May 19, 2020 / 9:31 PM / 17 days ago

UPDATE 1-NZ's Fletcher Building to lay off 10% of workforce as it flags sharp downturn in 2021

(Adds CEO comment, background, capex guidance)

May 20 (Reuters) - Fletcher Building Ltd on Wednesday warned that the novel coronavirus will lead to a sharp downturn in 2021 and potentially beyond as it laid off about 10% of its workforce.

New Zealand’s largest construction firm said around 1,000 positions will be cut in the country and an additional 500 in Australia.

Construction firms in New Zealand, along with their global peers, have been hit hard by the coronavirus-related lockdowns, which have disrupted industrial activity and led to a delay in projects.

“Looking to the next financial year, we are planning for an environment that will see a shrinking economy, substantially reduced customer demand across all our businesses and sustained lower levels of productivity”, Fletcher Building Chief Executive Ross Taylor said in a statement.

New Zealand commercial building activity is expected to be impacted by a reduced project pipeline in the private sector, with Taylor estimating a 15% decline in the value of commercial work put in place in FY21.

The company said it recorded an operating EBIT loss for April of about NZ$55 million ($33.41 million), with no revenue across most of its New Zealand operations during the country’s near total lockdown.

Fletcher also added that total expenditure for 2020 is now expected to be NZ$240 million compared to a pre-COVID-19 expectation of about NZ$300 million. ($1 = 1.6464 New Zealand dollars) (Reporting by Shruti Sonal in Bengaluru Editing by Chris Reese and Lisa Shumaker)

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