Fletcher moves to revive Mainzeal projects

Fletcher Building is in talks with the receivers of failed construction group Mainzeal to see if it can rescue some of the projects left high and dry by the collapse.

Improved trading conditions in New Zealand helped Fletcher Building yesterday post marginally higher net earnings for the six months till December of $146 million, up from $144m at the same time the previous year.

Sharebroker Forsyth Barr said net earnings came in above its estimate of $136m, albeit reflecting better-than-expected tax and interest costs in the period.

Fletcher Building shares closed at $8.87, down 45 cents or just under 5 per cent. Fletcher will pay an interim dividend of 17c a share, to be paid on April 16.

At its interim results briefing in Auckland yesterday, chief executive Mark Adamson said the trans-Tasman building materials group had agreed with receivers PricewaterhouseCoopers that it would assess partly finished Mainzeal developments job by job.

Picking up half-finished building work was fraught, and it did not want to inherit any issues, Adamson said. "But we are extremely keen to try and see these projects to completion, because some of the developers, or indeed some of the sponsors in the form of the government, are our customers as well. And probably as importantly, we're looking to protect the supplier base."

The company also had a vested interest in that it was owed $7.5m by sub-contractors at risk because of the Mainzeal situation, Adamson said.

Mainzeal went into receivership early this month, leaving projects such as the $100m Manukau Institute of Technology campus at a standstill.

Receivers Colin McCloy and David Bridgman said in an update yesterday that they had nearly completed their initial assessment of the company's projects; it was a complicated case.

Limited work has resumed on the Kapiti Coast District Council's new aquatic centre, and PwC said it hoped work on other Mainzeal projects would soon either be resumed or, "as is more likely in a number of instances", transferred back to the client or another contractor.

Fletcher Building has also announced that it plans to set up a shared service centre in Auckland providing back office functions to its subsidiaries across Australasia.

Adamson said Fletcher Building currently operated as about 50 autonomous business units, and there were many transactional processes such as accounts payable and payroll that could be centralised.

Cheaper labour costs were one of the reasons it was looking at establishing the centre in Auckland as opposed to an Australian city.

The move was part of a wider programme to bring the group's disparate businesses together and cut costs.