Fletcher Building executives were grilled this morning as analysts sought answers to the company's fresh woes punctuated by an expected $196 million loss.
And while chief executive Ross Taylor and chief financial officer Bevan McKenzie offered some explanations, investors will have to wait for next week for news on whether a second-half dividend will be paid.
"We've got nothing to say on that," Taylor said in response to a question from Jarden's Grant Swanepoel. Taylor said that was a decision for the board meeting next week and he refused to provide further detail.
Later, a Fletcher spokesperson said the company's dividend policy hadn't changed.
"Fletcher targets a pay-out of 50-75 per cent of after-tax net profit before significant items to shareholders as an annual dividend, subject to available cash flows. It's a matter for the board to decide when finalising the results next week."
The issue of the dividend is just one of many after the country's largest building company effectively brought forward its result by announcing the hefty full-year loss a week early. Much of the damage was caused by one-offs relating to mass redundancies and Covid-19 fall out.
However, 20 per cent of the provisions for the losses came from a "handful" of historically completed projects suggesting the ghosts of yesterday are still haunting the company.
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At the investor presentation, Taylor talked to a series of slides to give a sense of where Fletcher is currently at.
One slide gave reason for a little more optimism because it showed how the nature of Fletcher's construction work had changed since 2018.
Two years ago, the business had $2.2b of major construction work to complete, now down to $600m, the slide showed - a good thing as those older jobs suffered issues, were not as profitable as they could have been and, in some cases, clients withheld money.
However, Fletcher had a $2.4b forward order book of "new work won with materially better margin outlook and significantly lower and more appropriate risk profile".
Taylor told the analysts that new work included projects for Watercare and Higgins, and said "margins were strictly controlled", indicating past mistakes would not be repeated in bidding for new jobs.
He also talked about "rebooting" the construction team, referring to a situation where they had "mismanaged the business, losing money. These issues are before we rebooted the team."
Asked about the NZ International Convention Centre project, Taylor said that work fell into two parts:
• Repairs and work to the building due to last October's fire and the resulting insurance payout to SkyCity, on that company's books and which he wouldn't talk about;
• The approximately $100m of construction work left to be finished "once we've finished the insurance piece" and which would have been necessary had the fire not occurred.
On the $1b Commercial Bay, which Fletcher Construction built for Precinct Properties, he said: "It's cost us but there's not much point in trying to get out of it cheaply because it just costs you more in the long run. While it's painful doing it, it's better in the long run."
Matt Henry of Forsyth Barr asked about divisional performance and Australia but Taylor said detail would emerge next Wednesday when a fuller briefing would be provided.
Henry then asked about the final slide pointing somewhat ominously to the 2021 financial year and saying the business was "reset for market downturn of circa 25 per cent in New Zealand and [approximately] 20 per cent in Australia:".
Taylor said July had been "solid" but it was very difficult to call the year ahead yet. He later referred to the New Zealand election, Victoria's strict new lockdown and unemployment as factors creating uncertainty.
Fletcher had reduced its overall cost base by $300m. It had closed some supply chain and manufacturing plants, cut office space and removed some unprofitable product lines.
Citi equity analyst Craig Woolford asked about attributing about half the $150m reduction in operating earnings for the year to Covid-19.
Taylor said this was productivity losses, "how you deal with the subcontractors", versus what was able to be claimed, ongoing issues with borders being closed "and we have challenges getting core skills across the border, particularly when it's highly technical".
In May Fletcher announced it would be letting go 1500 people, including 1000 in New Zealand, due to the drop in demand.
That created a situation of "frenzy" whereby more had to be paid to key people to hold onto them, he said, "and the net effect is what you estimated on production rates. It's what it's costing you when you get through the contracts".
Pre-Covid, Fletcher intended to sell Australian concrete pipe business Rocla and McKenzie said that process was currently "live". Fletcher announced an impairment of $59m on Rocla and Taylor mentioned two factories which had been shut in Australia and the prospect of those being redeveloped.