Fletcher Building rises after completing part of SkyCity's NZICC project
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More news: Shares in Fletcher Building lifted after the building products supplier announced that it had completed and handed over the Hobson Street Hotel portion of the NZ International Convention Centre project in Auckland for SkyCity Entertainment.
Fletcher shares were up 1.3% to $2.72 by 1:45pm AEST. The NZX and ASX-listed company has seen its stock fall around 45% over the last 12 months.
Fletcher Building hands over part of troubled NZICC project
The news: Fletcher Building has completed and handed over the Hobson Street Hotel portion of the troubled NZ International Convention Centre (NZICC) project in Auckland that it is building for SkyCity.
The numbers: The company said it has also settled the remaining Contract Works Insurance (CWI) claims with the NZICC project insurers and SkyCity, with the proceeds materially in line with provisions taken in February. It did not specify the amount.
Fletcher had made an additional provision of NZD165 million ($151 million) in its half year results on the NZICC project, which it said would cover the increased costs as well as a portion of the company’s claims against the project CWI that may not be recoverable.
The context: The NZX and ASX-listed Fletcher has been troubled by repeated problems at the Auckland project since the construction site caught fire in October 2019 and has been forced into extensive remediation.
It has continued to pursue recoveries under the NZICC Third Party Liability insurance policy of more than NZD100 million. The extra provisions forced the company to post a half-year loss and cut its full-year earnings guidance in a slowing market.
This prompted a downgrade of its credit rating by Moody’s, earnings downgrades by a number of analysts, and several top management departures in recent months, as it faces shareholder discontent over weak share price performance. The project is due for completion later in 2024.
The source: ASX announcement
