FBU - Fletcher Building

[Rawz]

A fair point. NZ Building industry is probably one of the least efficient in the world given the desire to avoid any standardisation.

Can't agree however that this is the only reason for the stellar costs of building materials here in NZ.

When we arrived some 26 years back from Europe I found that building materials like nails, joiners and even paint was 50 to 100% more expensive than buying it in a German building market. Timber was at least twice the comparable price to coming from a German sawmill, and this despite the European timber being of much superior quality. They sell you timber in Europe which keeps in shape, even if you don't immediately use it.

The NZ building industry produces unbelievable low quality for an eye-watering high price - and the consumers, who often don't know better (and have as well little options) have no other choice than feeding a lazy and inept duopoly ...

Except for glass.. metro glass sell $250m of the stuff and only make a few bucks out of it. Consumers getting a great deal on glass!

I bet not even the savvy German consumers would be getting better deals on glass back in the fatherland

[Greekwatchdog]

BP, not really. We have Master builders guarantee so really all homes should be to a standard. The fact there are some builders who won't sign in for it shows a weakness. I have just seen a home friends were getting reno'd and builder totally FUBAR'd it. They have to get a new builder to fix it. No they weren't part of the MB association so they are likely up for costs pending a court case.
Also we are only a nation of 5 million. So we are very small and isolated and we pay international prices for commodities.

Rawz, In Europe the PVC Window is huge. In NZ its just started to gain traction. Big problem not many colours available and NZers love there colours. Sizing can also be a problem and lead times of 6 months.
Also the Glass association here has recently told industry that we should be triple glazing here. Selling point Warm housing. This will add a huge cost to houses as it will require new Aluminium to be designed to compliment this.
Also Metros biggest problem is Management are arrogant because of there so called dominance. They failed to execute in Aust and lost major client so now have a book of excuses to tell shareholders.

[BlackPeter]

Except for glass.. metro glass sell $250m of the stuff and only make a few bucks out of it. Consumers getting a great deal on glass!

I bet not even the savvy German consumers would be getting better deals on glass back in the fatherland

To be honest ... while I knew enough about price and quality of timber and whatever you need to connect timber with each other to be able to compare ... I never had a lot to do with glass - i.e. I don't know, you may or may not be correct re glass prices in NZ.

What I can give you however is the fact that a complete tripple glass window (i.e. glass, frame, hinges, lock) in
Germany is cheaper that a double glassed window (comparable size) here in NZ.

I suspect that the low earnings of MPG have more to do with the Kiwis love to produce every window of every house (o.k. - I am exaggerating a bit, but not much) in a different size and building them form the scratch instead of using standardized prefabricated windows.

While MPG tried to optimise their factories to produce uniquely sized glass sheets .... the result for the customer will still be more expensive than buying complete standardised windows in some other part of the world.

But anyway this is the FBU thread ...

[Balance]

Everything is more expensive in NZ - size of the market (which means short runs & less economies of scale) and distance from supply (and demand) markets.

[Biscuit]

.... the European timber being of much superior quality. They sell you timber in Europe which keeps in shape, even if you don't immediately use it.....

I build everything I can with untreated oregon (Douglas fir) rather than Pinus radiata. It doesn't warp and it has the most delicious smell when you work it. Reasonably priced at our local sawmill.

[Poet]

To be honest ... while I knew enough about price and quality of timber and whatever you need to connect timber with each other to be able to compare ... I never had a lot to do with glass - i.e. I don't know, you may or may not be correct re glass prices in NZ.

What I can give you however is the fact that a complete tripple glass window (i.e. glass, frame, hinges, lock) in
Germany is cheaper that a double glassed window (comparable size) here in NZ.

I suspect that the low earnings of MPG have more to do with the Kiwis love to produce every window of every house (o.k. - I am exaggerating a bit, but not much) in a different size and building them form the scratch instead of using standardized prefabricated windows.

While MPG tried to optimise their factories to produce uniquely sized glass sheets .... the result for the customer will still be more expensive than buying complete standardised windows in some other part of the world.

But anyway this is the FBU thread ...

Not only do MPG seem to build every window to a different size, they also employ a large number of people that don't seem to be able to use a tape measure which results in an awful lot of wastage and re-work (at least that is my recent experience building a house)

[Balance]

Not only do MPG seem to build every window to a different size, they also employ a large number of people that don't seem to be able to use a tape measure which results in an awful lot of wastage and re-work (at least that is my recent experience building a house)

Restraint of trade over - the experienced and skilled tradesmen have moved onto their own businesses in competition.

[freebee]

Share price been drifting down everyday lately and FBU making the most of SP drop buying another 70k shares on NZX and 145k ASX shares yesterday. https://announcements.nzx.com/detail/383631
SP down again today, are we expecting bad news?
Disc: FBU and I are both buying at these levels

[Entrep]

Share price been drifting down everyday lately and FBU making the most of SP drop buying another 70k shares on NZX and 145k ASX shares yesterday. https://announcements.nzx.com/detail/383631
SP down again today, are we expecting bad news?
Disc: FBU and I are both buying at these levels

Fall continues

[winner69]

Fbu should do well next five years.

This report says 265,000 new dwellings next 5 years ….construction sector value to double in 5 years ….wow


https://www.rnz.co.nz/news/political/457334/265-000-new-dwellings-in-pipeline-over-next-five-years-mbie-report

[Greekwatchdog]

And now officially into retirement villages https://www.nzherald.co.nz/business/fletcher-residential-releases-details-of-new-vivid-living-retirement-business/2BEYQMSA6J6JPPLPMB7B4ZBTUE/

[artemis]

And now officially into retirement villages ....

Different model, more in line with FBU's standard construction offerings. Designed to appeal to the more 'affordable' end of the market with pretty much no onsite amenities. But with some care services able to be accessed through a third party. Will suit some, for sure, and open a new sector in the market.

Comparative profitability still to be seen.

[justakiwi]

Will be very interesting to see what this looks like. More affordable for those who can't afford the big players, but I am not sure about the lack of amenities. Potential customers may be fine without a gym or swimming pool, but a hairdresser onsite once a week would be a basic expectation these days. The capital gain share will definitely be a pro for families looking for somewhere for Mum or Dad. Especially given there is to be no rest home - Mum and Dad will have to move elsewhere when they need that.


Different mode, more in line with FBU's standard construction offerings. Designed to appeal to the more 'affordable' end of the market with pretty much no onsite amenities. But with some care services able to be accessed through a third party. Will suit some, for sure, and open a new sector in the market.

Comparative profitability still to be seen.

[BlackPeter]

Fbu should do well next five years.

This report says 265,000 new dwellings next 5 years ….construction sector value to double in 5 years ….wow


https://www.rnz.co.nz/news/political/457334/265-000-new-dwellings-in-pipeline-over-next-five-years-mbie-report

But didn't FBU had plenty of problems (and lost plenty of money) during the last building boom? From memory ... they don't deal well with too much work :):

Discl: still holding ... but watching the sector closely ...

[Greekwatchdog]

[QUOTE=BlackPeter;930410]But didn't FBU had plenty of problems (and lost plenty of money) during the last building boom? From memory ... they don't deal well with too much work :):

Hey BP. The company is run a better and tighter these days. Taylor is very clear on expectations he has on respective business units.

[mcdongle]

Fbu should do well next five years.

This report says 265,000 new dwellings next 5 years ….construction sector value to double in 5 years ….wow


https://www.rnz.co.nz/news/political/457334/265-000-new-dwellings-in-pipeline-over-next-five-years-mbie-report

Wow thats 1019 houses a 7 day week, 52 weeks a year, Good luck with that i say

The annual number of new homes consented in the year ended January 2021 was 39,881, up 5.8 percent from the year ended January 2020, Stats NZ said today. The all-time high for any 12-month period was 40,025 in the year ended February 1974, which is 144 more than the current year-ended figure.2/03/2021

[BlackPeter]

Hey BP. The company is run a better and tighter these days. Taylor is very clear on expectations he has on respective business units.

I heard that as well. I recon the proof will be in the pudding :):

On a different subject ... if you reply to a post with quote (good practise) better not edit the html (bad practise) .... unless you really know what you are doing :p:

[BlackPeter]

Fbu should do well next five years.

This report says 265,000 new dwellings next 5 years ….construction sector value to double in 5 years ….wow


https://www.rnz.co.nz/news/political/457334/265-000-new-dwellings-in-pipeline-over-next-five-years-mbie-report

And I thought we are only something like 50,000 buildings short in NZ ...

What exactly are we doing with the other odd 200,000 spare buildings they want to erect?

[winner69]

And I thought we are only something like 50,000 buildings short in NZ ...

What exactly are we doing with the other odd 200,000 spare buildings they want to erect?

Replacing all the badly built and leaky ones built not that money years ago.

[BlackPeter]

Replacing all the badly built and leaky ones built not that money years ago.

Fair enough - though not familiar with the unit "money year". Is this more or less than a "light year"?

Anyway - I can't remember - did FBU contribute to the leaky building crisis? I bet they did.

Great strategy then to make money with correcting their own mistakes. Need to buy more FBU, they screwed up a lot over time - unlimited potential for making money!

[Panda-NZ-]

Ross Taylor (ceo) has construction experience rather than being a finance guy which is good.

[Greekwatchdog]

Hmm another fire at Convention Centre. Thankfully this time not too much damage.https://www.stuff.co.nz/auckland/300496638/fire-contained-at-aucklands-skycity-convention-centre

[winner69]

Jarden reckon Fletchers doing well and increased FY forecast

I liked this bit …a long earnings upgrade cycle is likely

Current target price $7.36

[winner69]

NZ housing consent records broken, nearing 50,000 mark - Stats NZ

https://www.nzherald.co.nz/business/nz-housing-consent-records-broken-nearing-50000-mark-stats-nz/K3AFAYQ52AQL32N43M6W4KVKXA/

[Habits]

NZ housing consent records broken, nearing 50,000 mark - Stats NZ

https://www.nzherald.co.nz/business/nz-housing-consent-records-broken-nearing-50000-mark-stats-nz/K3AFAYQ52AQL32N43M6W4KVKXA/

That is huge. I wonder how 50,000 apartments compares value-wise to a lower number say 20,000 standalone mcmansions. As an aside, house prices are out of whack with replacement cost. Some old 70s flats on single title with block and asbestos cladding which we used to own, were on the market recently. The asking price (with a 5 percent yield) after deducting improvements, worked out to $6000 per sqm of land value. Located in Hamilton. :) Am not sure even Kpg sold their 3 hectare sylvia park block anywhere near that much. If buyers want to pay it, it is their choice.

[winner69]

James Hardie announced a boomer profit this morning

ANZ the starvregiob ."….No specific dollars mentioned but NZ seems to have really well …..including decent margin expansion

Fletchers will doing well …how well we’ll know soon

[Greekwatchdog]

Thanks for that Winner. 16 Th Feb "D Day". I am expecting similar to last years first half bearing in mind 10 week shut down.

[Rawz]

I’ve got FBU in the 2022 comp and have recently increased my holding. FBU and STU to have cracking results

[freebee]

FBU share price dropping and hit 12 month low today of $6.28, good buying or punters not optimistic of HY results next week?

Disc: holding and bought more today

[Greekwatchdog]

For Barrs preview ahead of HY 16/02

OUTPERFORM


Fletcher Building (FBU) will report its 1H22 result on Wednesday, 16 February. Despite a lockdown, we expect FBU had a strong first half underpinned by robust demand. Whilst FBU will have incurred some costs from plant shutdowns we expect EBIT to be +5% with strong contributions from Building Products and Steel. Outlook statements are likely to include an Omicron caveat. We believe recent share price weakness reflects concerns around a slowing housing market. However, given the pipeline of work to be done, demand for materials is likely to remain robust for a prolonged period. With FBU trading on a 12-month forward P/E of 11.5x we reiterate our OUTPERFORM rating.


link
NZX Code FBU
Share price NZ$6.45
Target price NZ$8.20
Risk rating Medium
Issued shares 816.6m
Market cap NZ$5,267m
Avg daily turnover 1,014k (NZ$7,274k)
link
Financials: Jun/ 21A 22E 23E 24E
NPAT* (NZ$m) 413.0 415.3 461.2 499.7
EPS* (NZc) 50.3 50.9 59.1 64.0
EPS growth* (%) n/a 1.0 16.1 8.4
DPS (NZc) 30.0 32.0 38.0 42.0
Imputation (%) 0 59 53 52
*Based on normalised profits
link
Valuation (x) 21A 22E 23E 24E
PE 12.8 12.7 10.9 10.1
EV/EBIT 10.6 10.4 9.9 9.1
EV/EBITDA 6.9 6.7 6.5 6.1
Price / NTA 2.0 2.0 1.9 1.8
Cash div yld (%) 4.7 5.0 5.9 6.5
Gross div yld (%) 4.7 6.1 7.1 7.8
Key things to look for in 1H22 result:
Robust NZ core demand: We expect FBU will have experienced pockets of strength in key businesses such as steel, plasterboard and insulation. FBU's domestic production has likely won share from importers given supply chain issues.
Australia turning around slowly: We saw some half-on-half benefit from significant Australian restructuring in FY21 and we expect to see continued improvement in 1H22 underpinned by a robust demand backdrop.
Cost pressure: FBU is likely facing a number of inflationary cost pressures. However, given domestic manufacturing and the strong demand backdrop we believe this is largely being offset with price and share gains from lower import competition.
FY22 guidance: Due to COVID-19 uncertainty FBU is yet to prove any quantitative FY22 earnings guidance. In line with prior years, we expect guidance to be provided although the range may be wider than normal given the Omicron uncertainty in NZ. FBU's current trading and outlook comments will be of key interest to the market given the slowing NZ housing market.


.

[Sideshow Bob]

Looks like FB getting some cheap land....paid $265k for land they put 10 homes on!!

Fletcher's cut-price land deal surprises competitors | BusinessDesk (https://businessdesk.co.nz/article/property/fletchers-cut-price-land-deal-surprises-competitors)

[Greekwatchdog]

https://www.nzx.com/announcements/387332

[alokdhir]

Pretty solid results and outlook with big dividends going forward too ....I think this one is on the way up for 2-3 years ...can be considered a growth at reasonable price stock with BIG dividend yield at current prices .

[sb9]

Outstanding numbers and nice juicy fully imputed divvy of 18c and buy back to continue. A blue chip stock!!!

This along with EBOS, two solid earnings report to kick off the season. A very busy next week with flurry of results to come out..

[winner69]

Outstanding numbers and nice juicy fully imputed divvy of 18c and buy back to continue. A blue chip stock!!!

This along with EBOS, two solid earnings report to kick off the season. A very busy next week with flurry of results to come out..

Hope the guidance of $750m (last year $669m) is enough to push the share price back to 8 bucks .... nearly got there 6 months ago (amazing its fallen by 20% eh)

[sb9]

Hope the guidance of $750m (last year $669m) is enough to push the share price back to 8 bucks .... nearly got there 6 months ago (amazing its fallen by 20% eh)

8 bucks and beyond hopefully. What I was surprised most was bump of 50% in divvy and fully imputed. Market loves fully imputed divvies, Bevan (CFO) is our man.

[Rawz]

Solid result. And 2nd half looking "very solid".

[Greekwatchdog]

I like this part. Very good result given the lock downs..Costs well managed as expected..

New Zealand residential consents were running ahead of industry capacity.


"This has created a backlog of work on top of future consents in the coming years. This is anecdotally supported by our home builder customers generally now placing orders for their customers 12 to 18 months in advance," he said.


As well, the infrastructure sector continued to have a strong growth outlook on the back of committed and planned government projects. Similarly, in Australia, forecasters are all pointing to ongoing strong growth across residential, commercial and infrastructure through FY23 and beyond, Taylor said.

[sb9]

Question re expectations of full year divvy from Grant (Jarden), Ross's reply think positively in line with outlook. Could be another 18c-20c me thinks.

[Balance]

Question re expectations of full year divvy from Grant (Jarden), Ross's reply think positively in line with outlook. Could be another 18c-20c me thinks.

Lovely 10%+ dividend yield on my entry price.

Yummy!

[sb9]

Lovely 10%+ dividend yield on my entry price.

Yummy!

Yes indeed and not to forget capital appreciation on top of that.

Quite a refreshing presentation from Ross and Team, unlike the yester years toxic culture under Adamson...

[Balance]

Yes indeed and not to forget capital appreciation on top of that.

Quite a refreshing presentation from Ross and Team, unlike the yester years toxic culture under Adamson...

Adamson was an arrogant incompetent free rider, free loading on FBU’s strong operations to chase the high profile trophy loss making construction jobs.

[Sideshow Bob]

Adamson was an arrogant incompetent free rider, free loading on FBU’s strong operations to chase the high profile trophy loss making construction jobs.

In case you don't know who he is, then Home - Mark Adamson (markadamsonceo.com) (https://www.markadamsonceo.com/)

[winner69]

In case you don't know who he is, then Home - Mark Adamson (markadamsonceo.com) (https://www.markadamsonceo.com/)

must have been a hero once -

Mark Adamson has seen the share price double at New Zealand's biggest listed company.....

[BlackPeter]

must have been a hero once -

Mark Adamson has seen the share price double at New Zealand's biggest listed company.....

Haven't we all seen the share price double? ... and this makes us heroes?

[Waltzing]

nice result.. quiet day on the markets need results like this to steady the great ship of NZ business.

[winner69]

Up 7% today …good start for the recovery back to 8 bucks

[Balance]

must have been a hero once -

Mark Adamson has seen the share price double at New Zealand's biggest listed company.....

No mention of what happened to the sp when FBU started blowing up towards the end of his term?

[Muse]

In case you don't know who he is, then Home - Mark Adamson (markadamsonceo.com) (https://www.markadamsonceo.com/)

just checked out his website - wow - what a load of **** that is

[Beagle]

I can't get excited about cyclical companies where truck loads of executives are paid fabulously well for mediocre skills.
How thrilled should we be with today's result and share price considering the shares were over $10 in 2016 and more than $12 way back in 2007 ?
I suppose this time they will tell you they're going to grow profits on a sustainable basis going forward with new investment in XYZ plant...forgive me being a cynic, but haven't we heard the same things many time's before ?

I suppose the counter argument is every dog has its day but for how many days will this dog bask in the sunshine of the current cyclical tailwinds ?

[Waltzing]

Its a nice trade .... it always has been.

Usually buy at 6 and sell at 8-9

[alokdhir]

Its a nice trade .... it always has been.

Usually buy at 6 and sell at 8-9

Agree ...next year or so will make it go towards $ 9 for the rising dividend and cycle of work

[Rawz]

I can't get excited about cyclical companies where truck loads of executives are paid fabulously well for mediocre skills.
How thrilled should we be with today's result and share price considering the shares were over $10 in 2016 and more than $12 way back in 2007 ?
I suppose this time they will tell you they're going to grow profits on a sustainable basis going forward with new investment in XYZ plant...forgive me being a cynic, but haven't we heard the same things many time's before ?

I suppose the counter argument is every dog has its day but for how many days will this dog bask in the sunshine of the current cyclical tailwinds ?

I agree Beagle however there is value in the SP right now. What Waltzingman says... 9 bucks would be good

one never knows, FBU could put a few good reporting periods together in a row and then next thing you know you find yourself at $10-$12 share.

Happy to hold construction industry related shares right now as well. FBU did note that they were happy with how they were raising prices in line with inflation. Good protection of my dollar owning this stock. STU up next

[Beagle]

I agree Beagle however there is value in the SP right now. What Waltzingman says... 9 bucks would be good

one never knows, FBU could put a few good reporting periods together in a row and then next thing you know you find yourself at $10-$12 share.

Happy to hold construction industry related shares right now as well. FBU did note that they were happy with how they were raising prices in line with inflation. Good protection of my dollar owning this stock. STU up next

Fair enough but sometimes the market is more forward looking than you think and prices in the downturn cycle long before it happens. Lets see if it can break out of its downturn and crack up through the 200 day MA. Might take some interest if that happens.

[Waltzing]

its a 50/50 call for sure...but so is everything right now except the 10's.

[JohnnyTheHorse]

I'm quite surprised how beaten this has been given tailwinds, but as Beagle says maybe the market is very forward looking. I reluctantly sold my holding back in the low/mid 7's to reduce stock exposure (left STU as my main construction horse) and thought I'd regret it, however turned out to be a very good decision!

Technically speaking we have been well oversold (RSI) on both the weekly and daily charts. Daily also had diverging RSI. I took a position for this bounce and will sell a small portion once this daily bounce tops out, putting a stoploss below the lows and meaning I will be risk free on the trade. Positioning like this makes it very easy to just let the trade play out when you are looking for a longer term bottom (i.e. on the monthly chart).

[sb9]

Its a nice trade .... it always has been.

Usually buy at 6 and sell at 8-9

Even better if you bought in mid 3s and sell at 10..

[Waltzing]

8.80 looks like its the next high if they keep it hammering along...but MR B is right.. It has to stop here and start moving up.

[Waltzing]

out of the blocks and running.. up...

[sb9]

On the way to clinch $7 crown....

[Waltzing]

powering up ... nice to see...

[winner69]

Building consents still heading up .....plenty of materials needs and work over the next few years for Fletchers

[RTM]

Building consents still heading up .....plenty of materials needs and work over the next few years for Fletchers

More than doubled down on my FBU investment. Nice dividend coming up, and apart from near term supply issues, they should do OK longer term as long as they are competent.
Fingers crossed. Now 3% of portfolio.

[freebee]

More than doubled down on my FBU investment. Nice dividend coming up, and apart from near term supply issues, they should do OK longer term as long as they are competent.
Fingers crossed. Now 3% of portfolio.

i've also been buying more RTM. Reasons: FBU still buying back shares, management buying on market, fully imputed divvy of 18c shortly, great HY result and positive forecast, sector tailwinds. I'm surprised that its not back over $7 so good buying imo.

https://announcements.nzx.com/detail/388325

[winner69]

Go Ross - you tell those ComCom guys they wasting their time on this wild premise that the likes of Fletchers are rogues

Jeez - they only have an EBIT margin of 8% .....about 5% after tax return .... real rogues eh


https://www.nzherald.co.nz/business/fletcher-building-carter-holt-harvey-challenge-commerce-commission-probe/RZ5WKLAERE7SXYSLQTOKJ5XQNQ/

[Rawz]

Agree it is time for FBU to shine. New cycle. No where near the top.

[Greekwatchdog]

David Clarke is one of the most incompetent Govt ministers on show. Taylor is right about building components for a house. Govt fails to look at the big picture again only choosing to look at part of the picture as per usual. No wonder the Govt has failed in 4.5 years at the helm

[Waltzing]

FBU keeps moving down Winner() ...

[bull....]

commerce commission investigations completed on

petrol
supermarkets

next on the list building products i believe

fbu be packing there pants now . :scared:

my prediction timber after the div

[Greekwatchdog]

And where has it got them?
Petrol nothing. Govt should look at how much excise tax there is in the price.
Supermarkets = Nothing. Yawn more dribble
Construction = Nothing but more dribble. As mentioned earlier they are not looking at the total building costs just parts they want to look at.

[Beagle]

And where has it got them?
Petrol nothing. Govt should look at how much excise tax there is in the price.
Supermarkets = Nothing. Yawn more dribble
Construction = Nothing but more dribble. As mentioned earlier they are not looking at the total building costs just parts they want to look at.

Yawn, nothing will come of any construction inquiry except more wasted money.

[Greekwatchdog]

Yawn, nothing will come of any construction inquiry except more wasted money.

Thats all the Govt ever does, "waste money". Sad us Tax Payers waste so much of ours on their salaries.

[Recaster]

My takes on Fletcher's (FBU):

Interim Accounts to 31 December, 2021

https://recastinvestor.substack.com/p/update-basic-analysis-fletcher-building

and

Annual Accounts to 30 June, 2021

https://recastinvestor.substack.com/p/basic-recast-analysis-fletcher-building

Feedback welcome.

[Shareguy]

My takes on Fletcher's (FBU):

Interim Accounts to 31 December, 2021

https://recastinvestor.substack.com/p/update-basic-analysis-fletcher-building

and

Annual Accounts to 30 June, 2021

https://recastinvestor.substack.com/p/basic-recast-analysis-fletcher-building

Feedback welcome.


Thankyou for posting this Recaster. Very interesting indeed. Would be keen on the same for Steel and Tube.

[Recaster]

Just completing Steel & Tube funnily enough. Should be up today or tomorrow. Cheers.

[winner69]

Housing consents smash 48-year record

https://www.interest.co.nz/property/...-year-february

[Greekwatchdog]

Thanks Winner, no real surprise and there is still so much new house build demand in system. Shareprice way over sold.

[BlackPeter]

Thanks Winner, no real surprise and there is still so much new house build demand in system. Shareprice way over sold.

Clearly a good time for them to keep the share buy back going ...

[Louloubell]

Craigs continues to be optimistic about FBU in their latest report, but the market is not showing much love.

[Balance]

Craigs continues to be optimistic about FBU in their latest report, but the market is not showing much love.

Talked to a fundie who has exited their FBU position:

FBU’s biggest earner is its residential housing division. The company has been enjoying huge windfall profits from its land bank and ever escalating house prices. Division will continue to be profitable but will be hard pressed to deliver the sort of profits it has in recent years. In fact, the fundie expects the division to report reduced profits from 2023.

[sb9]

Talked to a fundie who has exited their FBU position:

FBU’s biggest earner is its residential housing division. The company has been enjoying huge windfall profits from its land bank and ever escalating house prices. Division will continue to be profitable but will be hard pressed to deliver the sort of profits it has in recent years. In fact, the fundie expects the division to report reduced profits from 2023.

In the meantime they continue to buy another piece of land for development.

Ellerslie racecourse $100m+ deal: Fletcher Living to buy 6.2 hectares of land for 370 homes
https://www.nzherald.co.nz/business/ellerslie-racecourse-100m-deal-fletcher-living-to-buy-62-hectares-of-land-for-370-homes/O6EHH36YRJ7A4BSUCD3KXC5NPU/

[Greekwatchdog]

Good on them, great buy. You Aucklanders have any idea on value of the sort of homes around that area that those new homes/apartments could fetch?

[BlackPeter]

Good on them, great buy. You Aucklanders have any idea on value of the sort of homes around that area that those new homes/apartments could fetch?

Hmm 6.2 ha for 370 homes - this is 167 m2 per section. Take off 10% for common property (like driveways, access roads, ... leaves something like 150 m2 per property. Not really the quarter of an acre dream.

I suppose they want to use the high density rules our beloved government introduced?

Get probably less than the median Auckland house price, but still - if they do it right (not a given with Fletchers) - something like 750 k plus for a 2 to 3 bed room apartment seems realistic? I've seen some selling slightly below under 1 mill - but than obviously location and standard must be right.

[iceman]

Hold your horses. From the Herald:

"Fletcher fast-track plans for $100m+ Ellerslie site opposed by Ōrākei Local Board"

[Rawz]

Hold your horses. From the Herald:

"Fletcher fast-track plans for $100m+ Ellerslie site opposed by Ōrākei Local Board"

Not in my back yard!!

[Balance]

Hold your horses. From the Herald:

"Fletcher fast-track plans for $100m+ Ellerslie site opposed by Ōrākei Local Board"

They are objecting to the fast track process under COVID recovery plan. Fair enough as Local Councils must be able to vet high density developments properly rather than have central government over ride them.

[RTM]

Hold your horses. From the Herald:

"Fletcher fast-track plans for $100m+ Ellerslie site opposed by Ōrākei Local Board"


Not in my back yard!!

Completely agree that this should not be processed under the COVID-19 Fast Track Resource approval process . Completely inappropriate. Should go through the normal Resource Management process, warts and all, to ensure appropriate checks and balances are applied.

[iceman]

They are objecting to the fast track process under COVID recovery plan. Fair enough as Local Councils must be able to vet high density developments properly rather than have central government over ride them.

Yes they are saying it should go through a normal consenting process which is fair enough.

[bull....]

my prediction timber after the div

timber timber

[winner69]

FBU unloved at moment …..share price 604 …probably 5something tomorrow ……lowest price since Feb last year

Maybe the $500,000 the govt giving Winstone to put in a more energy efficient will help out

Does seem weird the government giveth on one hand while ‘accusing’ them of price gouging re plasterboard.

[Sideshow Bob]

The more they buy back, the cheaper they get……

[nztx]

The more they buy back, the cheaper they get……


Time to borrow the other blokes truck & trailer as well - you reckon ? ;)

[RTM]

Time to borrow the other blokes truck & trailer as well - you reckon ? ;)

I already did pre-div @ $6.67.... not sure I have any appetite left for more.

[Greekwatchdog]

https://www.stuff.co.nz/national/politics/300574826/live-government-pumps-14-billion-into-auckland-to-prepare-more-land-for-housing

Govt spends $1.4b on 16,000 new homes. More furl on the fire..

[Balance]

The more they buy back, the cheaper they get……

Makes sense though to buy more when the sp is down rather than up when doing share buybacks.

Institutions are obviously taking the opportunity of the buyback to lighten up their weighting in the stock.

From a fundamental assessment point of view, there are concerns that the big driver of FBU's turnaround - windfall profits from residential division - is not going to deliver from this year given how residential property prices are falling out there. Other divisions will continue to do well but FBU makes super profits from its residential construction division.

https://www.stuff.co.nz/business/128464482/success-at-property-auctions-fall-to-18-at-aucklands-biggest-agency

[BlackPeter]

Makes sense though to buy more when the sp is down rather than up when doing share buybacks.

Institutions are obviously taking the opportunity of the buyback to lighten up their weighting in the stock.

From a fundamental assessment point of view, there are concerns that the big driver of FBU's turnaround - windfall profits from residential division - is not going to deliver from this year given how residential property prices are falling out there. Other divisions will continue to do well but FBU makes super profits from its residential construction division.

https://www.stuff.co.nz/business/128464482/success-at-property-auctions-fall-to-18-at-aucklands-biggest-agency

I'd think Place Makers is creaming it as well (well, they always are, but these days it must be like heaven for them) ... it's a sellers market.

[bull....]

https://www.stuff.co.nz/national/politics/300574826/live-government-pumps-14-billion-into-auckland-to-prepare-more-land-for-housing

Govt spends $1.4b on 16,000 new homes. More furl on the fire..

a nice headline ​but look at the timelines to complete lol maybe they need to ring china and ask how do we build things fast

[Greekwatchdog]

a nice headline ​but look at the timelines to complete lol maybe they need to ring china and ask how do we build things fast

Not this Govt Bull, they know it all.

[Balance]

I'd think Place Makers is creaming it as well (well, they always are, but these days it must be like heaven for them) ... it's a sellers market.

Heard through the grapevine that FBU has arranged a huge shipment of gib boards from overseas to capitalise on the horrendous shortage currently being experienced in NZ. So definitely making hay while the sun shines.

[dobby41]

a nice headline ​but look at the timelines to complete lol maybe they need to ring china and ask how do we build things fast

Like this one that fell over - just what we need
13742

[LaserEyeKiwi]

Peter Reidy, head of Fletcher construction, leaving to return to KiwiRail as CEO.

[Sideshow Bob]

Peter Reidy, head of Fletcher construction, leaving to return to KiwiRail as CEO.

Already replaced - Fletcher Building appoints new Chief Executive Construction - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/391275)

[winner69]

one of Wellington's bigger constrution companies gone belly up

https://www.nzherald.co.nz/business/80m-wellington-builder-armstrong-downes-in-liquidation-152-unit-cbd-project-frozen/KJWSLVIJ4BJZNGMV4VNXDLKJDM/

[RTM]

Peter Reidy, head of Fletcher construction, leaving to return to KiwiRail as CEO.

Bet his first priority will be the RailWay to NorthPort !

[Greekwatchdog]

Still no slow down with new builds. So much demand in system couple with Supply Constraints prolongs the cycle.

https://www.nzherald.co.nz/business/new-housing-consents-issued-smash-records-as-we-go-over-50000-for-the-first-time/XCOZYPW3GLDFUAG6KLB3ZV224A/

[RTM]

"On-market share buyback programme of up to NZ$300 million through to Jun-22"

Does anyone have any idea how far they are through this ? Is this visible somewhere ?
Hopefully good buying for them at the moment.
At $6.2 it would be about 6% of their shares...not insignificant.

[Louloubell]

Does anyone know what they do with the shares they buy back?

[winner69]

Does anyone know what they do with the shares they buy back?

Cancel them

[Southern Lad]

Does anyone know what they do with the shares they buy back?

The daily NZX buy-back disclosure notices state "shares acquired will be cancelled"

[Southern Lad]

"On-market share buyback programme of up to NZ$300 million through to Jun-22"

Does anyone have any idea how far they are through this ? Is this visible somewhere ?

The presentation to the Macquarie Australia conference earlier this week noted that the $300m buy-back was c. 75% through.

[bull....]

The presentation to the Macquarie Australia conference earlier this week noted that the $300m buy-back was c. 75% through.

oh no :scared: that means the price fall more

[RTM]

oh no :scared: that means the price fall more


The presentation to the Macquarie Australia conference earlier this week noted that the $300m buy-back was c. 75% through.

Thanks Southern Lad, I missed that.

Bull, 25% to go, still quite @ few so should support the SP for a bit longer.
But yes…price might come down a bit more, given where market seems to be heading.
All the better for the remaining 25%.

[Sideshow Bob]

oh no :scared: that means the price fall more

And the more they fall, the more they can buy and cancel!! :bored:

[Entrep]

Geez imagine the price without buyback support

[nztx]

What % of the total capital are they buying back to cancel ?

[Waltzing]

Yield starting to look good on this old Tonka Toy outfit.

Tonka Toys and sand pits. The construction industry is still going to be needed even in STAGGA incineration times.

[nztx]

Yield starting to look good on this old Tonka Toy outfit.

Tonka Toys and sand pits. The construction industry is still going to be needed even in STAGGA incineration times.


Can't not love the "Tonka Toys and sand pits." bit - good one :)

The logistics may need a bit of work to make sure the costs dont blow themselves away though ;)

[freebee]

Headline is "Why is Fletcher Building trading at a single digit PE ?" i dont subscribe to this, but maybe someone here who does can tell us any bits that might be of interest

https://www.nbr.co.nz/node/234445?utm_medium=email&utm_source=NBR%20Today

[alokdhir]

https://www.nzx.com/announcements/392238

Buy back finished ...they bought and cancelled 5% equity ...saved just under $ 17 mil from stated amount as SP was down

[Nor]

Meanwhile, Fletcher Building appears to have suffered from this souring of sentiment towards homebuilders. This is probably why the share price has been down in 2022 despite consensus earnings upgrades. For more detail on how the relationship between share price and earnings revisions work you can refer to this previous article. Ultimately this situation will resolve with either the share price recovering or consensus earnings forecast falling.

Chart showing the recent bi-furcation between earnings revisions and share price

While Fletcher Building hasn’t been savaged as badly as US homebuilders, while half of its revenue in New Zealand comes from residential, a chunk of that will be renovations and repairs, and none of its revenue in Australia comes from residential, it is estimated to be trading on a price to earnings ratio of 9x forecast earnings. That’s not 4x cheap but it's still cheap and cheaper still when compared to the broader New Zealand market where the average PE is 20x. There can be little doubt that the fizzy top is coming off house prices here, but there remains a very healthy pipeline of activity due to capacity constraints creating a backlog of work.

It will be fascinating to see how house prices respond to changing affordability and changing underlying demographics. In the US one part of the puzzle is already baked in, the coming wave of Millennials that will be looking to buy a house over the next decade. In New Zealand that part is less clear, our demand for housing is driven by migration. If there turns out to be a pent-up surge of migrants heading to New Zealand from China, Europe and the US, we might just see house prices stabilise around current levels.

[Nor]

Meanwhile, Fletcher Building appears to have suffered from this souring of sentiment towards homebuilders. This is probably why the share price has been down in 2022 despite consensus earnings upgrades. For more detail on how the relationship between share price and earnings revisions work you can refer to this previous article. Ultimately this situation will resolve with either the share price recovering or consensus earnings forecast falling.

Chart showing the recent bi-furcation between earnings revisions and share price

While Fletcher Building hasn’t been savaged as badly as US homebuilders, while half of its revenue in New Zealand comes from residential, a chunk of that will be renovations and repairs, and none of its revenue in Australia comes from residential, it is estimated to be trading on a price to earnings ratio of 9x forecast earnings. That’s not 4x cheap but it's still cheap and cheaper still when compared to the broader New Zealand market where the average PE is 20x. There can be little doubt that the fizzy top is coming off house prices here, but there remains a very healthy pipeline of activity due to capacity constraints creating a backlog of work.

It will be fascinating to see how house prices respond to changing affordability and changing underlying demographics. In the US one part of the puzzle is already baked in, the coming wave of Millennials that will be looking to buy a house over the next decade. In New Zealand that part is less clear, our demand for housing is driven by migration. If there turns out to be a pent-up surge of migrants heading to New Zealand from China, Europe and the US, we might just see house prices stabilise around current levels.

PS these are not my words of wisdom I'm quoting.

[LaserEyeKiwi]

https://www.nzx.com/announcements/392238

Fletchers announced the completion of its share buyback program - having now purchased 5% of outstanding shares.

Bravo. THey should immediately start another 5% buyback.

[LaserEyeKiwi]

Headline is "Why is Fletcher Building trading at a single digit PE ?" i dont subscribe to this, but maybe someone here who does can tell us any bits that might be of interest

https://www.nbr.co.nz/node/234445?utm_medium=email&utm_source=NBR%20Today

Because the NZ sharemarket is incredibly small and inefficient when it comes to correctly valuing companies. Wild price discrepancies to both the upside and downside vs common sense valuations are common on the NZX.

[Sideshow Bob]

https://www.nzx.com/announcements/392238

Fletchers announced the completion of its share buyback program - having now purchased 5% of outstanding shares.

Bravo. THey should immediately start another 5% buyback.

Averaged $6.64 and still have $26.5m leftover from their maximum allocation.

Buyback stops and up almost 2% today!! :p

[Waltzing]

They will need some in reserve for new Tonka Toys with all the fancy new controls. High tech toys are the new rage all over the world...

CAP EX ...

[winner69]

They will need some in reserve for new Tonka Toys with all the fancy new controls. High tech toys are the new rage all over the world...

CAP EX ...

If they are emissions friendly the govt will heavily subsidise them

[Balance]

Yet another Aussie major construction company in trouble - possibly one reason why Aussie instos have been bailing out of FBU.

https://www.news.com.au/finance/business/crisis-talks-underway-as-building-giant-on-brink-of-collapse/news-story/4a819c88bd378ec0cc286074303cb503

[Muse]

Yet another Aussie major construction company in trouble - possibly one reason why Aussie instos have been bailing out of FBU.

https://www.news.com.au/finance/business/crisis-talks-underway-as-building-giant-on-brink-of-collapse/news-story/4a819c88bd378ec0cc286074303cb503

now that's a familiar song

[bull....]

think grant gave it away yesterday when talking about the ocr increase and inflation saying housing supplies was a big part of the problem. fbu in comcom hairs

[alokdhir]

FBU now is more then 10% Gross Yield basis if Marketscreeners future dividends can be trusted ...

[bull....]

FBU now is more then 10% Gross Yield basis if Marketscreeners future dividends can be trusted ...

as the saying goes past performance is no guarantee of future performance

[alokdhir]

as the saying goes past performance is no guarantee of future performance

I still think its a much better buy then WHS / TRA etc ...its dividend is more secure then theirs

[Sideshow Bob]

FBU now is more then 10% Gross Yield basis if Marketscreeners future dividends can be trusted ...

NZX has a different number - FBU Fletcher Building Limited Ordinary Shares - NZX, New Zealand’s Exchange (https://www.nzx.com/instruments/FBU)

Maybe it could be where the latest interim divvy was imputed, but the previous FY divvy in August last year wasn't? (nor was recent divvies prior to that).

Or maybe also made some sort of allowance for the buyback and 5% less shares on issue.....

[alokdhir]

NZX has a different number - FBU Fletcher Building Limited Ordinary Shares - NZX, New Zealand’s Exchange (https://www.nzx.com/instruments/FBU)

Maybe it could be where the latest interim divvy was imputed, but the previous FY divvy in August last year wasn't? (nor was recent divvies prior to that).

Or maybe also made some sort of allowance for the buyback and 5% less shares on issue.....

https://www.marketscreener.com/quote/stock/FLETCHER-BUILDING-LIMITED-6492649/financials/

Its saying future fully imputed dividends of 37 , 41 and 41 cents ahead ...

On 5.50 SP it comes to 10.1% Gross yield

[BlackPeter]

I still think its a much better buy then WHS / TRA etc ...its dividend is more secure then theirs

Yes, but then - FBU has a great history of underperforming in boom times ...

[Sideshow Bob]

https://www.marketscreener.com/quote/stock/FLETCHER-BUILDING-LIMITED-6492649/financials/

Its saying future fully imputed dividends of 37 , 41 and 41 cents ahead ...

On 5.50 SP it comes to 10.1% Gross yield

OK, so one probably historic, the other forward looking. Marketscreener probably done by some sort of algorithm or calculation, notwithstanding current macro environment or headwinds.

[winner69]

Jarden on FBU -- reducing target share price on back of housing demand falling away next year



Swanepoel’s expectation is for earnings before interest and tax (Ebit) of $768 million for the year to June 2022, ahead of Fletcher’s own May 3 guidance of $750m Ebit, adjusting the target share price from $7.46 to $6.14 on a discounted cash flow basis. Jarden has upgraded expectations of 2023 Ebit to $875m while dropping 2024’s Ebit outlook to $592m. Swanepoel said house price moves are the biggest driver in the housing demand model, so he expects rolling annual housing consents to fall from the current 50,000 per year to below 30,000 by early 2023
.

So with a target of 614 current share price seems about right but isn't it a long way off the 8 bucks its was heading to not that long ago

https://businessdesk.co.nz/article/property/an-orderly-retreat-house-prices-to-drop-18-says-jarden

[Balance]

Jarden on FBU -- reducing target share price on back of housing demand falling away next year



Swanepoel’s expectation is for earnings before interest and tax (Ebit) of $768 million for the year to June 2022, ahead of Fletcher’s own May 3 guidance of $750m Ebit, adjusting the target share price from $7.46 to $6.14 on a discounted cash flow basis. Jarden has upgraded expectations of 2023 Ebit to $875m while dropping 2024’s Ebit outlook to $592m. Swanepoel said house price moves are the biggest driver in the housing demand model, so he expects rolling annual housing consents to fall from the current 50,000 per year to below 30,000 by early 2023
.

So with a target of 614 current share price seems about right but isn't it a long way off the 8 bucks its was heading to not that long ago

https://businessdesk.co.nz/article/property/an-orderly-retreat-house-prices-to-drop-18-says-jarden

Tend to agree with Jarden as FBU's biggest profit contribution comes from the windfall profits made from its residential housing division.

Enough there to generously share around with its other building material supply divisions.

[winner69]

That Jarden F24 forecast of $592m is about the sames as they made in F19

Suppose that's what happens in a cyclical / boom bust industry - profits go up and profits go down

[Balance]

That Jarden F24 forecast of $592m is about the sames as they made in F19

Suppose that's what happens in a cyclical / boom bust industry - profits go up and profits go down

FBU's underlying earnings are solid due to the oligopolistic nature of the industries it operates in.

The cream and windfall have always been from building and selling residential houses - just think of how much its land bank alone has made for FBU in the last 5 years.

[nztx]

https://www.nzherald.co.nz/business/fletcher-building-takes-legal-action-over-insurance-for-750m-nz-international-convention-centre-project/ULTK6C46VEYNJP6ZBZU7JTOEE4/

Fletcher Building takes legal action over insurance for $750m NZ International Convention Centre project



Big insurance groups back the project.

The Herald reported in 2020 that more than 80 per cent of the cover was held by American insurance giant Chubb, with the rest held by Australia's second-largest insurer, QBE, and Warren Buffett's Berkshire Hathaway.

Chubb operates in 54 countries and had more than US$174 billion ($273.3b) in assets and collects around US$38b in gross premiums.

Australia's QBE Insurance Group operates in Australia, North America, Europe and the Asia Pacific region.

Berkshire Hathaway is the world's largest financial services company by revenue and Buffett, its chief executive, is one of the richest people in the world.

Chubb is listed on the New York Stock Exchange and claims to be the world's largest publicly traded property and casualty insurance company and the largest commercial insurer in the United States.

Fletcher is an insured party under both its contract works insurance policy and third party liability insurance policy.


What could possibly go wrong ? :)

[BlackPeter]

https://www.nzherald.co.nz/business/the-front-page-six-factors-leading-to-perfect-storm-in-the-building-sector/F27OO3UQUGXBFGYZV75IRWGM3M
(might be paywalled)

Let hope FBU is this time able to play its hand properly ...




It's been reported that 94 per cent of the GIB market controlled by the GIB board, 89 per cent of the glass wool supply controlled by three firms, and just two companies control 85 per cent of the concrete industry.

...

"And one of the Jarden analysts Grant Swanepoel looked at Fletcher's dominance recently and found that it held 94 per cent of the share on GIB boards via Winstone Wallboards, 55 per cent of the cement market and 40 to 50 per cent of glass wool insulation. And Fletcher's Placemakers has about a quarter of the merchant market in terms of small to medium-sized buildings."

[Sideshow Bob]

Surprised, not surprised.....

'Error' behind violation of Gib policy | Otago Daily Times Online News (odt.co.nz) (https://www.odt.co.nz/business/error-behind-violation-gib-policy)

[alokdhir]

At current prices FBU yield is over 10% Gross ...Million dollar question ...how safe is the yield for next two years ?

[BlackPeter]

At current prices FBU yield is over 10% Gross ...Million dollar question ...how safe is the yield for next two years ?

Great question ... and probably anybody's best guess.

It appears they played their hand again really bad with the Gib bord saga. Instead of looking now like the white knights saving the NZ housing market with their Gib board monopoly by supplying (just) sufficient Gib board (even if its three times the world market price), they couldn't even manage the easy predictable building boom (building consent + 12 months) and look now more like the grinches who spoiled the current building boom.

Blatant incompetence.

Lets hope the market isn't punishing them boo bad. Kiwi building market seems to be easy to please as long as FBU is the supplier. Lets hope customers don't wake up from their slumber.

FBU just needs these customers happy to pay three times the world market price and not moaning for getting product 6 months later than anybody else. As long as they hang around, everything should be fine.

[Cyclical]

At current prices FBU yield is over 10% Gross ...Million dollar question ...how safe is the yield for next two years ?

I'm not really qualified to comment, as know very little about FBU, but I will anyway ;-)

We are now back to pre-covid pricing for this stock, a period in which the SP languished for about 18months after some losses if I recall correctly. What really pulled them out of the doldrums? Covid sugar rush money, low interest rates, property boom, large scale gov infrastructure spending...all that sort of stuff? I'm only guessing here, so correct me if I'm off the mark. Can't help but think this kind of industry is something of a ponzi scheme, with the next job helping to pay for completing the current one, which is all well and good when things are on the up... Time will tell, but can't see them maintaining a double figure yield in today's environment, and won't be surprised to see it get halved quick smart, and that may be an optimistic viewpoint...plenty of headwinds...I'll sit on the sidelines for now.

[Rawz]

The one good thing about the construction industry is it’s usually the first benefactor of fiscal stimulus once the economy goes into recession. I.e the govt of the day will announce a big multi billion dollar infrastructure spend

[winner69]

Sam and our Oliver going to sort Fletchers out

Fletcher Building meeting: Simplicity seeking answers to GIB board shortage

https://www.rnz.co.nz/news/national/469034/fletcher-building-meeting-simplicity-seeking-answers-to-gib-board-shortage

[stoploss]

Sam and our Oliver going to sort Fletchers out

Fletcher Building meeting: Simplicity seeking answers to GIB board shortage

https://www.rnz.co.nz/news/national/469034/fletcher-building-meeting-simplicity-seeking-answers-to-gib-board-shortage
Talking a big book but he can”t sell the shares and punish FBU , as Simplicity is an index fund so presume no matter how much he barks he will still be holding the shares ….

[BlackPeter]

Talking a big book but he can”t sell the shares and punish FBU , as Simplicity is an index fund so presume no matter how much he barks he will still be holding the shares ….

Well, it looks like he found another way to punish FBU:


Simplicity will never use Gib again and is instead importing four containers a month from Thailand and plans to do so for about the next decade in its 10,000-home plans.

from:

https://www.nzherald.co.nz/business/gib-crisis-75-businesses-seek-alternative-plasterboard-products-from-thai-importers

(may or may not be paywalled)

[freebee]

https://www.nbr.co.nz/hunters-corner/fletcher-buildings-financial-fumble/?utm_source=ActiveCampaign&utm_medium=email&utm_content=NBR+HEADS+UP%3A+Fletcher+Building+s+fi nancial+fumble&utm_campaign=NBR+Newsletter%3A

Not a subscriber but the headline says it all
Fletcher Building's financial fumble ANALYSIS: A $300m share buyback has left loyal shareholders worse off.

[glennj]

I like the idea of buybacks but FFS do it when the company is undervalued not over valued!

[Rawz]

Yes they (in hindsight) really buggered it up. Poor capital allocators

[alokdhir]

Maybe they can do another one now to make it right ...Surely they can spare another $ 300 mil ...which will get them 9% equity now then 6% before ..:D

[winner69]

Not one of Tim Hunters best pieces ..... but its full of emotion and probably what punters want to hear

Seems to have overlooked that shareholders ‘received’ $275m ……funny though is that those shareholders don’t know whether they sold into into the buyback or not …they just sold because they wanted to.

And Fletcher have achieved their EPS accretion …..though some might say that’s good for management bonuses.

Yes, FBU might be worth less (market cap) than when buyback started but that’s not because of the buyback is it.

[winner69]

When the buyback commenced FBU was trading at 1.7 times Book Value

Today its trading at 1.0 times Book Value

Don't think the buyback had anything to do this ..... and many unknown shareholders are $273m have cash in their pockets

[Rawz]

Cant go wrong buying FBU at or under book value?

[winner69]

Our Oliver first up on One News tonite about his visit to Fletchers with Sam.

One gets the impression that Ross Taylor wasn’t that interested and possibly has lost the enthusiasm for working for them. Maybe it’s Fletchers culture to wear our senior managers after a couple years.

Taylor been there coming up for 5 years ……becoming disinterested ….share price down from when he started …..time for a new CEO reckon.

PS - share price when he started about $7.00 ..... today $4.76


Another member of the unlucky club ..... might be great CEO but ill fortune follows them

[alokdhir]

Our Oliver first up on One News tonite about his visit to Fletchers with Sam.

One gets the impression that Ross Taylor wasn’t that interested and possibly has lost the enthusiasm for working for them. Maybe it’s Fletchers culture to wear our senior managers after a couple years.

Taylor been there coming up for 5 years ……becoming disinterested ….share price much the same as when started …..time for a new CEO reckon.

CEOs get disinterested for two reasons mainly meeting someone ...either they dont care or it doesn't matter ....dont care possible as he lost interest in job or already decided to move on ...or he didnt care about the meeting as it doesn't matter for his business which he thinks is doing fine ...

But as he has done good job so far ...he wont leave on low note ...he will leave when FBU over $ 7

[winner69]

CEOs get disinterested for two reasons mainly meeting someone ...either they dont care or it doesn't matter ....dont care possible as he lost interest in job or already decided to move on ...or he didnt care about the meeting as it doesn't matter for his business which he thinks is doing fine ...

But as he has done good job so far ...he wont leave on low note ...he will leave when FBU over $ 7

Nearly got to $8 bucks .... missed his opportunity to move on eh

[Balance]

Our Oliver first up on One News tonite about his visit to Fletchers with Sam.

One gets the impression that Ross Taylor wasn’t that interested and possibly has lost the enthusiasm for working for them. Maybe it’s Fletchers culture to wear our senior managers after a couple years.

Taylor been there coming up for 5 years ……becoming disinterested ….share price down from when he started …..time for a new CEO reckon.

PS - share price when he started about $7.00 ..... today $4.76


Another member of the unlucky club ..... might be great CEO but ill fortune follows them

It has been hell on Earth for Ross Taylor - came into FBU to clean up the mess.

Found the mess to be even worse than he could ever imagine.

Just when he thought things were improving, the Sky City CC fire happened.

Then, COVID & the lockdowns.

He probably has had enough and has better things to do than listen to gripes about gib shortage - which in a big part is thanks to Ardern’s omicron lockdown. The gib factory had to be closed.

[winner69]

It has been hell on Earth for Ross Taylor - came into FBU to clean up the mess.

Found the mess to be even worse than he could ever imagine.

Just when he thought things were improving, the Sky City CC fire happened.

Then, COVID & the lockdowns.

He probably has had enough and has better things to do than listen to gripes about gib shortage - which in a big part is thanks to Ardern’s omicron lockdown. The gib factory had to be closed.

Appreciate all the issues he has had to work through ….and doença good job

But he belongs to that club of managers that suffer ill fortune ….and it’s spooky but not surprising that it’s the share price that suffers over the long term.

FBU needs a lucky CEO

[bull....]

poor simplicity and nz shareholders association must have been told to f... off by fletcher building lol

Call for Fletcher Building chairman to resign, directors to seek re-election
NZ Shareholders Association chief executive Oliver Mander and KiwiSaver provider Simplicity (NZ) managing director Sam Stubbs have released a copy of a strongly-worded letter they have just sent to the company after an unsuccessful meeting on Friday

https://www.nzherald.co.nz/business/gib-crisis-call-for-fletcher-building-chairman-to-resign-directors-to-seek-re-election/4NQOWGZ57MR4JEQM33MGTL542M/

[winner69]

poor simplicity and nz shareholders association must have been told to f... off by fletcher building lol

Call for Fletcher Building chairman to resign, directors to seek re-election
NZ Shareholders Association chief executive Oliver Mander and KiwiSaver provider Simplicity (NZ) managing director Sam Stubbs have released a copy of a strongly-worded letter they have just sent to the company after an unsuccessful meeting on Friday

https://www.nzherald.co.nz/business/gib-crisis-call-for-fletcher-building-chairman-to-resign-directors-to-seek-re-election/4NQOWGZ57MR4JEQM33MGTL542M/


Letter here. http://www.equity.co.nz/files/2022%2006%2020%20FBU%20Letter.pdf

Seems Taylor OK in their eyes at the moment

[winner69]

Pretty telling chart from that letter to the Chair …..and basically covers duration as well

[Balance]

Pretty telling chart from that letter to the Chair …..and basically covers duration as well

They should try 10 years and 20 years charts.

[winner69]

I see there’s a couple of Fonterra Directors on the Fletcher Board …..and a couple of BNZ directors …..almost like an old boys club

Possibly says a lot

[Waltzing]

come on winner(n) the chart looks its still going d d d d own...

cant be all down to jib board .. or concrete blocks and steel bar..

whos building all those new suburbs anyway ...

could go under 400?

[Beagle]

They should try 10 years and 20 years charts.Agreed. There is a systemic problem of underperformance and lack of accountability with FBU that goes back a very very long way.
Interesting fact, go back ~ 25 years and the share price closed at $4.88 on 30/09/1997, higher than it closed today. Just as well nobody is pretending its a growth company LOL. At best its a tradeable cyclical.

Good on Oliver for having a go. I doubt anything will change at this old boys club.

[nztx]

come on winner(n) the chart looks its still going d d d d own...

cant be all down to jib board .. or concrete blocks and steel bar..

whos building all those new suburbs anyway ...

could go under 400?


How many builders will be left to build them ? :)

All dedicated FBU customers undoubtedly .. or maybe not now ?

How's FBU's Convention Centre Insurance fight going ?

[Waltzing]

NZTX It's Kiwi build going to save the day? there is a plan right .....?

[winner69]

Craig’s go OVERWEIGHT on FBU

Their valuation $7.11

Our modelling results show that, despite the headwinds, the outlook for NZ’s residential building sector looks supportive of Fletcher’s medium-to-long-term growth and suggests the market is currently undervaluing the stock,” Parker said.

https://businessdesk.co.nz/article/infrastructure/craigs-recommends-investors-be-overweight-fletcher-shares
Paywalled?

[sb9]

Craig’s go OVERWEIGHT on FBU

Their valuation $7.11

Our modelling results show that, despite the headwinds, the outlook for NZ’s residential building sector looks supportive of Fletcher’s medium-to-long-term growth and suggests the market is currently undervaluing the stock,” Parker said.

https://businessdesk.co.nz/article/infrastructure/craigs-recommends-investors-be-overweight-fletcher-shares
Paywalled?

Well timed with their investor day today.

[alokdhir]

Craig’s go OVERWEIGHT on FBU

Their valuation $7.11

Our modelling results show that, despite the headwinds, the outlook for NZ’s residential building sector looks supportive of Fletcher’s medium-to-long-term growth and suggests the market is currently undervaluing the stock,” Parker said.

https://businessdesk.co.nz/article/infrastructure/craigs-recommends-investors-be-overweight-fletcher-shares
Paywalled?

If FBU can maintain even current dividend of 36 Cents during this turbulent time ...that alone will take SP to $ 6.50 ...

IMO they got hammered more then required so maybe .....

[sb9]

If FBU can maintain even current dividend of 36 Cents during this turbulent time ...that alone will take SP to $ 6.50 ...

IMO they got hammered more then required so maybe .....

Another 18c final for this FY is surely given or could get better that to 20c. The current duo of CEO and CFO looks to be stabilizing the company to be more of Blue chip with decent growth combined with better yield for shareholders.

[alokdhir]

Another 18c final for this FY is surely given or could get better that to 20c. The current duo of CEO and CFO looks to be stabilizing the company to be more of Blue chip with decent growth combined with better yield for shareholders.

Their recent past is not giving confidence to the market ...they need to show more consistency of dividends to get better valuations and respect ...but bad sentiment did help me get some 4.66 ...though I was very shaky doing so ...thats because they keep goofing ...lol

[winner69]

Their recent past is not giving confidence to the market ...they need to show more consistency of dividends to get better valuations and respect ...but bad sentiment did help me get some 4.66 ...though I was very shaky doing so ...thats because they keep goofing ...lol

I’m buying heaps on open today ….not feeling shaky

[alokdhir]

I’m buying heaps on open today ….not feeling shaky

Did u actually buy heaps over $ 5.03 ...then on Monday maybe will make heaps too ...

U not worried about impending slowdown ...its an economy dependent stock ....or in your opinion its done its hardwork already ?

[peat]

guidance re-iterated (apart from those pesky extraordinaries)
so 7% or higher yield seems reliable for one year at least and probably more.

[nztx]

NZTX It's Kiwi build going to save the day? there is a plan right .....?


Well the Sunday Rag out of Welly seem to be doing a dance around a recessionary fire .. from that
Jib issues will probably solve themselves, Demand for the four walls unless state sponsored will
probably fall on it's sword, like the market is showing signs of withering, while interest rates
& inflation rapidly head in the opposite direction ;)

Any new Convention or large Sports Centres on the future spectrum to get fired up about
(apart from a project to build a large cage around Mahuta to stop her being washed away
by a fast flowing flood from the three great waters) ? ;)

[peat]

13968
historically there is a lot of support around this area five and high fours.
Last months candle had a long wick , we're only half way through this month but looking similar so far. That said there is massive resistance up at 8 so it is going to be difficult to double your money.
And yes we probably in for a recession at some point , but I dont think we are in one yet.

[bull....]

today

Commerce Commission to reveal draft report on building supply market

https://www.stuff.co.nz/business/300653721/commerce-commission-to-reveal-draft-report-on-building-supply-market

[Balance]

today

Commerce Commission to reveal draft report on building supply market

https://www.stuff.co.nz/business/300653721/commerce-commission-to-reveal-draft-report-on-building-supply-market


Just in time for the plasterboard crisis - which is now over!

https://www.stuff.co.nz/business/129468354/gib-shortage-over-due-to-construction-industry-slowdown

Pathetic how slow governments move to control or remove oligopolies and monopolies.

Remember how it took total embarrassment in Korea for Helen Clark to finally strip Telecom of its monopoly?

[winner69]

Draft report 383 pages balance

That's a lot of words eh

What will come of the effort .... like last time zilch

[Rawz]

Do the get paid by the page or something?

Often you can say more with less

[bull....]

market likes the announcement

[sb9]

Some handsome FY divvy to look out for when they announce numbers in couple of weeks.

[winner69]

Always interesting to see how ready mix concrete production is going - also a reasonable indicator of construction activity

Last 2 quarters have been negative v pcp -- so the touted boom may not be the case - things slowing down

And production only 6% more than June 2019 (3 years ago)

Long term trend below. (Source Stats NZ)

Need to remind ourselves how things can go during bad times like post 2008

[Habits]

Always interesting to see how ready mix concrete production is going - also a reasonable indicator of construction activity

Last 2 quarters have been negative v pcp -- so the touted boom may not be the case - things slowing down

And production only 6% more than June 2019 (3 years ago)

Long term trend below

Need to remind ourselves how things can go during bad times like post 2008

This is a pretty good encompassing measure Win, a bit like the truckometer.... this is the first time I have heard it mentioned

[sb9]

$6 next week by this time?

[bull....]

$6 next week by this time?

be surprised if they dont report strong numbers next week. must have made some serious money from gib the last yr

[bull....]

see fb getting a write up today paper

Forsyth Barr notes that stocks like building supplies and construction company Fletcher Building (https://www.stuff.co.nz/business/127787058/fletcher-building-firsthalf-profit-jumps-41-outlook-very-strong) and retirement village operator Summerset Holdings (https://www.stuff.co.nz/business/127869236/summerset-reports-record-annual-profit-as-it-benefits-from-strong-housing-market) have seen drops of more than 30% from their peak, even though analysts do not expect a significant change of tone.

In a report this week, analysts at Craigs Investment Partners noted Fletcher Building shares looked cheap given their relative P/E valuation.

https://www.stuff.co.nz/business/opinion-analysis/129542915/if-youre-investing-in-shares-right-now-heres-how-you-might-determine-if-they-are-good-value

[alokdhir]

FBU results tomorrow ....Already flagged as superb at ASM ...Dividend will be 20 Cents ? Or more .

Next year 65 cents eps is consensus analyst call ...It sure looks cheap but it has past reputation of inconsistency which maybe keeping it down

Maybe gets rerated above $ 6 ...their last buyback price !!!

[bull....]

FBU results tomorrow ....Already flagged as superb at ASM ...Dividend will be 20 Cents ? Or more .

Next year 65 cents eps is consensus analyst call ...It sure looks cheap but it has past reputation of inconsistency which maybe keeping it down

Maybe gets rerated above $ 6 ...their last buyback price !!!

another buy-back would be good

[alokdhir]

another buy-back would be good

Thats a very distinct possibility ...as they have the funds ...rather then give special dividend etc ...use another $ 300 mil to buy and extinguish shares thus making it EPS positive . That should fire up SP better

[sb9]

I think final divvy of 20c plus buyback of some proportion are two very highly likely scenarios from tomorrow's announcement.

[BlackPeter]

another buy-back would be good


Thats a very distinct possibility ...as they have the funds ...rather then give special dividend etc ...use another $ 300 mil to buy and extinguish shares thus making it EPS positive . That should fire up SP better

Actually - I would prefer them to spend their time and effort into improving their business (i.e. sustainably increasing their earnings) rather than playing around with trying to manage their share price. But I guess this is probably the difference between an investor (who is invested) and a trader (who buys and flogs off whatever makes them money)

[winner69]

Actually - I would prefer them to spend their time and effort into improving their business (i.e. sustainably increasing their earnings) rather than playing around with trying to manage their share price. But I guess this is probably the difference between an investor (who is invested) and a trader (who buys and flogs off whatever makes them money)

BP, financial engineering probably 'boosts' senior management incentives / bonus payments .... looking after themselves and hoping 'investors' don't notice

That''s why the Total Shareholder Returns TSR calculation includes buy backs and not just capital gain and dividends ... sneaky eh

[alokdhir]

BP, financial engineering probably 'boosts' senior management incentives / bonus payments .... looking after themselves and hoping 'investors' don't notice

That''s why the Total Shareholder Returns TSR calculation includes buy backs and not just capital gain and dividends ... sneaky eh

Also doing investor friendly things dont take much time and brain power of top management to distract them from doing their job ...lol

They need to signal to investors that they care and will do everything possible to maximise their returns ...which not only includes working well but some investor friendly measures also . Best way to improve their tarnished image due to past mismanagements

[winner69]

At least the FBU share price is higher than the $4.80 they raised $750m at a few years ago.

Good plan .... raise zillions so they an have regular buy backs in the years after

[sb9]

Also doing investor friendly things dont take much time and brain power of top management to distract them from doing their job ...lol

They need to signal to investors that they care and will do everything possible to maximise their returns ...which not only includes working well but some investor friendly measures also . Best way to improve their tarnished image due to past mismanagements

Absolutely, the current Board along with CFO and CEO combo seem to be doing that bit very well as of now. Am particularly been impressed by CFO Hamish work so far.

[winner69]

See the last buyback saw shares being bought at an average of about $6.67 another share buy back will be great news .... and guranteed to get the share price back to 7 bucks early next year

But at least the $300m or whatever will be counted in TSR

[alokdhir]

https://www.nzherald.co.nz/business/fletcher-building-tipped-to-increase-annual-earnings-house-building-strength-projected/R6Q5KLBMLYXXSCNDVLNPPIRUIE/

[bull....]

I think final divvy of 20c plus buyback of some proportion are two very highly likely scenarios from tomorrow's announcement.

22cps div makes 40cps full yr a 10% gross yield :t_up:

[alokdhir]

22cps div makes 40cps full yr a 10% gross yield :t_up:

With next year they guiding to add $ 100m + to EBITA ...shud make divvy go to 45 Cents ...then makes it look 11% Gross at todays price ...lol

If anyone buys today then he gets 22 + 20 + 25 cents in next 13 months ....wow

[RTM]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/397072/376674.pdf

Happy with this. Dividend up nicely...I guess somewhat matching inflation.
Just need to take care not to get overexposed to these guys...as they can disappoint as well.
Been in and out over the years. Always happy with the outcome...as they have offered attractive entry points as well as exits.

4% of portfolio. Holding for now.

[bull....]

With next year they guiding to add $ 100m + to EBITA ...shud make divvy go to 45 Cents ...then makes it look 11% Gross at todays price ...lol

If anyone buys today then he gets 22 + 20 + 25 cents in next 13 months ....wow

your right , good money making thinking. although dependant on activity staying reasonable.

I see no buy- back , probably because they have reinvested the strong cashflows into residential. makes sense as that is where the margin is and the growth

[winner69]

Can't go wrong buying FBU today

Only have to start thinking about selling when share price gets over 9 bucks heading to 10 bucks (again)

[sb9]

22cps div makes 40cps full yr a 10% gross yield :t_up:

Nice surprise on divvy, wasn't expecting such big lift in final. Suppose they've keep the s/holders happy after such a big lift in earnings. Good to see balance sheet in great shape. Should at least $6 on those set of numbers and hefty yield.

[LaserEyeKiwi]

Fantastic result!

Those with a dollar cost averaging strategy should do well long term in this one (which is what I have been doing this year).

[Waltzing]

And the Crowd goes ....

sorry the

Market goes ... its was great? no that great ......usually you would buy the bounce ....but not this time...

[winner69]

And the Crowd goes ....

sorry the

Market goes ... its was great? no that great ......usually you would buy the bounce ....but not this time...

Hey misery waltz …result in line with expectations …divie prob a bit higher than anticipated

Don’t forget share price 10% higher than a couple of weeks ago

It’ll still go up when gurus start warming up their abacus and upping targets

[RTM]

He should be pleased...can buy more / some at bargain basement prices !
Where are you SailorRob ?

[Waltzing]

Well Winner() as soon as the sun shines and the rain disappears and surfs up it will be summer soon...

your right nothing to moan about ... no nuclear winter yet...

[peat]

hopefully the lack of regular extraordinaries can continue , the company has been good at making money, but also giving back large chunks with write-offs etc
they were almost ahead of the curve with building the new gib factory, but not quite ahead enough, and now my guess is it will come on stream just as its not needed so much - what year was the Empire State Building completed?
I got mine at $7 so still underwater, because of their history I didnt have the courage to double at $5 because as RTM says they can surprise. . should still consider it i guess.... hmmmm we'll see. will enjoy the yield


ps I thought the Empire State Building was completed in 1929 but no, actually it was built in 1930-1931 - but you got my drift.....

[dibble]

Plenty to go wrong, as ever, but the sheer scale of infrastructure changes required for various climate "impacts" over next 20+ years offers this beast a lot of revenue, should they choose/be able to tap into more than their fair share.

Guess Im expecting their next international foray any month now, proven way to get rid of surplus cash.

[Gunner]

I work for Fletchers. The culture has changed with the CEO from.about 4 years ago. They are much more risk adverse and have better systems and controls in place to prevent debacles like the justice precinct and chch airport hotel etc happening again. There is better focus on the higher margin areas of the business. Long term is hard to predict but the next 12 months will be a good one.

[Rawz]

I work for Fletchers. The culture has changed with the CEO from.about 4 years ago. They are much more risk adverse and have better systems and controls in place to prevent debacles like the justice precinct and chch airport hotel etc happening again. There is better focus on the higher margin areas of the business. Long term is hard to predict but the next 12 months will be a good one.

Cheers Gunner. Good to know regarding the culture, it’s incredibly important

[bull....]

cheap labour on the way
labour relaxing the rules around immigration means immigrants can be employed significantly cheaper than local people.

[bull....]

geez more bad news on the construction front. lucky fbu are fully booked for the next 12 mths , who knows after that

Worrying sign Australian construction industry is heading for a bust
Concerning signs
Since peaking in March 2021, dwelling approvals have fallen by 29 per cent as of the latest data for June this year. After hitting an all-time record high in June 2021, dwelling commencements are following approvals down, falling 27.5 per cent as of the March quarter

https://www.news.com.au/finance/business/other-industries/worrying-sign-australian-construction-industry-is-heading-for-a-bust/news-story/8d26b099a7ee535c0775a11ff0e69c31

[Rawz]

FBU has a gross dividend yield of 11%

I own a couple of shares, held since the March 2020 crash.

I wonder how sustainable the dividend is? Anyone with industry or FBU knowledge have any thoughts?

I remember FBU management saying it’s hard to make money in a boom, or something along those lines. Seems illogical but sometimes that is the way with quoting and input costs/margins etc. so yes the boom
Is over and we are apparently heading into a recession(?).. but FBU will still generate income. And anything severe will be quickly followed by a multi billion $ govt infrastructure package.

There is potentially a lot of upside holding these for 5 years. If FBU could get CONSISTENT earnings it could be a $10 share

[BlackPeter]

FBU has a gross dividend yield of 11%

I own a couple of shares, held since the March 2020 crash.

I wonder how sustainable the dividend is? Anyone with industry or FBU knowledge have any thoughts?

I remember FBU management saying it’s hard to make money in a boom, or something along those lines. Seems illogical but sometimes that is the way with quoting and input costs/margins etc. so yes the boom
Is over and we are apparently heading into a recession(?).. but FBU will still generate income. And anything severe will be quickly followed by a multi billion $ govt infrastructure package.

There is potentially a lot of upside holding these for 5 years. If FBU could get CONSISTENT earnings it could be a $10 share

FBU is a difficult case. Long plagued by a quite inept board and management with a history of losing money when times are good and losing money when times are bad. Still - they always maintained a quasi monopoly position on many building products (like the recent Gib board crisis just again demonstrated) which allowed them to suck money from captive markets in the up and down phases. Not sure what in our collective psyche makes us to buy overpriced and under-speced gib board (and lots of other building products which FBU happily sells at mediocre quality but ways too expensive) over competitive offers from overseas markets. I guess its not FBU's fault that the NZ market is that dumb and prefers high prices over good quality.

As you see - no love lost with them, and certainly not a company to be proud of, but still - in the current market conditions I assume that they will find it hard to lose money in the short and medium term future, no matter what.

Holding a medium sized parcel, and not being proud of it.

[Gunner]

FBU is a difficult case. Long plagued by a quite inept board and management with a history of losing money when times are good and losing money when times are bad. Still - they always maintained a quasi monopoly position on many building products (like the recent Gib board crisis just again demonstrated) which allowed them to suck money from captive markets in the up and down phases. Not sure what in our collective psyche makes us to buy overpriced and under-speced gib board (and lots of other building products which FBU happily sells at mediocre quality but ways too expensive) over competitive offers from overseas markets. I guess its not FBU's fault that the NZ market is that dumb and prefers high prices over good quality.

As you see - no love lost with them, and certainly not a company to be proud of, but still - in the current market conditions I assume that they will find it hard to lose money in the short and medium term future, no matter what.

Holding a medium sized parcel, and not being proud of it.

The board and management are very good and has been since 2017/18. Back then there was a lot of legacy projects that were hermeraging cash. Justice precinct, chch airport hotel, sky city convention centre etc. The risk tolerance has been scaled back alot and there are better checks in place now to prevent it happening again. The industry is very cyclical though and with a potential recession on the way could keep a lid on growth. High inflation is bad for a construction company but fletchers is probably diverse enough to limit the impact. High margin in supplies such as GIB and a near monopoly.

[BlackPeter]

The board and management are very good and has been since 2017/18. Back then there was a lot of legacy projects that were hermeraging cash. Justice precinct, chch airport hotel, sky city convention centre etc. The risk tolerance has been scaled back alot and there are better checks in place now to prevent it happening again. The industry is very cyclical though and with a potential recession on the way could keep a lid on growth. High inflation is bad for a construction company but fletchers is probably diverse enough to limit the impact. High margin in supplies such as GIB and a near monopoly.

Well, I guess anybody is entitled to their opinion. Still curious, how you measure them being "very good"?

How would you assess management and control leading to the fire in the Auckland convention centre? Hey, this is what well run building companies do ... burn down their own projects by not following basic safety regulations :) : Outstanding? Yes - but very good? ... not so sure.

How well did they do in creating a industry choking GIB board crisis? Agreed - if you would have wanted to choke the NZ building industry, than they did well. However assuming that even most monopolists are interested in doing good business, have happy customers and make money? Not so sure I would call their handling "very good".

But I guess the GIB board crisis showed as well, that FBU basically has all the NZ councils in its pocket. Specifying a particular brand of gib board - quite frightening in a country supposed to have a free market. Maybe this is an achievement of board and management (though likely a historic issue), but whether this is what would help them in the long run (there might be at some stage a government fighting our concealed corruption) - not so sure.

Anyway - for NZ they are clearly a dinosaur. Not particularly well adapted to a changing environment, but still strong enough to resist the inevitable change to progress fast. Let's use this power as long as it hangs around, but just take care you don't fall in love with them ... they have a long history of disappointing shareholders.

[Gunner]

Well, I guess anybody is entitled to their opinion. Still curious, how you measure them being "very good"?

How would you assess management and control leading to the fire in the Auckland convention centre? Hey, this is what well run building companies do ... burn down their own projects by not following basic safety regulations :) : Outstanding? Yes - but very good? ... not so sure.

How well did they do in creating a industry choking GIB board crisis? Agreed - if you would have wanted to choke the NZ building industry, than they did well. However assuming that even most monopolists are interested in doing good business, have happy customers and make money? Not so sure I would call their handling "very good".

But I guess the GIB board crisis showed as well, that FBU basically has all the NZ councils in its pocket. Specifying a particular brand of gib board - quite frightening in a country supposed to have a free market. Maybe this is an achievement of board and management (though likely a historic issue), but whether this is what would help them in the long run (there might be at some stage a government fighting our concealed corruption) - not so sure.

Anyway - for NZ they are clearly a dinosaur. Not particularly well adapted to a changing environment, but still strong enough to resist the inevitable change to progress fast. Let's use this power as long as it hangs around, but just take care you don't fall in love with them ... they have a long history of disappointing shareholders.

I work for them. The safety culture and requirements is the industry standard in nz imo. They put safety above all else which cannot be said for most contractors The fire was caused by a sub is my understanding although that may be wrong.

The GIB issue cant be blamed on fletchers. They are in the business of maximising returns. The market needs to respond and likely the government too where the market is failing due to NZ small population.

The businesses they own are the backbone of construction in nz. Construction isnt going anywhere. Firth, Humes, Winstones, Higgins, Mico, placemakers, golden bay cement, pink bats, GIB etc etc.

[LaserEyeKiwi]

Have a small position, but cant ignore that the house building market is currently imploding, which will undoubtedly lead to less demand for Fletcher products from the home building industry. Its a boom/bust cyclical industry and fletchers will ride through the cycle, but be prepared for a possible period of negative growth for a year or two.

[BlackPeter]

I work for them. The safety culture and requirements is the industry standard in nz imo. They put safety above all else which cannot be said for most contractors The fire was caused by a sub is my understanding although that may be wrong.


Thanks for disclosing this.

On the other hand ... while working at some place makes it easier to see the fine details in a small part of the company, it might not help (depending on your job, of course) to see the big picture.

Excluding contractors from the safety regime appears as well a funny way to treat safety ... not even sure this would be legal? In the organisations I used to work had any contractors accessing the site to acknowledge and adhere to all our safety rules. Frightening if this would be not the case with FBU, since it would indiscriminately endanger employees, contractors and anybody else around.

So - no excuse at all if it was a contractor setting the site on fire :) ;




The GIB issue cant be blamed on fletchers. They are in the business of maximising returns. The market needs to respond and likely the government too where the market is failing due to NZ small population.


Well, any prudent and well managed market monopolist would have acted differently. If I have a dependent market and want to keep this dependency, then I make sure that there is sufficient product around to make customers happy. Fletcher didn't. They operated like a bunch of bureaucrats in a centrally planned economy a la Russia or China, not interested in their customers. Not their fault? Who cares ... they easily could have provided sufficient gib board supply (e.g. by importing it themselves), instead of letting their clients sweat. Inflexibility and finger pointing instead of forecasting issues and proactive problem solving is not how I would recognise a good management.

Fletchers pity-ful behaviour resulted in plenty of bad publicity (yes, there is such a thing) and as well plenty of market education that Fletchers products are overpriced and alternatives available. Ouch.




The businesses they own are the backbone of construction in nz. Construction isnt going anywhere. Firth, Humes, Winstones, Higgins, Mico, placemakers, golden bay cement, pink bats, GIB etc etc.

Well, yes - that's the thing with dinosaurs ... first they die slowly (due to their mass) and then they are dying very fast (due to an increasing volume of dead weight). It is a small market, as you say ... and one really good competitor could easily empty Fletchers plate. I am sure the market is more than ready for a change.

[Gunner]

Thanks for disclosing this.

On the other hand ... while working at some place makes it easier to see the fine details in a small part of the company, it might not help (depending on your job, of course) to see the big picture.

Excluding contractors from the safety regime appears as well a funny way to treat safety ... not even sure this would be legal? In the organisations I used to work had any contractors accessing the site to acknowledge and adhere to all our safety rules. Frightening if this would be not the case with FBU, since it would indiscriminately endanger employees, contractors and anybody else around.

So - no excuse at all if it was a contractor setting the site on fire :) ;



Well, any prudent and well managed market monopolist would have acted differently. If I have a dependent market and want to keep this dependency, then I make sure that there is sufficient product around to make customers happy. Fletcher didn't. They operated like a bunch of bureaucrats in a centrally planned economy a la Russia or China, not interested in their customers. Not their fault? Who cares ... they easily could have provided sufficient gib board supply (e.g. by importing it themselves), instead of letting their clients sweat. Inflexibility and finger pointing instead of forecasting issues and proactive problem solving is not how I would recognise a good management.

Fletchers pity-ful behaviour resulted in plenty of bad publicity (yes, there is such a thing) and as well plenty of market education that Fletchers products are overpriced and alternatives available. Ouch.



Well, yes - that's the thing with dinosaurs ... first they die slowly (due to their mass) and then they are dying very fast (due to an increasing volume of dead weight). It is a small market, as you say ... and one really good competitor could easily empty Fletchers plate. I am sure the market is more than ready for a change.

Your comment on safety shows you have no idea about construction or the current fletcher culture. All subs on site adhere to the safety plan. Fletchers safety culture and procedures are second to none but of course sometimes human factors creep in.

Fletchers is relatively big in nz but they're not dieing. They can easily sell parts of the business. They "right size" when they deem nessesary. The next 12 months will be good results.

I'm all for competition. It's good for the market and NZ.

[winner69]

F23 EBIT 855m or better guidance confirmed

And a refreshed sustainability strategy which includes a new commitment to achieve a target of net zero carbon emissions by 2050 will give them a few extra brownie points with fund managers …and maybe recognised in future share price

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBI/401121/381837.pdf

[BlackPeter]

F23 EBIT 855m or better guidance confirmed

And a refreshed sustainability strategy which includes a new commitment to achieve a target of net zero carbon emissions by 2050 will give them a few extra brownie points with fund managers …and maybe recognised in future share price

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBI/401121/381837.pdf

And hey ... cool waiting music for their AGM ;) ; People who pick jazz can't be bad ...

[BlackPeter]

... on the other hand - Ross talks a lot about good sounding but fuzzy things like shaping a better world, ESG goals and safety, biodiversity and even lots of donations and sponsorships ... do I sense a bad conscience?

Do they have their eyes still firm on the ball?

[BlackPeter]

Apart from my grandchild popping into the virtual meeting (and sorry - he had priority) not too much more to report from me. Winner gave you already the important financials ... and questions (as far as I record them) have been generally in the categories - specific environmental concerns, investment strategies and the usual nonsense. Ah yes, one shareholder asked how the Auckland convention centre is coming along (a good question) and the answer was somehow long winded and spongy, but I think I heard something like "close to finish", whatever this means.

Anybody without distraction who could report more about the meeting?

[bull....]

F23 EBIT 855m or better guidance confirmed

And a refreshed sustainability strategy which includes a new commitment to achieve a target of net zero carbon emissions by 2050 will give them a few extra brownie points with fund managers …and maybe recognised in future share price

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBI/401121/381837.pdf

nice update
having planning in place if things go to custard is smart planning and with a balance sheet to pick up distressed assets if they become available is great news

[Recaster]

A bit of a look at FBU:

https://recastinvestor.substack.com/p/update-fletcher-building-fbunzx-fbuasx

[peat]

A bit of a look at FBU:

https://recastinvestor.substack.com/p/update-fletcher-building-fbunzx-fbuasx

interesting thanks, seems like an objective analysis suggested real earnings might be as high as 57cps but highlights that earnings are unstable ,the decline in operating cash flow and the reduction in cash are a little concerning but the company has been buying back shares.

[winner69]

Stats NZ report Building Activity in September quarter up 34% on last year

Year ended Sept increase has been 20% - volume up 5% and prices 15%

Activity levels remain a all time record highs

No sign of the touted slow down yet

FBU must be doing well

[bull....]

FBU going to to disrupt the retirement sector

New retirement village model shares capital gains with residents

https://www.stuff.co.nz/life-style/homed/retirement/130665523/new-retirement-village-model-shares-capital-gains-with-residents

fletchers could end up being the biggest retirement sector player

[BlackPeter]

FBU going to to disrupt the retirement sector

New retirement village model shares capital gains with residents

https://www.stuff.co.nz/life-style/homed/retirement/130665523/new-retirement-village-model-shares-capital-gains-with-residents

fletchers could end up being the biggest retirement sector player

Sounds like hey offer less and charge less. There is a market for backpacker accommodation as well as for cruise ship experience ... what's the problem?

[Ricky-bobby]

These guys are one to watch over the coming years. They are thinking out of the box and developing some real interesting revenue streams. It definitely feels like a different company to what they were a couple years ago.

[Jaa]

FBU going to to disrupt the retirement sector

New retirement village model shares capital gains with residents

https://www.stuff.co.nz/life-style/homed/retirement/130665523/new-retirement-village-model-shares-capital-gains-with-residents

fletchers could end up being the biggest retirement sector player

A lot to like here, less fees, capital growth and connected with the rest of the community. Check out their first village at Red Beach (https://vividliving.co.nz/).

Read once that the key to a happy life was having a friend from every decade. Hard to do that when warehoused away at Ryman et al.

[percy]

A lot to like here, less fees, capital growth and connected with the rest of the community. Check out their first village at Red Beach (https://vividliving.co.nz/).

Read once that the key to a happy life was having a friend from every decade. Hard to do that when warehoused away at Ryman et al.
Reads well to me.
Red Beach would suit me.
Have stayed at the Top 10 there.Very nice.

[bull....]

A lot to like here, less fees, capital growth and connected with the rest of the community. Check out their first village at Red Beach (https://vividliving.co.nz/).

Read once that the key to a happy life was having a friend from every decade. Hard to do that when warehoused away at Ryman et al.

exactly being surrounded by younger more able people is the key to a long life. anyway red beach looked quite nice and care is available as needed

[winner69]

It’s only another $150m for the Convention Centre but no worries …it’s a Significant Item so doesn’t count

So all hunky dory

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/404201/385776.pdf

[BlackPeter]

It’s only another $150m for the Convention Centre but no worries …it’s a Significant Item so doesn’t count

So all hunky dory

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/404201/385776.pdf

Don't underestimate their progress! I guess only three years after setting their building on fire they report already that they finished the demolition - I guess really, these guys rock!

Really good company. Wondering whether they use No 8 wire for fixing their issues?

Maybe an investment idea? No 8 wire? STU?

[clip]

We had a fire at the office nearly 1 year ago to the day, 10 fire engines, lots of damage etc. After dealing with all the insurance, discovery of what's been affected, all sorts of things, we have just started demolition this week - this is for a building that fits 125 people. So potentially 3 years for a building that size is actually realistic, with a couple of lockdowns in the way etc.

[bull....]

see FBU just brought 2 new businesses this week .

[kiora]

It’s only another $150m for the Convention Centre but no worries …it’s a Significant Item so doesn’t count

So all hunky dory

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/404201/385776.pdf

This bit interesting as well ?
"“In our Residential and Development division, house prices and margins are in line with
expectations at c.10% below the peak in late 2021. House sales volumes remain lower than plan,
with strong customer visitation levels into Fletcher Living show-homes, but with lower conversion
rates. In certain developments, we have therefore slowed our build rates, and we have not been
taking on new land for some time, to ensure we manage working capital tightly.”"

[Paint it Black]

It’s only another $150m for the Convention Centre but no worries …it’s a Significant Item so doesn’t count

So all hunky dory

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/404201/385776.pdf

Agree the report is a little misleading saying all is rosy meeting projections with a slightly hidden bracketed caveat excluding significant items. Many readers could miss the importance of this by not understanding the significant items are in fact $150 million extra costs not covered by insurance. This is big money and one needs to understand why Fletchers couldn't negotiate this better. Very disappointing in my view the whole Convention Centre debacle notwithstanding the fire with design and construction cost and time overruns.

[winner69]

Jenny Ruth not too impressed with Fletchers disclosure …..saying it’s not really credible Taylor et all didn’t really know about this to the other day

I’d say more than expected $150m cash to be spent next few years on this fix …but doesn’t really matter as it’s Significant and doesn’t count.

Fletcher only just now aware of $150m SkyCity cost blowout

https://businessdesk.co.nz/article/infrastructure/fletcher-only-just-now-aware-of-150m-skycity-cost-blowout

Maybe paywalled ..better take out a sub

[bull....]

good results from boral in aus today even saying the outlook was not to bad