Fletcher Building settles with NZTA over delayed motorway
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The news: Building products group Fletcher Building has reached a settlement with the New Zealand Transport Agency (NZTA) and the Northern Express Group (NX2) over the delayed construction of the Puhoi to Warkworth motorway (P2W) in New Zealand.
The numbers: As a result of the settlement, Fletcher said it expects to recognise a loss on claims receivable of NZD16.4 million ($15.2 million) against the P2W project position in fiscal 2025, with corresponding impact to full-year earnings before significant items.
The company said the loss relates to revenue recognised over the life of the P2W project. The settlement means further cash proceeds from the project of NZD56 million will be received by the group this fiscal year.
The context: The P2W road opened in June 2023 having originally been scheduled for completion in December 2021. Fletcher said the project experienced delays and inefficiencies primarily due to the impacts of the New Zealand government's response to Covid, alongside other weather-related disruptions.
Fletcher, and its 50% partner on the project Acciona, lodged a claim with NZTA and NX2 to recover costs associated with the disruptions. The claims were the subject of an agreed dispute resolution process, but have now been resolved by agreement between the parties.
Fletcher said the settlement was lower than expected, but represents a "commercial resolution to a longstanding issue and avoids a drawn-out dispute."
Fletcher and Acciona have also submitted material claims under the contract works insurance policy for damage to the project caused by landslips and weather events during construction. Those claims are still the subject of negotiations with insurers.
What they said: "This represents further progress in closing out the legacy project issues that have absorbed significant management time and cost," said Fletcher's managing director and CEO Andrew Reding.
The source: ASX
