From building a humble but classic Edwardian villa in Broad Bay on Dunedin's Peninsula in 1909, Fletcher Building has become a $4.8 billion dual-listed multinational company - surviving and thriving through a tumultuous 100 years.
On Wednesday, Fletcher, the country's largest listed company, will hold its centennial annual meeting for shareholders in Dunedin.
Among the resolutions for shareholders to consider is whether to ratify a $526 million issue early in the new year.
However, while not a legal requirement, ratification would importantly allow it to seek further equity until April next year, for possible acquisitions.
The global recession has taken its toll on Fletcher.
It has shed thousands of jobs and seen margins slashed in a falling market, and profits driven down - prompting the oft-time dividend sharemarket darling to keep its own counsel on financial guidance for 2010.
Fletcher chief executive Jonathan Ling was picking the calender year 2009 would "bottom out" as the worst year of the recession.
He said that since last year's "free fall" in work volumes, volumes had "stabilised".
Next week's meeting would concentrate on updating shareholders on Fletcher's performance during the recession, including the troublesome US operations.
"There is some stability [in the US] but how long that takes to revive is still hard to tell," Mr Ling said.
The US banking system was "still not in great shape".
While there was positive movement in residential housing and more US Government stimulus-package work to flow through, work in the US commercial sector was worsening.
Craigs Investment Partners broker Peter McIntyre said while there were more tough times ahead for Fletcher, especially in its United States operations, New Zealand immigration and housing were up and a lot of the Government's weekly $250 million borrowings would go towards infrastructure projects - the type of work which makes up about $1.2 billion of forward work held by Fletchers, all in New Zealand.
"The next 12 months are likely to see more positive [financial] reports from Fletcher, but on balance its performance could be re-rated [downward] because of ongoing recessionary problems in the US," he said.
He believed shareholders would have no concerns in ratifying the $526 million issue at next week's meeting, saying the option "to raise fresh capital overnight" reflected the company's strong management which was "always prepared to look for opportunities".
Fletcher's ability to spot opportunities and tender accordingly underpinned the company's early formative decades, from building a Dunedin villa for 360 to turning a 1 million profit 56 years later on the back of some of the country's major construction projects.
About 101 years ago, a fresh-off-the-boat Scot, James Fletcher, went into partnership with Albert Morris.
The next year, on June 1, 1909, they established Fletcher and Morris; subsequently getting a contract to build the double-bay wooden villa in Broad Bay - the first Fletcher home.
Fletcher bought it back and restored it in the 1990s and it has become a popular daily tourist attraction.
In late-March, Angus Fletcher, grandson of Sir James Fletcher, visited Fletcher House in Broad Bay, to mark the 100th anniversary, part of Dunedin's annual Heritage Week Festival.
In the decades following construction of the Broad Bay house, Fletcher rose to complete many high profile projects at the time, including the University of Otago's Allen Hall, Albion Theatre, Chateau Tongariro and Auckland's Civic Theatre, with larger and larger jobs proliferating in Auckland and Wellington.
More contemporary projects from the 1960s to beyond 2000 include the Lyttelton Tunnel, Auckland's Vero Centre and Sky Tower, PricewaterhouseCoopers Tower, Wellington's HSBC Tower, Westpac (Cake tin) Stadium, Te Papa museum and the redevelopment of Eden Park for the Rugby World Cup in 2011.
An earlier project included a contract for part of the mid-1930s inaugural tranche of government-owned state houses, a segment of the property sector which has housed hundreds of thousands of New Zealanders and later became the first purchase for many on the property rung.
In 1919, the company became the Fletcher Construction Co Ltd, a name which survives today, but now its operates under six divisions.
James Fletcher left Dunedin in 1917 to concentrate on work in Wellington, while the company itself left Dunedin in 1926 to focus on operations in Auckland and Wellington which were more lucrative.
Fletcher returned in late-1942 when it reopened a branch, in Parry St, and operated as Dominion Industries, Fletcher Construction and Fletcher Holdings.
Another showcase for the company was its overall construction and fitting out of the South Seas Exhibition in Dunedin in 1926 which drew more than 2.5 million visitors that year, but was considered the "swansong" of its major projects in Dunedin.
In the 1920s, the company also diversified into related construction areas, including brickworks, quarrying, a foundry and structural steel manufacturing - a period when innovative new designs were undertaken and became commonplace for the remainder of the 20th century.
Fletcher posted a very healthy 27,782 after-tax profit for 1929, positioning itself well for the 1930s.
However, the Depression intervened and took its toll with dwindling tenders and the company became overdrawn, beyond approved bank limits and its survival was tight.
Substantial losses were booked when building the Government's first state houses in 1935, owing to changes imposed by the Government on workers' wages and conditions.
In the following decade, Fletcher fell well short of raising capital in a preferential share offering to the public, but its work was underpinned by military contracts for New Zealand and US forces.
Postwar, and with 250,000 of new capital from Australia, Auckland work proliferated and Fletcher's first overseas' ventures were undertaken in Fiji and Samoa.
The 1950s to 1970s reflected a period of growth and diversification, including its first civil engineering project to harness the Waikato River for hydro-electricity, steel manufacturing, building of Kawerau mill town, and construction of the Lyttelton tunnel and Marsden Point oil refinery and the 640km Kapuni gas line.
It posted a first-time 1 million profit for 1965.
In the 1980s there were radical changes, with the merger of Fletcher Holdings, Challenge Corporation and Tasman Pulp and Paper, and later in the decade a reorganisation of the company into divisions covering paper, forestry, energy and building.
Similarly, in the 1990s there was a dismantling of the share structure and Fletcher Challenge was split into separate companies in 2001 - Fletcher Building, Fletcher Challenge Forests (now Tenon) and Rubicon - for commercialisation of emerging technologies.
The company's popularity with shareholders was reflected in 1400 turning up to Fletcher Challenge's annual meeting in Dunedin in 1990.
While making the most of expanding overseas markets, its purchase of Formica in the late-2000s was to have ramifications when the US subprime mortgage market unravelled, the finance sector went into free fall and the ensuing credit crunch ushered in a global recession about 22 months ago.
In August this year, Fletcher's almost $1 billion purchase of Formica, accounting for almost half of a $360 million writedown of unusual items, dragged the construction company into the red with a $46 million loss, its first since 2001.
Formica's work volumes during 2008 plummeted 50%.
While Fletcher delivered a slightly better than expected full-year result to the end of June, posting a $46 million after-tax loss compared with analyst predictions of $64 million, that was in contrast to a $467 million profit for the same time last year.
At the time, Mr Ling defended the purchase, saying Formica Asia recorded a profit and North America was over its operational problems.
However, Europe's declining volumes were reflected in falling profitability, and reductions and restructuring would be focused on Europe.
"The worst is behind us [for Formica] and it's turned around and doing better," Mr Ling said this week, and he was "hopeful" there would be no more Formica-related writedowns.
Group sales were steady, mirroring last year's $7.1 billion, but only one of its six divisions, steel, delivered an increase in operating earnings - 52% up at $154 million for 2009.
Fletcher delivered a final 38c per share dividend, down 10c on last year.
Mr Ling said there had been a marked deterioration in all Fletcher's major markets, prompting the company to scale back its manufacturing capacity and restructure operations because of lower volumes.
Earlier in the year, Fletcher raised $526 million in new equity and $131 million in capital notes, with Mr Ling saying the company had "strong cashflows" after restructuring, 2500 job losses and capital raising - up 23% at $533 million for the year.
"These initiatives have insured that we are well positioned for the current economic conditions and to benefit as volumes grow over time," he said then.
Mr Ling this week reiterated the 2010 outlook remained "subdued" and that most markets expected to record low levels of activity.
Because of the market uncertainty, he again declined to give any earnings guidance for 2010.
Its building products division operating earnings were down 28% at $106 million, distribution down 54% at $30 million, infrastructure down 18% at $185 million, property down 77% from $80 million to $18 million and laminates and panels down 47% at $74 million.
Mr McIntyre said the $360 million in unusual items was largely in line with earlier guidance and Craigs estimates, with the Formica-related impairment charges of $157 million, the write-off of a US tax asset of $60 million and the balance of $143 million in various redundancy and restructuring charges.
"Fletcher paid too much for Formica. It's likely we will see more Formica-related writedowns in the year ahead," Mr McIntyre cautioned.
Following the AGM next week, a cocktail function will be held in the Dunedin Public Art Gallery, hosted by chairman Roderick Deane and Mr Ling.
Also attending will be Jack Smith (81), a retired employee of 35 years who rose to general manager, managing director and executive director.
After having retired twice he has spent the past five years writing the company's history.
He had promised Sir James Fletcher (J.C.) to write the history.
One volume has been published by Steele Roberts, covering the period 1909-1940 entitled No Job Too Big.
Aside from his 35 years service, Mr Smith had other close associations with the Fletchers as his father Bill Smith was a first cousin of Sir James senior, who came to New Zealand in late-1910 to join Sir James in a partnership.
Mr Smith himself joined the company in 1952, after completing an engineering cadetship with the Wellington City Council.
He is part-way through a second volume covering the period 1940 to 1964; the opening of the Christchurch-Lyttelton road tunnel.
He said it was well under way and should be released about mid-2010.
Source material: www.fletcherssince1909.co.nz
- Simon Hartley and Peter McIntyre.
