Positive work in progress, the gross billings HEB expects to collect, was $9.8m at the August 31 balance date, compared with $29.6m a year earlier, while negative work in progress, or the costs expected to be incurred, was $20.9m compared with $19.6m.
The company's website names 19 projects currently in progress, including Transmission Gully in Wellington, the Mangere wastewater treatment plant, and last month HEB was included in the alliance to repair road and rail infrastructure damaged by the Kaikoura earthquake in November.
Vinci, the world's biggest construction company by revenue, bought HEB in a period when it was seeking exposure in rapidly expanding economies with strong prospects for growth in construction. New Zealand's building sector has been a bedrock of the economy in recent years, with the Canterbury rebuild and Auckland house-building programme stoking activity.
When the Paris-based firm bought HEB, the New Zealand company employed 750 staff. In the 2016 financial year, HEB's wage bill shrank 7.5 per cent to $11.1m.