Regulation News

Aussie conditions hard on NZ company

One of the giants of the New Zealand construction sector and headquartered in Christchurch, Fulton Hogan has had one of its worst years, with four deaths and profits plunging $7.9 million from $73m the previous year.

Privately owned, Fulton Hogan has around 5500 employees, including 3500 in New Zealand.

Managing director Nick Miller said the company had grown rapidly in the Australian market and had paid the price.

Fulton Hogan expanded its footprint across the Tasman last year, buying out its partner in Victoria-based Pioneer Road Services.

”Our Australian construction business posted losses due to management challenges, prolonged wet weather, growing pains from an earlier acquisition, underperforming projects and costs of changes to address these performance issues, and stabilise the company going forward,? Miller explained.

”One particular project in New South Wales was hit by an unprecedented run of wet weather.”

Earlier this month, it was reported the company was having problems with the $AUD705m ($NZD900m) Sapphire to Woolgoolga project, a 25 kilometre upgrade of the Pacific Highway to a four-lane divided highway from Campbell Close in Sapphire to Arrawarra Beach Rd, Arrawarra, in New South Wales.

A contract for the design and construction of the upgrade was awarded to a joint venture between Leighton Contractors and Fulton Hogan in early 2010.  The Australian and NSW governments jointly funded the upgrade.

About half of Fulton Hogan’s business is now in Australia. While it made only a thin profit this year, its revenues rose 12 per cent to $2.7 billion for the year to June.

“We’ve had a tough year but we are very confident we have the business back on track, back to a stable position, and our performance in the first quarter would underpin that,” Miller said.

”We have learnt some important lessons and taken a number of decisive steps to get back on course, tackle profitability and better protect the well-being of every one of our 5500 people who front up for the company every day.”

Fulton Hogan told Quarry that a number of actions including tackling costs, creating two clear operational streams for the Australian business (industries and construction) and enhanced controls would improve operations.

Miller said while its growth over the past three years meant it now had the scale to compete as a preferred supplier on federal and state contracts, it would be slowing growth to allow its systems and process to catch up ”and mature”.

The company delayed its annual meeting in Christchurch until 19 December because of issues with a large commercial project in Australia. It is holding a range of informal meetings with its shareholders in the lead up to its annual general meeting.

Sources: Fulton Hogan, Scoop, The Press (NZ)

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