Fletcher Building has named its new chief executive as Ross Taylor.
Taylor, who will take up the position on November 22, was previously chief executive of UGL an international engineering and construction business based in Australia. He will earn a base salary of $2 million per annum.
Taylor takes over from Francisco Irazusta who has been the interim CEO since July when former chief executive Mark Adamson left the company immediately as it announced a second earnings downgrade amid cost blowouts at two major construction projects.
Chairman Sir Ralph Norris said Taylor had an impressive international career in the real estate, construction, manufacturing and engineering sectors.
"He has proven experience leading business turnarounds and improving performance and shareholder returns, and has direct experience across a range of Fletcher Building's core sectors - including housing, manufacturing and construction."
Norris said during Taylor's time in charge of UGL and Tenix he returned loss-making businesses to profitability, doubling the UGL share price in two years.
"Importantly he is a leader focused on people and culture, safety performance, client and customer satisfaction and sustainability, which are the foundations of any successful company."
Norris said that Taylor would lead the development of a new strategy for Fletcher
Building, which would focus on delivering the most value to shareholders.
Fletcher Building also announced its forecast guidance for the year to June 2018 of $680 million to $720 million earnings before interest and tax excluding significant items with a likely loss of $160 million in its building and interiors unit.
Including the loss from the unit, the earnings would be in the range of $520m to $560m similar to the $525 million underlying operating earnings this year, which was down 23 per cent from its 2016 financial year.
The loss on the building and interiors unit would be lower than the $292m loss it made this year.
Norris said it had decided to split out the building and interiors figure because of the uncertainty in estimating the final outcomes of the major buildings and interiors projects, and the resulting impact on in-year earnings.
"A considerable amount of remedial action has taken place in the past year by the board, the executive team and the construction leadership team to address the issues we have experienced in our B+I business.
"We have improved business and project governance; improved systems and processes; improved the construction and commercial capability of the division; and introduced more
commercial rigour around the bidding process.
"I strongly believe that these actions will address the issues we have experienced over the long term by ensuring our approach to bidding for, contracting and managing future projects is greatly enhanced.
But he said the measures would only go so far in altering the trajectory of its legacy projects that commenced some time ago.
Norris said he wanted to offer his personal apology to shareholders.
"Mistakes have been made and responsibility ultimately rests with the board. As we stated at our full year results briefings, we fully accept this responsibility.
"Our focus now is on delivering these legacy projects to the highest quality for our clients, and mitigating future losses.
"We recognise our shareholders will want transparency over the remaining risk profile attached to our building and interiors project pipeline."
Fletcher Building will hold its annual general meeting today and is expected to face the heat from shareholders, as well as workers who are expected to take industrial action outside the meeting over concerns about pay.
Fletcher Building will be taking a careful approach to its 2018 guidance after making two hefty cutbacks to its 2017 guidance, which upset shareholders and sent the share price tumbling.
Fletcher was initially expected to make $720m-$760m for the June 30, 2017 year, but in a surprise March move shortly after its half-year result in February, that was downgraded to $610m-$650m, due mainly to two big building projects.
That was further cut in July to $525 million with a $220 million impairment hit.
Its final year end result saw underlying operating earnings of $525 million, down 23 per cent from its 2016 financial year.
Fletcher Building shares closed on $7.96 yesterday and have fallen 18 per cent in the past year.