FBU - Fletcher Building

Dona Ferentes said:

and RWC, REC, GUD ...?

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i hold RWC , but of course spill-over effects can be both positive and negative
for instance CSR ( building products) and WES ( through Bunnings ) might get a pleasant breeze out of all this renovation activity

BTW we seem to have overlooked commercial properties in this discussion so far ( and SOME of them can be tigers for cutting corners )

divs4ever said:

i hold RWC , but of course spill-over effects can be both positive and negative
for instance CSR ( building products) and WES ( through Bunnings ) might get a pleasant breeze out of all this renovation activity

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bit of a selloff on RWC today, down 4 per cent, whereas Reece REH hasn't moved too much. (GUD is now a pure automotive play)

... one month charts

Dona Ferentes said:

bit of a selloff on RWC today, down 4 per cent, whereas Reece REH hasn't moved too much. (GUD is now a pure automotive play)

... one month charts
View attachment 164121

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indeed , i noticed that

am still trying to calculate an acceptable 'top-up ' price given the wider risks of operating in more international markets

was currently thinking $3.48 , but have no order in the market ( so the target might ease lower yet )

I read the FBU report. It was quite detailed and well worth checking out. They highlight what they see as widespread plumbing fails in the installation of their product which led to the leaks. That was concerning in itself. I wonder if these practices are now normal and will be causing further failures. They also offer a range of practical solutions. Well worth considering

I noted that the Pro fit range of products was withdrawn in 2022 because it was uneconomic.

I still can't understand how the product itself has escaped scrutiny for its overall robustness.

divs4ever said:

BTW we seem to have overlooked commercial properties in this discussion so far ( and SOME of them can be tigers for cutting corners )

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Yep. Not to mention the hundreds of apartments that have been built. These have already experienced problems with cheap cladding. They already have severe water leaking issues . Having internal water pipes with a shortlife expectancy and seemingly fragile when installed roughly would be the last straw.

basilio said:

I read the FBU report. It was quite detailed and well worth checking out. They highlight what they see as widespread plumbing fails in the installation of their product which led to the leaks. That was concerning in itself. I wonder if these practices are now normal and will be causing further failures. They also offer a range of practical solutions. Well worth considering

I noted that the Pro fit range of products was withdrawn in 2022 because it was uneconomic.

I still can't understand how the product itself has escaped scrutiny for its overall robustness.

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having been in a house with inferior roof repairs that took 4 years to become blindingly obvious , i can imagine a small leak ( say a cup or water a day ) , going undetected for an extended period of time ( with catastrophic rectification costs ) ( say behind the kitchen sink , or dishwasher , of behind the bathroom vanity cabinet )

now it the house repair i observed , it was annoying how many tiny corners that were cut in the 2014 repairs , that snow-balled later

reading that same report i next , i noticed the complexity of installation instructions compared to what i have seen to a replacement with that black poly pipe ( on the cold water fittings ONLY )

maybe despite whoever is adjudicated at fault this might cause building regulation changes

even 12000 houses at risk of damage in one state , could be a massive liability ( to insurers )

I still can't understand how the product itself has escaped scrutiny for its overall robustness

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easy , the regulators ( and inspectors ) asleep at the wheel ( seems to happen all over the place )

The big picture on build quality of apartments and homes ? These stories highlight what is happening.

basilio said:

The big picture on build quality of apartments and homes ? These stories highlight what is happening.

How a pool of water in the spare room became a 'long and costly fight' for a Melbourne couple

Construction experts warn leaky buildings that have been constructed with improper waterproofing are reaching "pandemic proportions" in what some fear could take a catastrophic building collapse before the government improves building practices.

www.abc.net.au

Water leaks, cracks and more: Sydney's apartments are riddled with building defects

Buying an apartment is the biggest financial commitment many of us will ever make. Unfortunately, our new research shows that defects in apartment buildings are

www.businessnewsaustralia.com

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have seen some interesting things in pre-handover cleans ( in units/town houses) in Brisbane as well .. circa 2011 to 2016 , and that is just the few hours cleaning up after the builders , goodness knows if the places were actually water-proof ( because one block couldn't even be secured at the kitchen windows , am told later several buyers refused to settle because of the defects

am not sure if there is just one cause or fix to the whole industry ( defective products , shoddy workmanship , stuff overlooked during inspections ) even having fully tiled flaws won't stop the carnage ( they put down this thin cardboard/fibreboard to protect the tiles , except it only stops scratches , scuff marks and superficial chips )

tradies tools , wobbles on scaffolds , dropped bench-tops ... and up comes the old tile floor ( they use a jack-hammer if the under floor is a cement slab ... which often damages the water jacket as well ) makes you wonder if on the second/third/fourth level , but what would i know i am only cleaning ... LOL

Fletcher Building responds to media speculation Auckland, 7 February 2024:

Fletcher Building Limited is aware of a news media report stating that it is weighing up an equity raise.

This is inaccurate and Fletcher Building is seeking to have the story removed.

i hold FBU

TRADING HALT

ahead of the results presentation on Wednesday

seems there will be a meeting tomorrow where several matters will be discussed

i hold FBU ( and do not currently have an order in the market , but that might change on Wednesday or Thursday )

Trouble at mill. By the looks. Nasty news incoming!

galumay said:

Trouble at mill. By the looks. Nasty news incoming!

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part 1 ... the board reshuffle

Fletcher Building Leadership and Board announcement Auckland, 14 February 2024:


Fletcher Building Ltd (“Fletcher Building” or “the Company”) today announces that Group Chief Executive Officer (CEO) Ross Taylor has given notice to the Board of his retirement and that as part of a Board renewal review being undertaken, Chairman Bruce Hassall will step down from the Board at the Company’s Annual Shareholders Meeting later this year.

An international and domestic search for a new Group CEO will be progressed, leveraging the Company’s succession plan.

The search process will be led by NonExecutive Director Barbara Chapman who Chairs the Company’s People and Remuneration Committee.
Mr Taylor has a six-month notice period, which he will serve in full if required, to facilitate an orderly handover to his successor.

Fletcher Building Chairman Mr Bruce Hassall said, “The Board, Ross and I believe it is in the best interests of the business and the team that he handover to a new leader and that I hand over to a new Chair at the time of the ASM in October.”

The Board thanks Bruce and Ross for their leadership and contribution since 2017.

During this period, they have led the turnaround of Fletcher Building which has seen the core businesses becoming more focused and profitable, with improved earnings, margins and returns.

The Company has a growth strategy in place and is focussed on progressing the close out of construction legacy projects and developing an industry solution for the Perth plumbing issue.

Mr Taylor said, “Fletcher Building is a great business, and it has been an honour and pleasure to have the opportunity to work with such a committed team of people.

I remain committed to the business and facilitating a smooth and orderly transition to my successor who will be able to focus on leading the organisation through the next strategy cycle and beyond.”

ENDS


i hold FBU

part 2

the results

Fletcher Building announces HY24 Results Auckland,

14 February 2024: Fletcher Building Limited today announced its financial results for the first half of FY24.
• Revenue of $4,248 million, down 1% from $4,284 million in HY23
• EBIT before significant items of $264 million, down 27% from $360 million in HY23
• EBIT margin of 6.2%, down from 8.4% in HY23
• Net Loss After Tax of $120 million (incl. $180 million flagged legacy provisions and $122 million non-cash write-down on Tradelink) compared to Net Profit After Tax of $92 million in HY23
• Underlying trading cash flows robust on good working capital management offset by legacy cash impact Fletcher Building chief executive Ross Taylor said: “Against the backdrop of materially weaker trading conditions, particularly in the NZ residential sector where volumes declined 20%, Group revenue of $4,248 million was in line with the prior period’s $4,284 million. EBIT before significant items was $264 million, compared to $360 million in the prior period.
The Group reported a net loss after tax of $120 million, compared to a profit of $92 million in the prior period.
Disappointingly, the result was heavily impacted by the $165 million significant items provision on the New Zealand International Convention Centre announced on 5 February and a $122 million non-cash impairment and writedown on the Tradelink Australia business.”

In New Zealand, revenue for the materials and distribution divisions (Building Products, Concrete and Distribution) was 8% lower than HY23.
However, this compares to overall market volumes which were 15% lower compared to HY23.

The market decline was driven primarily by the residential sector, which weakened by around 20%, to which these divisions have a 60% exposure.
Mr. Taylor said: “In a more challenging trading environment, the New Zealand materials and distribution divisions performed solidly. Gross margins remained robust at 29.3% (HY23: 30.3%), with the reduction versus HY23 primarily due to a shift in revenue mix towards the lower-margin commercial and infrastructure sectors.

The divisions proactively managed price and costs to help offset increased competitive intensity and ongoing inflationary pressure. “For our Residential and Development division, the house sales market was a relative bright spot in New Zealand, with improved buyer activity, especially first-home buyers, Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand and a stabilising of house prices after 18 months of decline.
Fletcher Residential increased EBIT to $41 million (HY23: $33 million), with 419 units taken to profit compared to 189 in HY23. “A particular highlight of the half was the performance of the Australian division which delivered EBIT and EBIT margin broadly in line with HY23 despite a softer market.
Effective price disciplines and a shift toward higher-margin products saw the gross margin lift to 33.1% (HY23: 31.9%) and overhead costs were 3% lower than the prior period. “A full review of the Australian Tradelink® business over the half year combined with disappointing results led to a $122 million non-cash impairment and write-down in its carrying value.
We have concluded that whilst we believe there is a compelling opportunity for Tradelink, further ownership of the business is not in line with the strategic objectives of Fletcher Building.
Consequently, we intend to commence a divestment process for Tradelink shortly.
“Cash flows from operating activities for the Group were an outflow of $126 million, compared to an outflow of $203 million in the prior period. The materials and distribution divisions produced strong first half trading cash flows of $253 million compared to $206 million in HY23, driven by good working capital management and despite the lower earnings
“Regarding the ongoing Perth plumbing issues, our testing and expert reports on causation continue to show that that the leaks are caused by installation failures and that there is no manufacturing defect.
We remain committed to developing a workable and appropriate industry solution.
“Given the current market conditions, the expected legacy cash outflows and in line with the Company’s dividend policy, the Board has made the prudent decision to not declare and pay an interim dividend in order to maintain our balance sheet settings.
“As we look ahead to the remainder of the year, we expect FY24 Group EBIT before significant items to be in a range of $540 million to $640 million, with the mid-point assuming a continuation of current market conditions for the balance of FY24.”
“Finally, I would again like to express my appreciation to our dedicated team for their hard work and commitment, to our customers for their trust and loyalty, and to our shareholders for their ongoing support.”

#Ends

i hold FBU

not one I follow, but there seem to be ructions.
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Fletcher Building resumes trading amidst challenges

By Glenn Dyer | More Articles by Glenn Dyer

Fletcher Building (ASX:FBU), a prominent player in the construction industry, is poised to resume trading on the ASX at 10 am today, marking the end of a two-day halt initiated after a rapid 6% drop in shares within just 8 minutes. The company's decision to halt trading came in the wake of mounting concerns and uncertainties, primarily stemming from impending announcements regarding its financial performance and leadership changes.

Scheduled to precede the resumption of trading is the release of Fletcher Building's full-year results and earnings guidance, expected before the market opens. However, anticipations are grim, following a revealing lawyer’s letter on Monday that hinted at potential write-downs, losses, and the departure of CEO Ross Taylor. These revelations have cast a shadow over the company's immediate future, underscoring the challenges it currently faces.

Among the key issues plaguing Fletcher Building are two problematic contracts within New Zealand: the NZ International Convention Centre in Auckland and a car park at Wellington International Airport. The fallout from these contracts has already resulted in total write-downs of $NZ180 million, with the specter of further losses looming large. Compounding these financial woes is the company's acknowledgment that it may not be able to recoup these costs from insurers, further exacerbating its financial predicament.

In addition to its New Zealand woes, Fletcher Building is grappling with ongoing disputes related to leaky pipes it supplied for homes in Western Australia. The company disclosed that approximately 1,500 out of 15,000 houses constructed in Western Australia using its pro-fit polybutylene plumbing pipes had experienced leaks between mid-2017 and mid-2022. This revelation underscores a broader pattern of challenges confronting the company, necessitating a comprehensive reevaluation of its operations and risk management strategies.

Despite the daunting challenges, Fletcher Building is set to host an investor call at 11 am New Zealand time (9 am Sydney time), offering stakeholders an opportunity to gain insights into the company's strategic plans and future outlook.

Furthermore, the company intends to release guidance data for the remainder of the current financial year, providing investors with crucial information to navigate the turbulent waters ahead

Fletcher Building Market Update

Auckland, 13 May 2024:

Fletcher Building Limited (the “Company”) today provides a trading and market update.
Current market conditions Market conditions across the Company’s Materials and Distribution1 divisions have weakened throughout FY24. In New Zealand, market volumes to date in 2H24 have moved ~5% lower than 2Q24, and in Australia market volumes to date in 2H24 are ~10% lower compared to 2Q24.

There has also been a notable slowdown in house sales in the New Zealand market and an end to the house price momentum seen through the first half of FY24.

Trading update and outlook At the Interim Results in February 2024, the Company provided guidance for FY24 EBIT before Significant Items to be in the range of $540 million to $640 million.
The mid-point of the Company’s guidance range assumed a continuation of market volumes and house sales run-rates broadly in line with those seen in 2Q24. As a result of the trading conditions in 2H24, the Company now expects lower FY24 earnings.
The Company’s updated guidance is for FY24 EBIT before Significant Items in a range of $500 million to $530 million inclusive of $10 to $15 million of restructuring costs related to cost out initiatives.
The variability within the range is driven by May and June being two of the largest trading months for the Company.
Although all of the Material and Distribution divisions have experienced softer revenues due to the market conditions, the Company’s updated guidance is primarily driven by the following areas: -

Challenging conditions in the Distribution division given its exposure to the residential sector, which has resulted in intense price competition.

The Distribution division’s market share has stabilised in 2H24;
lower pricing has been required to achieve this, resulting in lower gross margins;
- A sharp correction in the Australian residential market leading to a forecast ~10% revenue decline for the Australian division in 2H24 compared to 2Q24;
and 1 Materials and Distribution divisions = Concrete, Building Products, Distribution and
- A combination of weaker revenues and gross margin pressure in certain Building Products businesses, notably Iplex NZ and Steel, where end markets have been particularly soft.
Although we continue to observe solid performance by some business lines within these divisions, these trends are not sufficient to offset the broader declines affecting our business.
The Concrete division has demonstrated resilience, delivering stable revenues and improved gross margins so far in 2H24, notwithstanding ongoing contraction in market volumes and price competition intensifiying.
Its performance reflects market share gains and a strategic refocus on commercial and infrastructure sectors.
In addition, in a slowing housing market, Residential & Development has continued to perform well and continues to expect ~900 units taken to profit for the full year.
The Construction divison’s earnings are improved reflecting the rebalancing of the order book to a lower risk profile and strong execution in the Brian Perry Civil business.
The Company remains strongly focused on the sustainable reduction of both fixed and variable costs, with overhead cost control particularly strong.
The Company expects market conditions to remain challenging in both New Zealand and Australia in the near term and continues to look for opportunities to manage costs against that backdrop.
Balance Sheet and Cash Flows The Company remains focused on securing robust cash flows.
Good working capital disciplines have meant that trading cash flows (excluding legacy construction projects) are robust.
The Company expects further significant trading cash inflows in the May-June period, driven by: the seasonally higher trading months in the Materials and Distribution divisions; and settlement of house and industrial land sales in Residential & Development.
The Company expects that Net Debt at 30 June 2024 will be in a range of $1.9 billion to $2.0 billion.
The Company’s liquidity profile remains robust, with $2.8 billion of debt facilities in place and liquidity at 30 June 2024 is expected to be $0.8 billion to $0.9 billion.
Acting CEO Commentary Acting CEO Nick Traber said, “Given the current conditions, our focus has been on managing things within our control, in particular: customer service; costs and margins; cash flows; capital allocation; funding; and closing out the remaining legacy construction projects.
“Fletcher Building has many strongly positioned core business assets that have demonstrated resilience in current market conditions. Our immediate priorities are to optimise the performance of each of our businesses, close out legacy issues and tightly manage risks to maximise our ability to deliver shareholder value.
Our people are integral to achieving this and I would like to thank each of them for their ongoing efforts as we navigate the tougher market environment.” Conference call to be held today Fletcher Building management will host a Q&A briefing today, Monday 13 May 2024 at 12:00pm NZST / 10:00am AEST to discuss today’s announcement.

Participants can register for the conference by navigating to the following link: https://s1.c-conf.com/diamondpass/10039019-nrtiv0.html

i hold FBU

I have had this on m watch list for so long that I had forgotten it, and today Commsec sent me the price notification that I set.

How does a company that specialises in building homes get their SP so low during a housing shortage?

@divs4ever @JohnDe @Dona Ferentes @galumay and the followers and holders
With the collapse in FBU price, was it an over reaction ?
I do not hold but the report published did not inspire me. The forthcoming court case to recover damages will take some time. The net debt of more than $1 Billion is a serious concern as well.

I am however intrigued with Allan Gray's recent top up and how they see it after the price dive ?

they ( or at the least one very vocal customer ) have a big problem , and it is hard to tell who is correct and who isn't

however a lot of WA homeowners ( and unit owners ) ( and mortgages ) have reasons to be concerned

no who is correct ( FBU or the customer ) i don't know , i veer slightly towards FBU since the complaints seem to be exclusively in WA ( but there easily could be under-reporting elsewhere )

have i added more recently ... not a chance , i see a downturn is residential construction and available finance ( which will likely be Australia/NZ wide ) i would rather throw extra cash at FRI ( which i also hold )

Miner said:

I am however intrigued with Allan Gray's recent top up and how they see it after the price dive ?

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some whispers of a take-over attempt perhaps ?

since CSR is already under take-over clouds and it would be difficult to acquire BKW , FBU might look slightly attractive to some-one