The clock tower at the University of Auckland features on Fletcher Construction's list of significant buildings nationwide. Photo / Dean Purcell
The clock tower at the University of Auckland features on Fletcher Construction's list of significant buildings nationwide. Photo / Dean Purcell
Opinion by Anne Gibson
Anne Gibson, Property Editor for New Zealand's Herald, has been writing about real estate since 1985 and is a skilled and knowledgeable journalist with deep insights into property as well as other businesses.
Fletcher Construction has been called New Zealand’s premier builder.
But could it be sold soon?
From the Chateau Tongariro to state houses, the University of Auckland’s arts block (clock tower) to the Dominion Museum, Dunedin Post Office and Wellington Railway Station, Fletcher Construction Co has been credited with having builtsome of New Zealand’s most significant buildings.
It took two large hardback books by former boss Jack Smith to even tell part of its history:
No Job Too Big: A history of Fletcher Construction, Vol 1: 1909-40
No Job Too Hard: A history of Fletcher Construction, Vol 2, 1940-65.
The books are said to be a “story of war and peace, of success and failure, and how New Zealand’s premier builder coped in the face of many challenges”.
Fletcher Construction may soon be sold and analysts suggest it could be worth up to $340 million. Photo / Getty Images
Today’s Fletcher Building is a shadow of the former Fletcher Challenge of the last century.
And Fletcher Construction itself is a shadow of what the great company once was.
Fletcher flagged the potential Fletcher Construction sale at its investor day on June 11 and again on July 22 in an NZX notice.
Higgins, the civil construction company that Fletcher bought in 2016;
Brian Perry Civil, bought by Fletcher in 1986;
Fletcher Construction (major projects) division, part of the original 2001 float on the NZX.
Fletcher Living, the company’s home-building business, is not included in the sale.
Fletcher Living doesn’t come under Fletcher Construction. It is a separate division, headed by the accomplished, experienced Steve Evans, in that role for more than a decade.
Andrew Reding heads Fletcher Building and is looking at divestment options for the Construction businesses.
On the possible Fletcher Construction sale, CEO and MD Andrew Reding said in July: “Given the quality and strong recent performance of our Construction businesses, and the role they will play in New Zealand’s growing infrastructure pipeline, we were not surprised to receive inbound interest for them, which has motivated us to test whether there are attractive divestment options.
“No decision has been made to sell at this time, and we will carefully consider the value of any options presented from this process before deciding whether to move ahead.”
The business says Fletcher Construction has 3700 staff working across the three brands.
“Since 1909, our people have planned, built, maintained and managed significant national infrastructure for the benefit of communities in New Zealand and the South Pacific. We have safety at our core and invest in innovation for the future,” Fletcher Construction said.
In more recent years, Fletcher Construction had three jobs that caused problems:
Auckland’s new $1 billion-plus NZ International Convention Centre for SkyCity;
Auckland waterfront’s Commercial Bay for Precinct Properties;
Justice & Emergency Precinct in Christchurch.
In 2018, the Herald reported on 14 of 73 projects on its books that are loss-making or on watch.
SkyCity Entertainment Group's NZ International Convention Centre has been a problem project for Fletcher Construction. Photo / Michael Craig
Jobs had gone over the original bid cost and taken far longer than expected.
Underbidding and lack of information flow to the board were two issues blamed then.
The now former-CEO Ross Taylor said in 2018 that Fletcher Building would not be bidding for any further vertical construction work in New Zealand while it concentrated on completing existing projects.
The company said at the time that the building and interiors market “continues to be characterised by high contract risk and low margins”, adding, “we will no longer work in these conditions”.
SkyCity is suing Fletcher Building and the Fletcher Construction Company for $330 million, saying it had taken 10 years instead of three to build the NZICC.
The claim seeks damages for losses incurred by SkyCity arising from ongoing delays in the completion of the project, including those that resulted from the 2019 fire.
In response, Fletcher said it had already flagged risks associated with the convention centre, it was committed to delivering the project and would vigorously defend itself.
But SkyCity said the NZICC was now nearly six and a half years behind the contractually agreed delivery date of January 2019.
Despite its problems, Forsyth Barr analysts have estimated Fletcher Construction could be worth $230m to $340m.
More may be said about the sale at the company’s annual results announcement on August 20.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.
