Fulton Hogan slows Australian growth goals as annual earnings plunge 89 percent
By Paul McBeth
Nov. 26 (BusinessDesk) - Fulton Hogan, the privately-held construction company, has slowed its growth aspirations across
the Tasman after problems with a joint venture in New South Wales eroded earnings, leading to an 89 percent drop in
annual profit.
Net profit sank to just $7.9 million in the 12 months ended June 30, from $73.9 million a year earlier, which departing
chairman Ed Johnson described as a "disappointing and totally unacceptable group performance" in the company's annual
review, mailed to shareholders. Revenue grew 12 percent to $2.73 billion, in line with budget.
"Absolutely we've had a tough year, but we are very confident between the board and myself we have the business back on
track, back to a stable position, and our performance in the first quarter would underpin that," managing director Nick
Miller told BusinessDesk. "We've had a very strong performance out of the business across the first quarter."
The Christchurch-based company's earnings plunged after it took a $27.4 million charge on associate companies and
jointly controlled entities, including its Pacific Highway joint venture in NSW, which has been beset with wet weather.
Fulton Hogan has taken a $55.6 million provision for future losses in its current liabilities on its joint venture.
The construction firm delayed its annual meeting until mid-December as it negotiated the details of the problematic
Australian project, having already revoked a planned share buyback in October. Fulton Hogan expanded its footprint
across the Tasman last year, buying out its partner in Victoria-based Pioneer Road Services.
Including a revaluation of land, and losses on cash flow hedge reserves and foreign exchange, Fulton Hogan posted a loss
of $7.1 million, compared to a comprehensive profit of $99.7 million in 2011.
Miller said the company is slowing its growth aspirations in Australia after building its presence across all states and
territories in the world's 12th biggest economy, which was "critical to our strategy." The company rejigged its
Australian operations to attract more specialists in its two work streams - industries and construction.
"Part of it has been around reducing overhead structure, but also focusing on what's important. We're confident we now
have that under control and the business is running well," he said.
The board declared a final dividend of 5 cents per share, taking the annual payout to 11.5 cents, down from 20 cents
paid in 2011.
Fulton Hogan delayed the next two buyback instalments for Shell New Zealand to let it consider a potential acquisition
of some resource-based assets in New Zealand.
Miller said the company is focusing on strengthening its balance sheet, through increasing its retained earnings and
selling some non-core assets such as forestry and land. Those funds will be put towards repaying debt, he said.
Fulton Hogan had current liabilities of $532.3 million as at June 30 and non-current liabilities of $772.9 million.
Miller was upbeat about the coming year, with a forward-order book of $3.7 billion, saying "the underlying business is
still very solid and is well-positioned for the future."
Fulton Hogan will continue to pursue a 'zero harm' health and safety policy after four workers died in the financial
year in four separate incidents, and has introduced a number of new initiatives to improve the culture and behaviour
around safety, Miller said.
"That rocked us to the core - Fulton Hogan has always had health and safety as a number one priority," he said.
(BusinessDesk)