NZ firm hits speed bumps

MARTA STEEMAN
Last updated 07:30 27/11/2012

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One of New Zealand's largest privately-owned businesses, Fulton Hogan, has joined the ranks of New Zealand companies that have come a cropper in Australia, with its worst profit in a decade of just $7.9 million.

The profit has slumped almost 90 per cent from the previous year.

New Zealand's largest locally owned roading and civil construction company blamed rapid growth in the past five years across the Tasman through multiple acquisitions and unprecedented wet weather delaying key contracts there.

In addition, the deaths of four staff on the job in the June 2012 financial year have turned this into a black one for one of the country's previously most successful companies.

The poor performance was in its Australian operations, which made a loss after making provisions for $56m losses on several contracts, including the upgrade of a 25-kilometre stretch of the Pacific Highway where it was in a joint venture with giant Australian construction player Leighton Holdings.

Managing director Nick Miller said the company had taken corrective action during the year and the ship had steadied and was back on course.

It had shed 60 staff in Australia, divided the business into two streams and installed two new chief operating officers for each stream. The firm was slowing its growth to allow systems and processes to catch up.

It had $3.7b of forward orders, with most in the June 2013 financial year and, in the first quarter, it had achieved 150 per cent of budget, Miller said.

The $7.9m profit is almost 90 per cent lower than last year's $73.9m. However, revenues rose 12 per cent to $2.73 billion.

As for dividends for its 2230 shareholders, Miller said that was being considered by the board later this week.

The company's shares were in a trading halt while the board had an independent party value them. That was done annually. He would not divulge the value.

One in four staff owned shares as well as members of the founding families, the Fultons and Hogans. Those wanting to sell their shares had to sell back to the company. It reissued shares to other staff.

For three of the deaths on the job, health and safety authorities in New Zealand and Australia had advised there would be no prosecutions, while the remaining incident - in Tasmania - was still under investigation.

"Unquestionably it has rocked our business this year. To lose four colleagues has been traumatic for the business," Miller said. The company had redoubled its efforts on health and safety.

Fulton Hogan was relatively small in the Australian market and faced competition from multinationals.

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BLACK YEAR June 2012 Four staff deaths, two in New Zealand and two in Australia.

Profit $7.9m, down 90 per cent from last year's $74m.

Revenues $2.73b, up 12 per cent.

Revenue $1.7b in Australia and $1b in New Zealand.

5500 staff in Australia and New Zealand.

- Taranaki Daily News

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