Australia slashes Fulton Hogan’s profit
Award-winning construction company Fulton Hogan has joined a long list of companies that have tripped up in the more competitive and ruthless Australian market.
One of the giants of the New Zealand roading and construction sector and headquartered in Christchurch, Fulton Hogan has had one of its worst years with four deaths and its profit plunging to $7.9 million from $73m the previous year.
Privately-owned, Fulton Hogan was feted recently as one of two Canterbury supreme winners in the Champion Canterbury business awards.
Earlier this month, the company with about 5500 employees, including 3500 in New Zealand, announced it was delaying its annual meeting in Christchurch until December 19 because of issues with a large commercial project in Australia.
Managing director Nick Miller said today the company had grown rapidly in the Australian market and had paid the price.
“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.”
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 A$705m (NZ$900m) "Sapphire to Woolgoolga project" which is 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 upgrade is jointly funded by the Australian and NSW governments.
About half 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 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,” Miller said.
Miller said the company had renewed its focus on health and safety.
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".
Miller said it was returning to a back to basics approach.