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bigbruce

12-10-2023, 12:06 AM

May be grounds for class action for those investors who purchased shares after release of results and webcast 16th Aug 23 and 21st Sept 23 where CEO interviewed on Shareies,
both occasions CEO stated product OK and pointed to installation issues as east coast has no issues.

Ricky-bobby

12-10-2023, 08:42 AM

There will be a big dip in sp, then it will recover… look at sky city.

Toddy

12-10-2023, 09:45 AM

True. But it may take years if everyone Lawyers up.

Balance

12-10-2023, 09:48 AM

Isnt Fletchers the manufacture of these busted pipes? and the installer is saying its faulty i.e. Fletchers billion dollar problem?

Will be FBU's problem if it is Iplex's manufacturing fault.

There are two sides to the dispute so likely to go to court, one suspects.

Lawyers will be rubbing their hands with glee while affected homeowners suffer.

https://www.watoday.com.au/national/western-australia/bgc-braces-for-700-million-plumbing-bill-over-deluge-of-faulty-pipes-20231011-p5ebjf.html

In a statement, Fletcher Building claimed its own investigation and extensive independent testing pointed to installation as the cause of the burst pipes.

“We have also collected evidence from more than 270 individual inspections of homes in Perth constructed by 12 different builders and plumbers,” a spokesman said.

“This has identified significant installation failures, in breach of Australian Standards, the Plumbing Code and installation guidelines.

“These installation failures are the type that generate the plumbing failures that have been experienced by homeowners.”

Toddy

12-10-2023, 09:57 AM

A very scary article. I suspect that FBU will be on a trading halt for an extended period.

Rawz

12-10-2023, 10:17 AM

Absolute nightmare. Lucky FBU are use to dealing with these type of things lol

Poet

12-10-2023, 10:23 AM

According to Tim Hunter in the NBR

''Fletcher has had a copy of BGC’s investigation report since June 2.''

So another potential source of (class action?) litigation from disgruntled purchasers of shares in the period between 2 June and yesterday's trading halt.

Jeez, maybe the solution here is an increase in Directors' fees.

whatsup

12-10-2023, 10:23 AM

Will be FBU's problem if it is Iplex's manufacturing fault.

There are two sides to the dispute so likely to go to court, one suspects.

Lawyers will be rubbing their hands with glee while affected homeowners suffer.

https://www.watoday.com.au/national/western-australia/bgc-braces-for-700-million-plumbing-bill-over-deluge-of-faulty-pipes-20231011-p5ebjf.html

In a statement, Fletcher Building claimed its own investigation and extensive independent testing pointed to installation as the cause of the burst pipes.

“We have also collected evidence from more than 270 individual inspections of homes in Perth constructed by 12 different builders and plumbers,” a spokesman said.

“This has identified significant installation failures, in breach of Australian Standards, the Plumbing Code and installation guidelines.

“These installation failures are the type that generate the plumbing failures that have been experienced by homeowners.”

How possible can a installer be at fault when they most probably have been installing all brands of plumbing pipes, this appears to me to be a failure of the type of plumbing just like the piping that was installed in the majority of N Z homes in the 1980's that split or had pin hole fractures after 10 years from installation.

Biscuit

12-10-2023, 10:33 AM

How possible can a installer be at fault when they most probably have been installing all brands of plumbing pipes, this appears to me to be a failure of the type of plumbing just like the piping that was installed in the majority of N Z homes in the 1980's that split or had pin hole fractures after 10 years from installation.

Wouldn't surprise me if it was an installation problem if Aussie plumbers are anything like NZ plumbers. We had a shower installed which immediately leaked into the wall. After much back-and-forth, it was clearly the installation at fault. Reinstalled by another plumber recommended by the manufacturer, who also incorrectly installed it. Don't like to generalize but...

Balance

12-10-2023, 10:44 AM

Wouldn't surprise me if it was an installation problem if Aussie plumbers are anything like NZ plumbers. We had a shower installed which immediately leaked into the wall. After much back-and-forth, it was clearly the installation at fault. Reinstalled by another plumber recommended by the manufacturer, who also incorrectly installed it. Don't like to generalize but...

Interesting that the problems are localised around Western Australia?

And BGC is in deep strife for taking on too many projects and being unable to deliver.

Have they been cutting corners and using unskilled workers?

Lawyers must be licking their lips at the tens of millions of dollars of fees going their way!

kiora

12-10-2023, 10:52 AM

Wouldn't surprise me if it was an installation problem if Aussie plumbers are anything like NZ plumbers. We had a shower installed which immediately leaked into the wall. After much back-and-forth, it was clearly the installation at fault. Reinstalled by another plumber recommended by the manufacturer, who also incorrectly installed it. Don't like to generalize but...

I second this
4 leaks & potential leaks on our new build from plumbers FORGETTING to glue or crimp joins,just crap

Luckily caught 1 before the water was turned on & others under the house(not a concrete pad thank goodness) so no damage

Have to wonder if there are other issues yet to surface.
The issue in our house was is even if the joints are not crimped the O ring will seal the joint temporally until it gives out then joints leak or burst

bigbruce

12-10-2023, 12:37 PM

https://www.watoday.com.au/national/western-australia/bgc-braces-for-700-million-plumbing-bill-over-deluge-of-faulty-pipes-20231011-p5ebjf.html

From above link, some issues Victoria also
"Gray said similar faults had occurred on homes in Victoria, and he expected the number of reports to rise.

“We talk about it being the tip of the iceberg, because we think it’s only a matter of time before the issue spreads and people start to pick up and notice that across the rest of Australia,” he said."

Toddy

12-10-2023, 01:30 PM

If FBU had to sell of a few business units in the future to fund potential liabilities, which ones would you pick to sell first?

winner69

12-10-2023, 01:35 PM

If FBU had to sell of a few business units in the future to fund potential liabilities, which ones would you pick to sell first?

Iplex?….…..

whatsup

12-10-2023, 02:10 PM

Toddy

12-10-2023, 02:27 PM

Also, once a building inspector comes across an issue then the word would spread around pretty quickly to keep an eye out.
Tradesmen are professionals, architects are professionals, building inspectors are professionals etc.

Leemsip

12-10-2023, 07:24 PM

Interesting to see how the bonds do tomorrow on the open.

Leemsip

13-10-2023, 08:15 AM

Any takers for the opening price when this starts trading? Last price $4.90 and total EV @ $3.8b.

Take a $1b off? Why not. So 1/4 down to $3.60. Everyone is pretty optimistic so lets round up to $4 to start trading.

fastbike

13-10-2023, 08:24 AM

I second this
4 leaks & potential leaks on our new build from plumbers FORGETTING to glue or crimp joins,just crap

Luckily caught 1 before the water was turned on & others under the house(not a concrete pad thank goodness) so no damage

Have to wonder if there are other issues yet to surface.
The issue in our house was is even if the joints are not crimped the O ring will seal the joint temporally until it gives out then joints leak or burst

Iplex Pro-fit (the product at the centre of this dispute) does not use O rings. There is a brass fitting (T junction, wingback, etc) fitted with a copper crimping sleeve. Push the correctly prepared polybutylene pipe onto the fitting, checking it is fully seated, then crimp and check the crimp with the supplied gauge.
Not an O ring in sight.

Greekwatchdog

13-10-2023, 08:32 AM

Trading halt extension...

NZ RegCo refers to the trading halt that was placed on Fletcher Building Limited’s (“FBU”) equity securities at the request of the company, on Wednesday, 11 October 2023.
NZ RegCo has agreed, at FBU’s request, to extend the trading halt until the close of business on Friday, 13 October 2023, with trading to resume at market open on Monday, 16 October 2023.
Further to the announcement of Wednesday, 11 October 2023, FBU advises that it has obtained a copy of the presentation given to media and analysts by BGC (Australia) Pty Ltd (“BGC”) relating to the Iplex Australia Pro-fit pipes. FBU is currently preparing a response to that presentation, which it expects to release during the course of Friday, 13 October 2023. The extension to the trading halt will enable the market to consider FBU’s response before trading recommences on Monday, 16 October 2023

Toddy

13-10-2023, 08:42 AM

That's weird. Releasing the info but continuing the trading halt to give the market time.....

winner69

13-10-2023, 08:45 AM

That's weird. Releasing the info but continuing the trading halt to give the market time.....

Takes time to ‘read between the lines’ to work out what they really saying

Question though will anybody really believe it’s not our fault and any impacts are manageable

Balance

13-10-2023, 08:53 AM

The lawyers & spin merchants are already charging up the first $1m in legal fees.

Expect much much more.

Toddy

13-10-2023, 08:54 AM

Maybe giving buyers time to top up their trading accounts.

FBU presentation is happening right now apparently. So surly a market release of the presentation in not far away.

Greekwatchdog

13-10-2023, 08:58 AM

Auckland, 13 October 2023: Fletcher Building today announced that it will provide an update on the Western Australia plumbing issues in a briefing for all investors, analysts and media.
Fletcher Building management will host a briefing today, Friday 13 October 2023, at 2:00pm NZDT / 12:00pm AEDT.
Trading in securities in both the NZX and ASX is expected to resume on Monday 16 October 2023.
Participants can access the briefing by teleconference or webcast (details below):
Teleconference – register for the briefing by navigating to the following link:
https://s1.c-conf.com/diamondpass/10034385-5fwedy.html
Upon registration you will be provided with the dial in number, passcode, and your unique access PIN. To join the briefing, simply dial the number and enter the passcode followed by your PIN.

bull....

13-10-2023, 09:10 AM

Sam Gray, general manager of strategy and commercial at BGC, told Nadia Mitsopoulos on ABC Radio Perth (https://www.abc.net.au/radio/perth/) the company had used Iplex pipes for 20 years, but in 2017 the pipes were changed.
"Back in 2017, Iplex changed an ingredient in the pipe. The ingredient is called a resin and it's basically the core thing that the pipe is made of," Mr Gray said.

BGC is hoping that the regulator will issue a product recall of the polybutylene water pipe in question.
But Trish Blake, WA Commissioner for Consumer Protection, said her agency could still issue a product recall even if litigation commenced.
"Our process around product recall is completely independent of any litigation between the parties … if there is a need for a recall, we would conduct that recall," she said.

https://www.abc.net.au/news/2023-10-12/bgc-fletchers-war-of-words-over-burst-pipes/102969932

Sideshow Bob

13-10-2023, 09:43 AM

Halt in place until end of the day. Trading resumes Monday

https://www.nzx.com/announcements/419902

whatsup

13-10-2023, 10:04 AM

How possible can a installer be at fault when they most probably have been installing all brands of plumbing pipes, this appears to me to be a failure of the type of plumbing just like the piping that was installed in the majority of N Z homes in the 1980's that split or had pin hole fractures after 10 years from installation.

Just as I thought ., imho change of ingredents in the material used in its manufacture , what was it resin which has failed under pressure, this will be a massive law suit, how much insurance cover for this sort of liability do they have ?

My position is," when you cash my cheque it does not fail/bounce so why should your product" !!

winner69

13-10-2023, 10:21 AM

For a laugh I pulled out these numbers from FBU Trend Statements in AR

From 2009 to 2023 ‘significant items’ have totalled $2.2 billion …..but they touted EBIT (before these) of $8.3billion in same period.

One could say that over the years about 25% of profits have been written off in subsequent years …wow ‘extraordinary’ significant items for 2024 will make table look worse

Incredible

Toddy

13-10-2023, 10:45 AM

Paid for by the shareholders via the capital raise.

whatsup

13-10-2023, 10:46 AM

Suspension from quotation ann on ASX

kiora

13-10-2023, 11:31 AM

I second this
4 leaks & potential leaks on our new build from plumbers FORGETTING to glue or crimp joins,just crap

Luckily caught 1 before the water was turned on & others under the house(not a concrete pad thank goodness) so no damage

Have to wonder if there are other issues yet to surface.
The issue in our house was is even if the joints are not crimped the O ring will seal the joint temporally until it gives out then joints leak or burst

In my view there are significant number of tradies & "professionals" in the building industry that don't own their mistakes
https://businessdesk.co.nz/article/news-in-brief/engineering-nz-warns-of-systemic-issues?utm_source=7am+Headlines+from+BusinessDesk&utm_campaign=bde241dcc4-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-bde241dcc4-446239310

If there are issues found they will often shrug there shoulders and put the onus back on the the owner to fix & pay for the fix

winner69

13-10-2023, 01:08 PM

Alan Gray will be cashing up some investments to buy heaps more FBU

Greekwatchdog

13-10-2023, 02:10 PM

Well here is the response..

13/10/2023, 1:58 pm GENERAL• Plumbing failures confined to Perth
• Evidence clearly points to installation as causation
• Testing to date proves no manufacturing defect
• Iplex supporting with AUD$15m interim fund, working with regulator to assist with industry solution
• Recall is not justified and would be an unnecessary impact on homeowners
• BGC’s repair estimate is misleading & sensationalist
Auckland, 13 October 2023: Fletcher Building Limited has today issued a detailed update on the cause of the plumbing failures that have occurred in a number of homes built in Perth during the period 2017 – 2022, along with the activities Iplex Australia is undertaking to support industry and homeowners in finding the right solution.
The announcement also provides a detailed rebuttal, backed by multiple Australian laboratories and international scientific experts, which exposes critical inaccuracies and inadequacies in claims levelled by BGC about the cause of the plumbing failures.
Due to the nature of BGC’s release and concern regarding the factual basis of the information, Fletcher Building implemented a trading halt on Wednesday 11 October 2023. It has today addressed each of the concerns put forward by BGC.
Fletcher Building also updated the market on the Company’s thorough testing and evidence gathering processes, including a proposed joint home inspection protocol that it is in the process of agreeing with the WA Government’s State plumbing authorities (Building & Energy, Department of Mines, Industry Regulation and Safety - DMIRS).
We reaffirm that evidence to date clearly points to installation as the cause of the plumbing failures – with no evidence suggesting manufacturing is at fault. The data and information provided by product merchants, builders and plumbing contractors confirms that the plumbing failures are limited to Western Australia and no abnormal leak rates have occurred elsewhere in Australia, contrary to claims made by BGC.
CEO Ross Taylor said: “Despite BGC’s attempts to blame shift, Iplex AU and Fletcher Building remain committed to our course of action in helping the industry resolve the plumbing failures in Perth. We will continue to scientifically work through causation of the failures and support the industry to put in place the best solutions for affected homeowners in Perth.
“BGC’s allegations are unfounded - their view on causation has changed over time. Our independent expert advice is that the methodology and hypothesis BGC used is gravely flawed and their findings unsupported.
“Notably, the various recent tests completed by BGC weren’t done to replicate comparable real-life conditions whereas our testing is doing just that. BGC has not performed any tests which measure the performance of the pipes against Australian or international standards. Ultimately, none of their claims help regulators or homeowners get to either an accurate understanding of the root cause of the failures in Perth, nor do they provide a practical, timely solution for all homeowners affected.”
The plumbing failures are limited to Perth, it is not national.
• Significant plumbing failures are only evident in Perth, despite the same quantity of pipe being sold nationally outside of Perth, pointing to region-specific installation practices as the cause of the failures.
• We have proactively spoken with our major east coast product merchants, builders and plumbing contractors who are by far the biggest users of Pro-Fit pipe and therefore, provide a valid comparison to the use of Pro-Fit in Perth over the same period.
• They have not advised us of any abnormal concerns, despite being aware of the circumstances in Perth.
• See slides 7 and 16 for more detail
The evidence points to installation as the root cause of the Perth plumbing leaks.
• Iplex’s investigation has identified extensive evidence of poor installation. For every plumbing failure we have seen, there is one or more readily observable installation failures that are in breach of Australian Standards, the Plumbing Code and/or Iplex’s installation instructions. These failures are of the type that generate stress and radial cracking.
• Of the homes investigated, 96% had at least one installation failure. The remaining 4% relate to failures which are either unrelated to the issue in question (e.g. rodent chew and fittings) or inaccessible pipes.
• The abnormal plumbing failure rates are only occurring in the Perth area, but the rates of failure are different across participants.
• Over the last five months, we have funded the repair of 383 homes through our fund. For 170 of these homes, our expert plumbing team attended the house prior to repairs being done and carried out a full inspection and rigorous data capture on both the installation and to provide pipe for testing. In 100% of these cases the installation failure was of a type that generates leaks.
• We are well progressed on our testing, having completed tests across circa 900 pipes, using six local and international external labs and experts, and conducting 24 different types of tests. These tests show that the Pro-Fit pipe performs as well as or better than its predecessor pipe.
• Examples of poor installation were also illustrated in BGC’s own evidence pack. Comparisons can be found on slide (14).
• See slides 10-15 for more detail
Fletcher Building and our global polymer experts consider the Scheirs report not credible.
Resin
• BGC’s allegations that the resin change causes the substandard performance is unsupported.
• Iplex tested the BGC hypothesis with tests conducted by independent laboratories, in conditions that deal with clean and failed pipe and various scenarios. Relevantly, those independent laboratory tests disprove the results key to Dr Scheirs' conclusions.
• Ylem is one of the major manufacturers of polybutylene resin in the world. They have not experienced any issues of this nature elsewhere including Korea, Japan, China, Europe, New Zealand and Australia other than Perth.
Molecular Weight Distribution Theory
• The tests required to measure Molecular Weight Distribution theory as proposed by BGC are highly specialised and require a sensitive testing regime which is why Iplex has obtained results from an international laboratory in the UK qualified to perform these tests. As a result of a testing error, BGC has been given results that are significantly lower than the results Iplex has obtained from its independent laboratory which has many years of experience testing polyolefin materials such as PB-1.
• In any event, based on the testing results received to date, Iplex believes the Pro-Fit pipe, when manufactured with Typlex resin, has a molecular weight distribution in excess of the "threshold" PD Index number of 3.5 that BGC says is necessary and most are in the "target range" that BGC believes is preferred.
Environmental stress cracking
• To test BGC’s theory that the environmental stress crack resistance of the Typlex pipe is inferior to that of the previously used LYB pipe, Iplex engaged an independent qualified laboratory in Spain to perform a 'crack round bar' testing which measures the crack resistance of a polymer.
• The results received to date are in line with Iplex’s internal view that there is no material difference between the crack resistance of LYB and Typlex. In fact, it appears that Typlex might be slightly more resistant to cracking.
• Independent experts believe the environmental stress crack resistance testing carried out by Dr Scheirs was not in full accordance with the referenced ASTM test methods and cannot be relied upon for making a determination of either materials’ true environmental stress crack resistance.
• See slides 24-26 for more detail
Why do we have confidence in our evidence gathering, our testing + inspection regime?
• The BGC hypothesis cannot be relied on for causation. Iplex has undertaken more tests over significantly more samples.
• Iplex testing to-date in both its accredited NATA laboratory and multiple independent laboratories shows the Pro-Fit pipe is compliant with Australian standards.
• To-date Iplex has also collected evidence from in excess of 270 individual inspections of homes in Perth constructed by 12 different builders and plumbers. This has identified significant installation failures, in breach of Australian Standards, the Plumbing Code and installation guidelines.
• See slides 19-21 for more detail.
Fletcher Building and Iplex are committed to helping homeowners affected by the plumbing failures
• On 17 April 2023 Iplex Australia also committed AUD$15m to an interim support fund to establish causation and inform appropriate fixes for homeowners and help Perth builders and plumbers to complete repairs (both leaks and resulting property damage) as well as ceiling pipe replacement in homes.
• To date, circa 383 homes have been completed through our fund at a cost of approximately AUD$1m.
• We are very focused on ensuring the safety of the homeowner, and our interim fund is designed to provide funding and resources available to allow the plumbers and builders to respond urgently to any leak while root cause is established.
• We are trialing leak detection units on houses which automatically detect a leak event and shut off the water supply to the house – if these trials are effective then they may also be available to the builders.
• Iplex has also established a dedicated team on this project. This includes local qualified, specialist plumbing team in Perth to support builders and plumbers in investigating causation and innovative solutions to address the issue.
• Iplex believes that every effort should be exerted by the industry to find options that are efficient and effective for the benefit of affected homeowners. In the interests of assisting the industry and homeowners to address this issue in a timely and efficient way, Iplex continues to provide technical support to builders to assist them in understanding causation.
• The total expenditure in the fund to date sits at circa AUD$3m and beyond the $1m spent on installation fixes, the remainder covers costs for our dedicated WA plumbing team, testing and trials of various technologies such as house leak detectors and pipelining systems.
• See slide 5 for more detail.
Against this backdrop, a product recall is not justified and would create needless disruption to unaffected homeowners with perfectly good pipe and pipe installations.
• A recall is also totally impractical given capacity constraints in the industry.
• There are a number of less costly, less intrusive, and more rapid fix options for those homes that have been affected.
• Iplex is currently exploring multiple approaches that may be used to provide a solution including leak detectors, wall pipe mapping and pipe re-lining.
• See slide 34 for more detail.
BGCs estimated repair cost is misleading and sensationalist
• BGC’s estimate is based on a full house re-piping which is not justified.
• Realistic scenarios that better align with the facts, suggest that an industry cost to repair Perth houses, could be a fraction of that, perhaps in the order of AUD$50m to $100m.
• See slide 35 for more detail.
“While not a product failure, we want to support the industry and homeowners to come up with the optimum suite of fix solutions that minimise inconvenience, time and cost for all involved. This work is being supported by our interim fund of AUD$15m to ensure the repair work gets done in an effective timely fashion for homeowners, and that the industry is supported financially, while the industry develops an effective way forward,” Ross Taylor said.
"Moving forward, we will continue to undertake the industry collaboration necessary to agree the best way forward. Iplex has agreed to jointly inspect house leaks with the WA plumbing regulator to get an aligned data set. We will also finalise our testing and expert report during this period.
“Despite BGC’s position to work independently of the industry and ourselves, including refusing access to the funding available and allowing independent inspections of their homes, we will continue to share our ideas and methodologies with them in an attempt to help them help their customers,” he said.
ENDS
Authorised by:
Ashleigh Harding
Company Secretary
For further information please contact:
MEDIA
Christian May
General Manager – Corporate Affairs
+64 21 305 398
Christian.May@fbu.com
INVESTORS AND ANALYSTS
Aleida White
Head of Investor Relations
+64 21 155 8837
Aleida.White@fbu.com
Downloads

FBU dismisses BGC claims and provides detailed update (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/419965/405123.pdf)
FBU WA Plumbing Issues Update presentation (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/419965/405124.pdf)

winner69

13-10-2023, 02:19 PM

Bloody useless plumbers

FBU doing their best to fix a few

All be forgotten by Xmas?

JSwan

13-10-2023, 02:20 PM

Anyone listening to the presentation? So damn technical

Rawz

13-10-2023, 02:21 PM

Maybe no FBU bargain come Monday

Balance

13-10-2023, 02:24 PM

Bloody useless plumbers

FBU doing their best to fix a few

All be forgotten by Xmas?

FBU refuting BGC’s assertion that it is an Australian wide problem - it is localised to Perth & WA.

Also interesting to know that BGC has not worked with or co-operated with FBU to investigate and fix the emerging problem.

Toddy

13-10-2023, 02:40 PM

If FBU says there is no issue on their part, then why bother with the extended trading halt.

Balance

13-10-2023, 02:44 PM

FBU refuting BGC’s assertion that it is an Australian wide problem - it is localised to Perth & WA.

Also interesting to know that BGC has not worked with or co-operated with FBU to investigate and fix the emerging problem.

Also interesting that BGC has been totally uncooperative compared with other builders to investigate and fix the problem. They will not even share data and information with FBU.

bull....

13-10-2023, 03:05 PM

probably the courts will end up deciding therefore the question is what gaurantee's ? liabilities does FBU have with iplex if sued

Biscuit

14-10-2023, 09:26 AM

FBU refuting BGC’s assertion that it is an Australian wide problem - it is localised to Perth & WA.

Also interesting to know that BGC has not worked with or co-operated with FBU to investigate and fix the emerging problem.

Interesting question, why the failures would be localized to WA? Are WA plumbers more useless than plumbers in general? Seems unlikely. Is that to do with local conditions or a manufacturing batch problem? I'd still lean towards it being an install issue, but I wouldn't put money on it.

Balance

14-10-2023, 01:26 PM

probably the courts will end up deciding therefore the question is what gaurantee's ? liabilities does FBU have with iplex if sued

The question was asked during the Q & A - there is a corporate guarantee over the liabilities of iplex and all other FBU fully owned subsidiaries. No escape there.

percy

14-10-2023, 01:38 PM

Wonder whether NZ Fletchers will get a "fair suck of the sav" in an Aussie court.?

winner69

16-10-2023, 08:15 AM

FBU share price probably fall today but I reckon not much damage ….no carnage

Taylor spun a good story to appease the market …whatever it’ll take years to sort out and longer the better for FBU.

Anyway the market judges and prices FBU on EBIT before significant items so any impact of this affair don’t count.

Balance

16-10-2023, 09:15 AM

A few pertinent points from FBU’s presentation.

Very telling that BGC has refused to co-operate or work with FBU to fix the problems.

https://www.thepost.co.nz/a/business/350091103/fletcher-building-claims-leaky-pipes-aussie-due-shoddy-installation-not

“Taylor provided details of testing that had been undertaken by multiple Australian laboratories and by international scientific experts which found no evidence of a manufacturing fault with its product, and found flaws with BGC’s claims.”

“He noted that there were no abnormal leak issues on its plumbing pipe installed elsewhere in Australia, only in Perth in Western Australia, which pointed to installation practices as the cause of the plumbing leaks.”

“Taylor said BGC had refused to work with the group and “won’t talk to us”.

“Over the past five months, Iplex had funded the repair of 383 homes, with its expert plumbing team inspecting 170 of the homes – it found 96% of the homes had at least one installation failure and 86% had multiple installation failures. The 4% of homes with other issues either had unrelated failures, such as rodent chew and fittings, or inaccessible pipes.”

bull....

16-10-2023, 09:44 AM

interesting i think i heard correctly fbu was in process of raising capital before this media storm

winner69

16-10-2023, 09:47 AM

interesting i think i heard correctly fbu was in process of raising capital before this media storm

They are/were looking at some bond issue

bull....

16-10-2023, 09:51 AM

They are/were looking at some bond issue

guess the rate payable if they proceed has increased considerably now

winner69

16-10-2023, 10:04 AM

Down to 420 …over reaction?

Hoop will need to update his chart ……another GAP DOWN to add

Toddy

16-10-2023, 10:10 AM

It probably doesn't matter what the sp is now. The pipe issue will put a cap any sp appreciation. So any medium term investment in FBU becomes a yield play.

Balance

16-10-2023, 10:11 AM

Down to 420 …over reaction?

Hoop will need to update his chart ……another GAP DOWN to add

Wait for ASX to open - that’s the real market these days for FBU & most of NZX’s big cap stocks.

winner69

16-10-2023, 10:12 AM

Wait for ASX to open - that’s the real market these days for FBU & most of NZX’s big cap stocks.

Alan Gray putting in his orders I reckon

Paint it Black

16-10-2023, 11:00 AM

Interesting question, why the failures would be localized to WA? Are WA plumbers more useless than plumbers in general? Seems unlikely. Is that to do with local conditions or a manufacturing batch problem? I'd still lean towards it being an install issue, but I wouldn't put money on it.

Or it could be just one plumber that BGC sub contracts with at a cheap rate. Would be interesting to drill down onto who the plumbers are on the actual failures. From my past experience Iplex in NZ were a very reputable company.

Balance

16-10-2023, 11:18 AM

Or it could be just one plumber that BGC sub contracts with at a cheap rate. Would be interesting to drill down onto who the plumbers are on the actual failures. From my past experience Iplex in NZ were a very reputable company.

There’s a very telling point which came out during the Q & A on Friday.

One analyst asked about the ‘expert’ used by BGC to cite product fault in its report. Ross Taylor asked the analyst if he was giving him a free pass.

He said he really did not want to comment on the expert as he was happy that FBU have used several specialists, internationally acknowledged experts in their fields to support their stance that installation, rather than product was at fault.

To which the analyst mentioned the BGC expert’s name for confirmation.

It was clear from the follow on discussion about the expert imo that BGC has serious credibility problems.

Paint it Black

16-10-2023, 11:58 AM

There’s a very telling point which came out during the Q & A on Friday.

One analyst asked about the ‘expert’ used by BGC to cite product fault in its report. Ross Taylor asked the analyst if he was giving him a free pass.

He said he really did not want to comment on the expert as he was happy that FBU have used several specialists, internationally acknowledged experts in their fields to support their stance that installation, rather than product was at fault.

To which the analyst mentioned the BGC expert’s name for confirmation.

It was clear from the follow on discussion about the expert that BGC has serious credibility problems.

Yep Fletcher's multiple experts easily out trump BGC's solitary 'expert'. While living in Perth I was amazed at the size and low cost per m2 of houses there. Margins are no doubt very tight there and BGC itself will be wanting to deflect their own potential liability as far away as possible to buy time.

Filthy

16-10-2023, 12:30 PM

the expert imo that BGC has serious credibility problems.

one wonders if they, or someone else close, are making a mint from having a short position.

someone has been building since mid-August - so they knew something brewing before the market.

https://www.shortman.com.au/stock?q=FBU

maybe just luck, or maybe BGC info leaking, but be naive to think that market manipulation doesn't occur from time to time eh Balance!

.....maybe that expert is in it for a few bucks!

whatsup

16-10-2023, 01:00 PM

Very early days yet, there will be much more to come here, truth, worts and all !

Fortunecookie

16-10-2023, 01:11 PM

"Pro-fit was an uneconomic product that we stopped manufacturing in 2021....The decision to ceaseproduction of Pro-fit wasa COMMERCIALDECISION MADE IN 2021."
Polybutylene pipes discontinued and replaced with PVC pipes.

Any plumbers on this forum. It would be interesting to get some perspective on the difference between the two different pipes.

jonu

16-10-2023, 01:53 PM

Oversold IMHO.

I'll be surprised if it closes under $4.50 today.

(Discl: bought in this morning)

ronaldson

16-10-2023, 03:45 PM

Interesting to note that during FY19 (to 31 March 2019) Kingfish noted that they had purchased Fletcher Building shares for the first time since KFL was established in 2004. They did that by selling out of EBOS, and at balance date FY19 1.8% of KFL's equity holdings were FBU, so not large but already their worst negative contribution for the annual period. During FY20 they progressively reduced their position size, and exited entirely. They have not reentered since, so a brief hold only for a company that is basically a committed buy and hold investor.

Given the limited range of investment opportunities available to KFL given its focus on NZX 50 companies I thought the decision to mostly exclude FBU from their investment thesis over a 20-year span told a tale, plus the fact that having then convinced themselves under their criteria to buy they then were not afraid to quickly reverse course and quit altogether. Hard to argue against that given FBU's subsequent history.

winner69

16-10-2023, 03:48 PM

Ronaldson ….KFL tempting fate with Vulcan Steel with their foray into the building sector?

whatsup

16-10-2023, 04:02 PM

Oversold IMHO.

I'll be surprised if it closes under $4.50 today.

(Discl: bought in this morning)

jonu, as u well know this will be a long drawn out process, uncertainity is the enemy of share markets.

jonu

16-10-2023, 04:09 PM

jonu, as u well know this will be a long drawn out process, uncertainity is the enemy of share markets.

The insto sellers have shut up shop about 3.45. The closing auction will be interesting.

Paint it Black

16-10-2023, 04:12 PM

Shareclarity now has the value gap at 52% with FBU against a DCF of $6.54. Putting the WA issues aside with National/ACT now in and the PPP motorways on the agenda surely the FBU stable of Higgins, Firth and Winstones have a good upside to close the gap?

FTG

16-10-2023, 08:45 PM

Caution folks...the seat belt lights are still on! (they actually went back on in August).

TA Radars are showing further turbulence ahead. Some of it may get nasty.

FWIW - both S/R zones & Fib point to the $3.80 to $4.00 Zone (NB: on ASX chart) as being the next target, IMHO.

DYOR.

whatsup

16-10-2023, 09:39 PM

The insto sellers have shut up shop about 3.45. The closing auction will be interesting.

Nahhhh way too early, come back after Xmass !

jonu

16-10-2023, 09:49 PM

Nahhhh way too early, come back after Xmass !

Well I was surprised! Still happy at the level I have bought in at.

ronaldson

16-10-2023, 10:01 PM

Ronaldson ….KFL tempting fate with Vulcan Steel with their foray into the building sector?

KFL took a small (1.2% of KFL's total equity investments) stake in Vulcan in May by applying some of the Pushpay takeover receipts it had available at the time. The acquisition pricing must have been around $8 and it's really only just now they are underwater with some of the shine off VSL's operating results, attributed to a slowdown in projects here waiting on the election outcome. KFL don't seem too concerned and they note that following the Ulrich Aluminum acquisition VSL is now rolling out some hybrid sites to leverage both the steel and aluminum businesses. Not a holder myself but willing to monitor how it is from here.

The issue with KFL is that there are relatively few investible companies available to it in the NZX index and it must look to those with longer growth runways that favour its need to buy and hold. As it showed with FBU in 2018/19 it is willing to reassess the performance of a recent investment against its criteria if it believes circumstances have changed, but it would seem premature to do that with VSL at the moment. The economic cycle we are in is certainly not helpful just now. I understand VSL is now bigger in Australia than here so perhaps that is where we should look to understand how it is?

Not sure where a bottom for VSL might lie. It seems to pay a good dividend per share so yield will go some way to holding it up.

ronaldson

16-10-2023, 10:19 PM

FBU traded today in the range $4.19 - $4.47, with a close at $4.33 leaving buyers at $4.32 but no sign of a seller now until $4.45. A good share for the brave to have traded today (I wasn't) and tomorrow might reduce the volatility and settle the dust a bit.

The market is always an interesting beast, as FBU has shown us today. The election result so far hasn't enlightened us too much yet given the opportunity for change hasn't manifested quite as it may have seemed two or three weeks ago. Looks like we need to wait a few more weeks to be really confident how things will work out and there probably won't be too many of those "first 100 days" promises actually delivered upon!

Balance

17-10-2023, 09:22 AM

BlackPeter

17-10-2023, 09:31 AM

jonu

24-10-2023, 09:17 AM

FBU closed at NZ equivalent $4.50 on the ASX. Interest what happens when one exchange is closed!

winner69

27-10-2023, 08:46 AM

ASM has up to date F24 outlook.

Think it says we’ll end up with previous guidance so no downgrade or upgrade …but heck we’re doing well and going to make zillions.

Even mentioned ‘green shoots’ in the housing market ..that’s good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBI/420592/405890.pdf

Sideshow Bob

27-10-2023, 08:48 AM

https://www.nzx.com/announcements/420593

ASM Meeting presos and speeches.

Product testing on their plumbing issue well advanced - tests to date show pro-fit not defective. Looking like installation, with a $50-$100m fix over several years.

ThaiJohn

03-11-2023, 03:20 PM

Anymore thoughts on FBU?
I took a small holding @432 and thinking of grabbing a few more.
Currently 447

Paint it Black

03-11-2023, 03:40 PM

Anymore thoughts on FBU?
I took a small holding @432 and thinking of grabbing a few more.
Currently 447

With today's Alpha Spread DCF saying the company is undervalued by 29% and the new National infrastructure projects lining up for Higgins, Brian Perry, Firth and Winstones to name a few in the Fletcher stable I'm now topping up. The fly in ointment is the WA leaky pipes issue with Iplex but this is already factored in and Fletchers say they can comfortably defend it as being a local installation problem.

Rawz

03-11-2023, 04:47 PM

What’s the price to book value ratio currently?

winner69

04-11-2023, 08:53 AM

What’s the price to book value ratio currently?

Good question Dorothy …..irs about .95 ….

Buts that before whatever they put aside for leaky pipes ……so let’s say P/B is about 1.15

What impact has buybacks had?

Balance

04-11-2023, 09:29 AM

Good question Dorothy …..irs about .95 ….

Buts that before whatever they put aside for leaky pipes ……so let’s say P/B is about 1.15

What impact has buybacks had?

Always right to buy FBU below NTA.

Word from my contact (ex-FBU senior executive with Residential) is that market yet to realise that just how much FBU has restructured to take advantage of the infrastructure boom to happen with NZ in the next 10 years.

Downside is still with Residential where there is no more windfall profits from ever rising land prices right until 2021. Things are very slow on that front and expected to continue well into early 2025.

Make sure you have holding power obviously as there will be a few twists and turns yet with FBU.

Sideshow Bob

06-11-2023, 08:48 AM

Allan gone from circa 10.9% to 11.9%.

Keeping buying.....

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/421067/406455.pdf

Balance

06-11-2023, 08:51 AM

Allan gone from circa 10.9% to 11.9%.

Keeping buying.....

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/421067/406455.pdf

That’s their modus operandi as a contrarian investor - buy aggressively when others are selling aggressively.

They have done well over the years with their strategy.

winner69

06-11-2023, 08:55 AM

That’s their modus operandi as a contrarian investor - buy aggressively when others are selling aggressively.

They have done well over the years with their strategy.

Probably buying heaps more Kathmandu at the moment as well.

silverblizzard888

06-11-2023, 09:02 AM

Fletchers are no brainer for the long term at this value, but its a question of how long do you have to wait and will it be worth it over other opportunities.

Balance

06-11-2023, 09:08 AM

Probably buying heaps more Kathmandu at the moment as well.

As one of their fund managers said to me years ago, it is one thing to attract & have funds under management.

It is tough to find good investments to put the funds in so when the opportunities present themselves after they have done their due diligence (including meeting with management, industry players especially competitors), they will invest aggressively.

winner69

13-11-2023, 10:09 AM

From Stats NZ ....

In the September 2023 quarter, the actual volume of ready-mixed concrete produced was 1.05 million cubic metres, down 10 percent compared with the September 2022 quarter.

Seems to imply construction activity still a bit weak ..relative to recent past

winner69

18-12-2023, 07:05 PM

FBU share price getting back to 5 bucks again

Southern Lad

18-12-2023, 08:52 PM

FBU share price getting back to 5 bucks again

Assume announcement of an offer for ASX listed Adbri Ltd (formerly Adelaide Brighton Ltd) has pushed the FBU share price along today - see https://wcsecure.weblink.com.au/pdf/ABC/02755036.pdf

Balance

19-12-2023, 09:27 AM

Assume announcement of an offer for ASX listed Adbri Ltd (formerly Adelaide Brighton Ltd) has pushed the FBU share price along today - see https://wcsecure.weblink.com.au/pdf/ABC/02755036.pdf

Let's hope that FBU never gets taken over - it is one of the most predictable double bagger stocks on NZX & ASX.

Buy low, sell high!

bull....

19-12-2023, 09:34 AM

last 10yrs stock only gone down , apart from a couple blips up. so has not been a good long term hold.

Balance

19-12-2023, 10:01 AM

last 10yrs stock only gone down , apart from a couple blips up. so has not been a good long term hold.

3 great opportunities to double the money with FBU since 2012 - buy low, sell high.

Just have a look at the chart.

As predictable as rain on the West Coast during spring!

Toddy

19-12-2023, 11:32 PM

FBU will get it right some day soon and the stock will fly.

It's a real shame that they have this leaky pipe issue hanging over them.

The last 10 years of stuff ups has definitely been down to mismanagement as opposed to external factors.

Toddy

31-01-2024, 05:09 PM

Compass Homes in Auckland have concluded its now too tough to make money building residential houses in the Auckland region.

It will be interesting to see if Fletcher Residential can buck the trend.

Sideshow Bob

05-02-2024, 08:35 AM

The good old "significant items"

https://www.nzx.com/announcements/425713

Update on NZICC and WIAL Carpark projects

5/2/2024, 8:30 amMKTUPDTEAuckland, 5 February 2024: Fletcher Building (the “Company”) today announced an update on the New Zealand International Convention Centre and Hobson Street Hotel project (“NZICC”) and the Wellington International Airport Carpark project (“WIAL Carpark”).

The NZICC project remains on track for completion in late calendar 2024. Progress to date has included: carparks are now complete; the Hobson Street Hotel is scheduled to be handed over to the client this month; and steel remediation throughout the International Convention Centre is 98% complete. Despite this progress, actual and expected costs to complete the project have increased, principally in the areas of steel remediation, internal fit-out, and installation of operating systems. The increased costs are primarily due to higher levels of subcontractor resource required to deliver the final stage of the project. In addition, a portion of the Company’s claims against the project Contract Works Insurance (CWI) may not be recoverable. Based on the latest cost and revenue forecasts, the Company has determined that it will make an additional provision on NZICC of $165 million, classified as a Significant Item in its half year 2024 financial statements.

The Company continues to pursue recoveries under the NZICC Third Party Liability (TPL) insurance policy of more than $100 million. While the Company considers it has good grounds for its TPL claims, no TPL revenue is included in the current project forecast – in line with accounting standards.

On the WIAL Carpark project, the Company continues to work with the client to agree a remediation solution to quality issues and to settle claims. Based on its latest assessment of the cost of the remediation, the Company has determined that it will make a provision on WIAL Carpark of $15 million, classified as a Significant Item in its half year 2024 financial statements.

CEO Ross Taylor said: “The NZICC rebuild is a significantly complex and challenging project. It is disappointing we require further provisions on this project and the WIAL carpark. We remain on track to complete construction of all legacy projects by the end of calendar 2024, however cost and revenue risk will remain until we have done so. We will vigorously pursue our claims for recoveries on the legacy projects, which are likely to take until FY25-26 to settle.”

The Company’s HY24 results and financial statements will be released on Wednesday 14 February 2024.

Toddy

05-02-2024, 08:41 AM

Think of the positives. No more leaky pipe provisions.

winner69

05-02-2024, 08:45 AM

Just another $180m shareholders won’t see

Good doesn’t impact profitability eh

Probably announced today hoping big players taking long weekend and won’t notice when they come back

Balance

05-02-2024, 08:49 AM

Have to laugh - only in NZ and with FBU can a project contracted to be built for $450m end up costing over $1 billion! And 5 years behind schedule!

Greekwatchdog

05-02-2024, 09:48 AM

Have to laugh - only in NZ and with FBU can a project contracted to be built for $450m end up costing over $1 billion! And 5 years behind schedule!

Thats a bit short sited to the real "Root Cause" as to why the project is in this state.
Fire Sub Contarctors mistake
Covid and Shut downs. How many did you have up there and for how long?
Couldn't get any staff
Shortage of materials
Inflation escalated costs dramatically XXX%

A PERFECT STORM

winner69

05-02-2024, 09:56 AM

Balance

05-02-2024, 10:00 AM

Add the latest $180m we are up to $2.4billion

And only half year gone

Guess it shows just how resilient & profitable the oligopolistic NZ operations of FBU are?

Sideshow Bob

05-02-2024, 10:03 AM

Add the latest $180m we are up to $2.4billion

And only half year gone

Great table W69!! $2.4b

I saw the programme on Sky Open about leaky apartment buildings last night......one of those might be next years 'significant items'.......

Balance

05-02-2024, 10:05 AM

Thats a bit short sited to the real "Root Cause" as to why the project is in this state.
Fire Sub Contarctors mistake
Covid and Shut downs. How many did you have up there and for how long?
Couldn't get any staff
Shortage of materials
Inflation escalated costs dramatically XXX%

A PERFECT STORM

If the NZICC is the only FBU's screw-ups, I would somewhat agree with you but it's not.

Refer the $2.4 billion of screw-ups W69 has collated so far!

Toddy

05-02-2024, 11:36 AM

Caused by previous management so won't effect this year's staff bonuses.

Sideshow Bob

05-02-2024, 11:42 AM

Here is their preso about their 'significant items'

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/FBU/425756/412088.pdf

winner69

05-02-2024, 12:52 PM

Nice one Percy

I have drawn a brilliant (i'm biased) chart. Two reasons:..
1 It's in hindsight to what has just happened so its now no bloody use to anyone
2 For TA investors that fail to make a living in Trading and resort to writing textbooks. This chart below is a must for your text book.
However, its very exciting for the Chartists to see the Gap theory operating in practice..and.. the RSI divergences showing the warning is marvelous (that is if you took heed of the warning).

Yep the chart shows a part of TA in it's finest glory... but... the best part, is not the TA but FBU's continued failure to reach the market's expectation..It has failed over and over again to the point that it is becoming a predictable event after each report announcement.

14721

Hoops put this cool chart up last August after a FBU ‘surprise’

From a TA perspective things still going to plan ….FBU ‘surprising’ is a predictable event

Maybe Hoop could update in a day or two

winner69

05-02-2024, 01:20 PM

Since ASX has opened share price sunk below 420 …lowest point on Hoops chart

Surely can’t go below 400

Greekwatchdog

05-02-2024, 01:27 PM

If the NZICC is the only FBU's screw-ups, I would somewhat agree with you but it's not.

Refer the $2.4 billion of screw-ups W69 has collated so far!

Most of that $2.4b is tied up in past works where stupid CEO and Board almost f**ked the company and they fell on their sword thou CEO had resigned before then.

FBU can't change that part of its history and will always be reminded of it when things go South. Todays announcement is solely on those 2 projects and reason for those costs are as mentioned.

winner69

05-02-2024, 01:40 PM

Hey rawz …. the latest provision will reduce book value by about 23 cents ….but book value will still be over 450 at half year

So FBU trading below book value and at years low so good time to buy I reckon …. Even for long term but definitely a trade is on

What you reckon?

Balance

05-02-2024, 01:45 PM

Sideshow Bob

05-02-2024, 02:10 PM

Since ASX has opened share price sunk below 420 …lowest point on Hoops chart

Surely can’t go below 400

Commentators kiss of death.....

$3.93 AUD

winner69

05-02-2024, 02:39 PM

Commentators kiss of death.....

$3.93 AUD

Jeremy doing a good job at the test

Leemsip

05-02-2024, 03:04 PM

FBU a bit like TWR for me. Should be easy money but they keep dropping the ball. Just cant trust it.

Lets see how low she goes...COVID low was $3.30 something..

Panda-NZ-

05-02-2024, 03:47 PM

Market closed tommorow, should give investors a chance to calm down.

winner69

05-02-2024, 03:49 PM

Market closed tommorow, should give investors a chance to calm down.

Alan Gray and others will still be buying on the ASX

winner69

05-02-2024, 04:20 PM

Analyst briefing several analysts wanted to know how the extra costs would affect Fletcher’s debt covenants….plenty of headroom said Taylor. Could trim growth investments if need to.

Taylor said the board had not discussed cutting dividends.

Didn’t want to talk about the status of Puhoi to Warkworth roading project and it’s claims on NZTA

Analyst Stephen Hudson of Macquarie Securities noted the Treasury’s pre-election economic and fiscal update had disclosed a $203m claim against NZTA/Waka

And one analyst was concerned about the potential for further slippage on convention centre given their past history……and Taylor acknowledged there remained some uncertainty.

So it seems all to be OK ….and results announcement will be a beaut

percy

05-02-2024, 04:31 PM

Would some one please confirm that on 2/2/2004 FBU's share price was $4.03 and has taken 20 years to reach $4.23 today.Capital growth of 1 cent a year.!lol

Baa_Baa

05-02-2024, 05:34 PM

Would some one please confirm that on 2/2/2004 FBU's share price was $4.03 and has taken 20 years to reach $4.23 today.Capital growth of 1 cent a year.!lol

If you'd invested $10k 20 years ago, you'd have received ~$21k in dividends, and ~$750 in capital gains.

Toddy

05-02-2024, 05:52 PM

Is that taking into account the emergency capital raise when the bank account ran dry.

winner69

05-02-2024, 06:43 PM

All these significant items might be ‘legacy’ stuff but you’d have to say that Taylor’s handling of them has been abysmal

Time for him to move on …been here long enough to create the future legacy issues yet to come to light

Toddy

05-02-2024, 07:05 PM

The CFO has been there a significant amount of time longer.
The CEO can only make decisions based on the information provided.

Just saying.

winner69

06-02-2024, 09:16 AM

The CFO has been there a significant amount of time longer.
The CEO can only make decisions based on the information provided.

Just saying.

But mean blaming the numbers man. Taylor should have been down at the coal face / site to find out what was really going on and giving everybody a decent shake up

The $165m extras didn’t happen overnight

Toddy

06-02-2024, 03:39 PM

But mean blaming the numbers man. Taylor should have been down at the coal face / site to find out what was really going on and giving everybody a decent shake up

The $165m extras didn’t happen overnight

Taylor is a big guy. I couldn't imagine him crawling underneath houses looking for leaky pipes.

winner69

07-02-2024, 08:28 AM

Down 1% on ASX yesterday but close at NZ$4.23 equivalent

Market over reacted to announcement?

Could be an up day today

Balance

07-02-2024, 09:21 AM

Down 1% on ASX yesterday but close at NZ$4.23 equivalent

Market over reacted to announcement?

Could be an up day today

Talked to an ex-FBU executive (who now runs his own consultancy & project management firm) who said he is not surprised. FBU simply wants to get the legacy problem projects done and out of the way, and has been using mainly sub-contractors to finish the projects.

No sub-contractors are going to give fixed price contracts these days so as problems are encountered and/or uncovered, FBU has to pay up.

The good news I guess is that he believes FBU is truly near the end of completing the legacy problem projects (unless another mishap like a fire happens!).

winner69

07-02-2024, 09:28 AM

Talked to an ex-FBU executive (who now runs his own consultancy & project management firm) who said he is not surprised. FBU simply wants to get the legacy problem projects done and out of the way, and has been using sub-contractors to finish the projects.

No sub-contractors are going to give fixed price contracts these days so as problems are encountered and/or uncovered, FBU has to pay up.

The good news I guess is that he believes FBU is truly near the end of completing the legacy problem projects (unless another mishap like a fire happens!).

Good insights mate

But I do wonder when what will be called the Taylor legacies will start to emerge …..it’s in Fletchers DNA

Sideshow Bob

07-02-2024, 10:29 AM

whatsup

07-02-2024, 10:35 AM

Balance

07-02-2024, 10:49 AM

https://www.nzx.com/announcements/425830

Fletcher Building Limited is aware of a news media report stating that it is weighing up an equity raise. This is inaccurate and Fletcher Building is seeking to have the story removed.

Article in the Australian so zero credibility imo.

Same newspaper which has been spreading rumours about impending takeover of ATM for the last 3 years.

Great for rampers (down or up) though. :t_up:

Master98

07-02-2024, 11:05 AM

"inaccurate" in details, but story is true, I assuming.

Toddy

07-02-2024, 11:22 AM

No worries. The banks are not on our case.

OK, all good then.

Master98

07-02-2024, 02:20 PM

https://www.nzherald.co.nz/business/western-australia-government-probes-injuries-in-homes-with-fletchers-iplex-pipes/UFYVTIAXIRDIBFVK7TGEPPR2HU/
Western Australian government is seeking information about injuries in Perth homes where Fletcher Building’s Iplex pipes are installed.

fastbike

07-02-2024, 07:13 PM

Toddy

08-02-2024, 09:00 AM

Jarden has a target price of $6.13 on FBU.

bull....

08-02-2024, 10:04 AM

Forsyth Barr analysts say Fletcher Building has now made $420 million worth of provisions on the convention centre project in the past 12 months and the latest ones 'bring into question management controls and board oversight'

https://www.interest.co.nz/business/126270/forsyth-barr-analysts-say-fletcher-building-has-now-made-420-million-worth

bull....

08-02-2024, 10:19 AM

no wonder the australian ran a story about capital raising

They say the ultimate cash cost will see Fletcher Building's debt to equity levels reach "the top end" of the company's target range "and we expect a reduction in dividends and cuts to the growth capex pipeline" at the company's upcoming half-year result announcement on February 14 in order to "provide some headroom".

https://www.interest.co.nz/business/126270/forsyth-barr-analysts-say-fletcher-building-has-now-made-420-million-worth

Rawz

08-02-2024, 10:31 AM

sheesh these legacy projects are death by millions of cuts

Sideshow Bob

08-02-2024, 10:50 AM

sheesh these legacy projects are death by millions of cuts

2.4 Billion cuts.....

That's over $3 per share.

nztx

08-02-2024, 02:34 PM

sheesh these legacy projects are death by millions of cuts

When did FBU have it's last foray into the cupboard to clean out legacy projects at a large cost
that it never wanted to keep on the shelf ?

They have done it before, haven't they ? ;)

whatsup

08-02-2024, 03:29 PM

nztx

08-02-2024, 03:48 PM

They wouldnt dare cut the dividend !!!!

Why not ? .. look where it got WHS ... nothing like a competitor alongside in the race down & beyond ;)

Take off $3 a share for many cuts ;)

troyvdh

08-02-2024, 03:53 PM

Its funny...kinda.Ive just returned from a wonderful week in HKG.Leaving the airport...construction is on a biblical scale.As are the towering sky scrappers ...we had a feed on the 13th highest building in the world.Hong kongers are wonderful..it appeared to me that two issues are uppermost...Make dosh and get educated.I wondering ...surely construction products would have come China right.I wonder if they have similar issues as in NZ.....OR does NZ Inc just buy what is cheapest.
Like building houses out of polystyrene .....WTF......Whats the cost going to be $40B....

troyvdh

08-02-2024, 08:28 PM

Sorry...some folk believe this issue is the biggest man made disaster in NZ history.

Am I wrong...is it debatable.

I understand that Canada was one of the first to suffer.

whatsup

09-02-2024, 09:53 AM

I dont think that FBU is a buy until it reached its July-Sept 2012 level approx $3-00 !! imo there is much more " disclosures " to be revealed !!

Entrep

09-02-2024, 10:33 AM

I've sold, crystallising a pretty big loss. Terrible management with terrible track record. Uninvestable until that changes.

Rawz

09-02-2024, 10:40 AM

the old price/book value play is looking quite attractive.

Its traditionally been a good trade.

I wonder how low this can go before it trades at 1.5x book value again

leverage ratio too high for me. but others wont mind

Entrep

12-02-2024, 03:02 PM

From: NZX Product Operations
Date: Monday, 12 February 2024
Subject: Fletcher Building Limited ("FBU") -- Trading Halt of Securities

Message:

NZ RegCo advises that it has placed a trading halt on Fletcher Building
Limited ("FBU") ordinary shares at the request of the issuer. The trading
halt was placed at 2:40pm today, Monday, 12 February 2024.

FBU has requested the trading halt to allow it to finalise earnings guidance
which it proposes to release to the market, which is likely to materially
vary from current analyst forecasts. The information to allow FBU to do this
will arise as the Board and sub-committee of the Board finalise FBU's half
year accounts.

The halt will remain in place pending the release of an announcement by the
issuer, or midday on Wednesday, 14 February 2024.

Please contact NZX Product Operations on +64 4 496 2853 or
productoperations@nzx.com with any queries.

winner69

12-02-2024, 03:30 PM

Jeez …only a week since last lot of bad news ….but this could well be a ‘material’ PROFIT UPGRADE

Sideshow Bob

12-02-2024, 03:34 PM

Jeez …only a week since last lot of bad news ….but this could well be a ‘material’ PROFIT UPGRADE

It's FBU - its never good news.......:mellow:

alokdhir

12-02-2024, 03:41 PM

Only 1% chance of good news ...most likely its not bad but very bad ...:t_down:

winner69

12-02-2024, 04:01 PM

Word on street …..Taylor might be way out

bull....

12-02-2024, 04:04 PM

savage :scared: me thinks

alokdhir

12-02-2024, 04:09 PM

Word on street …..Taylor might be way out

That maybe the collateral damage ...which will come from materially downgraded profits from analysts expectations ....as thats what the Halt notification says

bull....

12-02-2024, 04:11 PM

That maybe the collateral damage ...which will come from materially downgraded profits from analysts expectations ....as thats what the Halt notification says

and ceo gone ... massive impairments i believe. debt ratio's in trouble ?

Filthy

12-02-2024, 04:52 PM

time to carve up and sell off some of the businesses. could even IPO a couple of em and actually extract some decent value for shareholders; if they even cared. the sum of the parts surely worth more!

Rawz

12-02-2024, 05:06 PM

Old mate Allan wont be happy.

I suppose this is going to be a final clean out. Write everything down and start a new.

whatsup

12-02-2024, 05:15 PM

Old mate Allan wont be happy.

I suppose this is going to be a final clean out. Write everything down and start a new.

Before they do that the need to repair the shonky crappy leaky buildings that they have built over the last 30 years and not left the poor sods out to dry ( nothing to see here mentality )

In life I take the attitude , " my cheque does not bounce, so why should your work " !!

Toddy

12-02-2024, 05:23 PM

Back from surfing at the Mt to catch up on today's business news.

What gets up my goat is that these clowns make NZ look like the wild west and drags other stocks and confidence down with them.

Sack the lot of them. They get big bonuses for losing shareholders money year after year.

nztx

12-02-2024, 06:06 PM

Must likely be a large pool of blood on the floor for FBU to go Trading Halt ;)

Any bets on the SP when the collar gets removed after the release gets tossed out ?

moimoi

12-02-2024, 06:08 PM

It is remarkable that this couldn't have been announced some time ago.

AND

in an effectively regulated marketplace the regulator would be investigating why not!!.

hogie

12-02-2024, 06:10 PM

Wish I had've got out when I was in the green ... this was after waiting over a decade ...

Too big to fail?

Toddy

12-02-2024, 06:11 PM

Did anything ever come of the Australian class action.
Or is it still ongoing in the background.

nztx

12-02-2024, 06:54 PM

Did anything ever come of the Australian class action.
Or is it still ongoing in the background.

might need another Trading Halt for that one .. WA's Dingo's might still be too busy sniffing out the trail :)

Southern Lad

12-02-2024, 08:00 PM

and ceo gone ... massive impairments i believe. debt ratio's in trouble ?

See the additional detail in the Russell McVeagh letter sent to the ASX as part of the trading halt request:

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02771572-2A1504380

Sounds very much like additional impairments and provisions, no or little dividend and Ross Taylor falling on his sword. Hard to see a capital raise not being required in the short term. No doubt class action lawyers will be at the ready.

Lego_Man

12-02-2024, 08:51 PM

See the additional detail in the Russell McVeagh letter sent to the ASX as part of the trading halt request:

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02771572-2A1504380

Sounds very much like additional impairments and provisions, no or little dividend and Ross Taylor falling on his sword. Hard to see a capital raise not being required in the short term. No doubt class action lawyers will be at the ready.

I've always found it ludicrous that Aussie investors get more information going into a halt than us, even if it's a dual listed company.

Toddy

12-02-2024, 09:02 PM

I've always found it ludicrous that Aussie investors get more information going into a halt than us, even if it's a dual listed company.

Didn't the Aussies read it in the paper first. Then FBU put out a market disclosure saying that they were trying to get the article taken down.

Were they successful I wonder.

alokdhir

13-02-2024, 08:18 AM

I've always found it ludicrous that Aussie investors get more information going into a halt than us, even if it's a dual listed company.

That's due to more relaxed disclosure norms at NZX ...in trying to be easy on companies who pay them listing fees they sacrifice the interests of investors ...thats being penny wise and pound foolish imho

Balance

13-02-2024, 08:27 AM

That's due to more relaxed disclosure norms at NZX ...in trying to be easy on companies who pay them listing fees they sacrifice the interests of investors ...thats being penny wise and pound foolish imho

NZX has been on a slippery downward slope for years.

Mark Weldon (with the complicity of its directors and institutional shareholders) killed the goose that laid the golden eggs to feather their own nests at the expense of NZ.

I wrote to the NZX during Mark’s reign of the NZX about the revolving door ‘my way or the Highway’ Weldon’s personnel management style and I was told it was none of my business!

Took the MediaWorks debacle to show everyone just how lousy and useless he was.

Still has the letter via email somewhere in my outbox!

Leemsip

13-02-2024, 09:10 AM

COVID lows in the low $3....

Hard to buy without certainty on a cap raise though....

bull....

13-02-2024, 09:54 AM

COVID lows in the low $3....

Hard to buy without certainty on a cap raise though....

might get there.
in there announcement they stated analyst forecasts are way to high compared to what they are going to report.
which means share price not reflecting reality ? savage sell-down coming on analysts updating there numbers ?

bull....

14-02-2024, 07:42 AM

Simplicity calls for greater scrutiny of Fletcher Building’s board

https://www.thepost.co.nz/business/350169318/simplicity-calls-greater-scrutiny-fletcher-buildings-board

of course its a bit late

Toddy

14-02-2024, 08:16 AM

The Board has some of the best business compliance brains in NZ.

The blame is at the operational lever, heads of divisions.

For example, how come the provisions are always surprises when clearly they do not happen overnight. Good accounting from management project accounting to financial accounting surely would show progressive cost blow outs and red flags.

Why does it always take the preparation of the half year and annual accounts to bring these issues to a head.

Is it the systems or the people that are just not up to the job.

Something needs to change. The poor shareholders carry the can for this incompetence.

Yes, the Board has a major role to play. But its clear that the right information is not making its way to the board room.

thedrunkfish

14-02-2024, 08:30 AM

These are all questions that should have been drilled down into long before now and thus the buck stops with the upper management.

If the division head lets this happen they should be down the road as well as down the management chain below that allowed it, totally unacceptable. Unfortunately the business like many others has suffered with middle management bloat, many of whom are totally unaccountable and therefore useless.

I think Fletchers may be the first of many businesses who will need to sharpen their operations heavily in the next 12 months, invest and grow the profitable parts of the business and be ruthless in cutting what isnt. Diversity and inclusivity is all well and good when your making money......

Sideshow Bob

14-02-2024, 08:39 AM

https://www.nzx.com/announcements/426113

NZ RegCo refers to the announcements released yesterday, Monday, 12 February 2024 regarding the application of a trading halt on Fletcher Building Limited (“FBU”) ordinary shares at the request of the issuer.

FBU is considering a number of matters, relevant to information to be released on Wednesday, 14 February 2024, including:

FBU’s half year results, including potential provisions and impairments;
earnings guidance for the full year, which FBU has indicated is likely to materially vary from current analyst forecasts;
FBU’s determination of the level of interim dividend or if no dividend will be paid; and information about the position of the CEO of FBU.

FBU has advised NZ RegCo that it intends to release this information before market open tomorrow, Wednesday, 14 February 2024 to be followed by an investor call at 11:00am. FBU will release full details about that investor call tomorrow morning.

FBU has advised NZ RegCo that the investor call is expected to conclude by midday on Wednesday, 14 February 2024. NZ RegCo considers it appropriate for additional time to be provided following the conclusion of the investor call, to enable investors and the market to consider and assess the information released by FBU and the commentary provided at the investor call.

Accordingly, NZ RegCo confirms that it has exercised its discretion and the halt will remain in place until 12:30pm on Wednesday, 14 February 2024.
Please contact NZX Product Operations on +64 4 496 2853 or productoperations@nzx.com with any queries.
ENDS

Sideshow Bob

14-02-2024, 08:49 AM

Hassall and Taylor both going....

https://www.nzx.com/announcements/426125

Auckland, 14 February 2024: Fletcher Building Ltd (“Fletcher Building” or “the Company”) today announces that Group Chief Executive Officer (CEO) Ross Taylor has given notice to the Board of his retirement and that as part of a Board renewal review being undertaken, Chairman Bruce Hassall will step down from the Board at the Company’s Annual Shareholders Meeting later this year.

An international and domestic search for a new Group CEO will be progressed, leveraging the Company’s succession plan. The search process will be led by Non-Executive Director Barbara Chapman who Chairs the Company’s People and Remuneration Committee.

Mr Taylor has a six-month notice period, which he will serve in full if required, to facilitate an orderly handover to his successor.
Fletcher Building Chairman Mr Bruce Hassall said, “The Board, Ross and I believe it is in the best interests of the business and the team that he handover to a new leader and that I hand over to a new Chair at the time of the ASM in October.”

The Board thanks Bruce and Ross for their leadership and contribution since 2017. During this period, they have led the turnaround of Fletcher Building which has seen the core businesses becoming more focused and profitable, with improved earnings, margins and returns. The Company has a growth strategy in place and is focussed on progressing the close out of construction legacy projects and developing an industry solution for the Perth plumbing issue.

Mr Taylor said, “Fletcher Building is a great business, and it has been an honour and pleasure to have the opportunity to work with such a committed team of people. I remain committed to the business and facilitating a smooth and orderly transition to my successor who will be able to focus on leading the organisation through the next strategy cycle and beyond.”

ENDS

Sideshow Bob

14-02-2024, 08:50 AM

https://www.nzx.com/announcements/426123

Auckland, 14 February 2024: Fletcher Building Limited today announced its financial results for the first half of FY24.

• Revenue of $4,248 million, down 1% from $4,284 million in HY23
• EBIT before significant items of $264 million, down 27% from $360 million in HY23
• EBIT margin of 6.2%, down from 8.4% in HY23
• Net Loss After Tax of $120 million (incl. $180 million flagged legacy provisions and $122 million non-cash write-down on Tradelink) compared to Net Profit After Tax of $92 million in HY23
• Underlying trading cash flows robust on good working capital management offset by legacy cash impact

Fletcher Building chief executive Ross Taylor said: “Against the backdrop of materially weaker trading conditions, particularly in the NZ residential sector where volumes declined 20%, Group revenue of $4,248 million was in line with the prior period’s $4,284 million.

EBIT before significant items was $264 million, compared to $360 million in the prior period. The Group reported a net loss after tax of $120 million, compared to a profit of $92 million in the prior period. Disappointingly, the result was heavily impacted by the $165 million significant items provision on the New Zealand International Convention Centre announced on 5 February and a $122 million non-cash impairment and write-down on the Tradelink Australia business.”

In New Zealand, revenue for the materials and distribution divisions (Building Products, Concrete and Distribution) was 8% lower than HY23. However, this compares to overall market volumes which were 15% lower compared to HY23. The market decline was driven primarily by the residential sector, which weakened by around 20%, to which these divisions have a 60% exposure.

Mr. Taylor said: “In a more challenging trading environment, the New Zealand materials and distribution divisions performed solidly. Gross margins remained robust at 29.3% (HY23: 30.3%), with the reduction versus HY23 primarily due to a shift in revenue mix towards the lower-margin commercial and infrastructure sectors. The divisions proactively managed price and costs to help offset increased competitive intensity and ongoing inflationary pressure.

“For our Residential and Development division, the house sales market was a relative bright spot in New Zealand, with improved buyer activity, especially first-home buyers, and a stabilising of house prices after 18 months of decline. Fletcher Residential increased EBIT to $41 million (HY23: $33 million), with 419 units taken to profit compared to 189 in HY23.

“A particular highlight of the half was the performance of the Australian division which delivered EBIT and EBIT margin broadly in line with HY23 despite a softer market. Effective price disciplines and a shift toward higher-margin products saw the gross margin lift to 33.1% (HY23: 31.9%) and overhead costs were 3% lower than the prior period.

“A full review of the Australian Tradelink® business over the half year combined with disappointing results led to a $122 million non-cash impairment and write-down in its carrying value. We have concluded that whilst we believe there is a compelling opportunity for Tradelink, further ownership of the business is not in line with the strategic objectives of Fletcher Building. Consequently, we intend to commence a divestment process for Tradelink shortly.

“Cash flows from operating activities for the Group were an outflow of $126 million, compared to an outflow of $203 million in the prior period. The materials and distribution divisions produced strong first half trading cash flows of $253 million compared to $206 million in HY23, driven by good working capital management and despite the lower earnings.

“Regarding the ongoing Perth plumbing issues, our testing and expert reports on causation continue to show that that the leaks are caused by installation failures and that there is no manufacturing defect. We remain committed to developing a workable and appropriate industry solution.

“Given the current market conditions, the expected legacy cash outflows and in line with the Company’s dividend policy, the Board has made the prudent decision to not declare and pay an interim dividend in order to maintain our balance sheet settings.

“As we look ahead to the remainder of the year, we expect FY24 Group EBIT before significant items to be in a range of $540 million to $640 million, with the mid-point assuming a continuation of current market conditions for the balance of FY24.”

“Finally, I would again like to express my appreciation to our dedicated team for their hard work and commitment, to our customers for their trust and loyalty, and to our shareholders for their ongoing support.”

#Ends

bull....

14-02-2024, 08:59 AM

Balance

14-02-2024, 09:04 AM

Ross Taylor has what is termed ‘Fxxk you money’ from his high pay in the millions of dollars over the last 6 years so he has happily quit and can comfortably retire without having to put up with all the crap coming his way. Many of the crap as a consequence of legacy projects.

alokdhir

14-02-2024, 09:07 AM

i see why they saying there guidance materially different to analyst's

there ebit guidance is down double digits 10 - 15% on analyst's range :scared:
no div down 100% on analyst range :scared:

and now we have a new ceo at some stage to wipe cupboard's clean again when they start :scared:

But Allan Gray increased its holding by more then additional 1% ...if thats some consolation ...maybe they see lots of value now ...if u putting this much money then they must be doing very good research too ...surely more then us ?

Balance

14-02-2024, 09:08 AM

But Allan Gray increased its holding by more then additional 1% ...if thats some consolation ...maybe they see lots of value now ...if u putting this much money then they must be doing very good research too ...surely more then us ?

Allan Gray is a contrarian investor so situations like FBU are made for them.

winner69

14-02-2024, 09:09 AM

But Allan Gray increased its holding by more then additional 1% ...if thats some consolation ...maybe they see lots of value now ...if u putting this much money then they must be doing very good research too ...surely more then us ?

Time for Kingfish to get involved methinks …….Fletchers and Vulcan a good industry pair

alokdhir

14-02-2024, 09:15 AM

Allan Gray is a contrarian investor so situations like FBU are made for them.

Contrarian surely u shud be to invest in FBU ...but they must be doing some research also or just contrarian to SP movement ??

bull....

14-02-2024, 09:16 AM

looks like every division getting savaged on margin and ebit :scared:

leverage at top of range , debt rising :scared:

if keeps getting worse need more capital i reckon

no change to iplex provision but they say risk remains :scared: potential more provisions in the future

Balance

14-02-2024, 09:38 AM

“As we look ahead to the remainder of the year, we expect FY24 Group EBIT before significant items to be in a range of $540 million to $640 million, with the mid-point assuming a continuation of current market conditions for the balance of FY24.”

Consensus forecast was for $674m so downgrade of between 5% to 20%. Heck of a range!

whatsup

14-02-2024, 09:46 AM

whatsup

14-02-2024, 09:48 AM

Contrarian surely u shud be to invest in FBU ...but they must be doing some research also or just contrarian to SP movement ??

I personally wouldnt be a contrarian investor until the C R issue is totally put to bed and that imho is an issue between FBU and its financers !!

Balance

14-02-2024, 09:52 AM

Bal, what was his pay scale ?

He was the highest paid CEO of NZ’s listed companies, I believe.

whatsup

14-02-2024, 10:16 AM

FBU will restart trading @12.30 today.

winner69

14-02-2024, 10:19 AM

FBU will restart trading @12.30 today.

Now decks cleared and all that every body happy and share price will go up?

bull....

14-02-2024, 10:20 AM

is there an investor call ?

whatsup

14-02-2024, 10:28 AM

is there an investor call ?

Investor call 11.00

bull....

14-02-2024, 10:34 AM

Investor call 11.00

how to access ?

winner69

14-02-2024, 10:39 AM

how to access ?

https://edge.media-server.com/mmc/p/wishq6iy/

Sideshow Bob

14-02-2024, 10:41 AM

Where is this bad boy going to trade after its halt??

bull....

14-02-2024, 10:43 AM

https://edge.media-server.com/mmc/p/wishq6iy/

thx off for a listen

Toddy

14-02-2024, 10:54 AM

Where is this bad boy going to trade after its halt??

There are so many super funds invested in FBU. Therefore I dont think it will trade much below $4 bucks. They all have a vested interest.

winner69

14-02-2024, 11:08 AM

Split screen ….test cricket and FBU rave

I have to say test cricket more exciting

But question time might change that

whatsup

14-02-2024, 11:59 AM

Where will this open shortly ?

whatsup

14-02-2024, 12:00 PM

Where will this open shortly ?

Sub $4-00 at least .

Toddy

14-02-2024, 12:08 PM

I'm starting to see a correlation between poor CEO performances and those that play golf.

Maybe worth building into my risk model.

winner69

14-02-2024, 12:17 PM

I'm starting to see a correlation between poor CEO performances and those that play golf.

Maybe worth building into my risk model.

From the bits I heard they don’t see the poor ‘everything’ as their fault

Have to admire the improvement in injury rates …TRIFR chart looking good

Entrep

14-02-2024, 12:33 PM

$3.50

https://media.giphy.com/media/JmyufT9zDTm4Cam9kR/giphy-downsized.gif

Rawz

14-02-2024, 12:49 PM

Was there any mention of cap raise on the call?

whatsup

14-02-2024, 12:56 PM

Was there any mention of cap raise on the call?

No, but that could come later after the funders have had their say !

stef

14-02-2024, 03:09 PM

More mistakes, so much imcompetence at FBU, cant get simple details right

GENERAL: FBU: Correction to Net Tangible Assets (NTA)

Auckland, 14 February 2024: Fletcher Building wishes to correct the NTA
figure in the NZX Results Sheet attachment released earlier today. The
correct NTA per Quoted Equity Security value for the Current Period is $2.91
(not $3.11 as stated in the earlier attachment due to typographical error).

An amended Results Sheet is attached for completeness.

Leemsip

14-02-2024, 03:25 PM

Outside of COVID, we havent seen this price since 2003.
Waiting for RAWZ to buy, so I can get in....

alokdhir

14-02-2024, 03:43 PM

$ 3.50 was a good place to get in ....first cut is the deepest normally ....so hopefully it wont try to test previous low of $ 3.20 ...

Rawz

14-02-2024, 04:14 PM

Outside of COVID, we havent seen this price since 2003.
Waiting for RAWZ to buy, so I can get in....

Ill be waiting for after the cap raise.
Or wait for the half year report

whats the old book value / sp ratio..?

winner69

14-02-2024, 05:36 PM

Ill be waiting for after the cap raise.
Or wait for the half year report

whats the old book value / sp ratio..?

Book Value reported as $4.34

Always good to buy FBU at discount to book value …like nearly 20%

Rawz

14-02-2024, 05:41 PM

Book Value reported as $4.34

Always good to buy FBU at discount to book value …like nearly 20%
Money for jam then.

Toddy

14-02-2024, 05:44 PM

Money for jam then.

. Money for leaky pipes

percy

14-02-2024, 06:13 PM

Book Value reported as $4.34

Always good to buy FBU at discount to book value …like nearly 20%

Correction to Net Tangible Assets (NTA) figure in Results Sheet attachment
Auckland, 14 February 2024: Fletcher Building wishes to correct the NTA figure
in the NZX Results Sheet attachment released earlier today. The correct NTA per
Quoted Equity Security value for the Current Period is $2.91 (not $3.11 as stated
in the earlier attachment due to typographical error).

Paint it Black

14-02-2024, 06:36 PM

Complete utter incompetence from the Board. Next time can we please have a CEO full time in NZ not retiring back to OZ with a big smile on his face.

winner69

14-02-2024, 07:27 PM

As some of you have probably caught on I’ve had my doubts about Taylor being Fletchers saviour from very early days

First red flag was when I heard it was Kate Spargo, who was on UGL and Fletcher boards, tapped him on the shoulder and said go talk to Ralph Norris and he’ll sort something out. So much for the global executive search eh

Kate didn’t last much longer and left about the same time Norris did …but damage done

Paint it Black

14-02-2024, 08:09 PM

Correction to Net Tangible Assets (NTA) figure in Results Sheet attachment
Auckland, 14 February 2024: Fletcher Building wishes to correct the NTA figure
in the NZX Results Sheet attachment released earlier today. The correct NTA per
Quoted Equity Security value for the Current Period is $2.91 (not $3.11 as stated
in the earlier attachment due to typographical error).

'Typographical error' my foot - how could it be? More likely a calculation mistake which sums up Fletcher's honesty and ability.

nztx

14-02-2024, 08:11 PM

Book Value reported as $4.34

Always good to buy FBU at discount to book value …like nearly 20%

Depends on how much further damage they still got to book up to fill the bottomless
Aussie problem pit ahead and how many more kaput projects there are hidden out back
to sneak back in for fix up jobs ;)

How large would you all like the reverse dividends to be - boys & girls ? .. you know the sort
where the pennies get thrown back into the tin with no imputation credits, deductions etc etc
and if you're lucky they don't all fly out the door on the next lot of reported red ink :)

Toddy

14-02-2024, 08:26 PM

Typographical error. Sure was.

It's easy to confuse a 311 with a 2, a 9 and a 1.

Happens all the time down in finance at Fletchers.

kiora

14-02-2024, 10:41 PM

No wonder NZ houses leak,construction costs have exploded & roads are full of pot holes.

https://www.infometrics.co.nz/article/2023-03-construction-cost-growth-eases-but-further-challenges-lie-ahead

As I mentioned a few months back,uninvestable ever since it listed in the
80s ? !

kiora

14-02-2024, 10:43 PM

Continuing systemic catastrophes

No wonder NZ houses leak,construction costs have exploded & roads are full of pot holes.

https://www.infometrics.co.nz/article/2023-03-construction-cost-growth-eases-but-further-challenges-lie-ahead

As I mentioned a few months back,uninvestable ever since it listed in the
80s ? !

alokdhir

15-02-2024, 08:34 AM

Toddy

15-02-2024, 08:42 AM

It's a good deal for NEW investors at these levels

Those shareholders that have been carrying the can for the last decade probably have more than enough exposure already.

Im pretty sure that the Fletcher workers in the staff share scheme don't want anymore shares.

bull....

15-02-2024, 08:47 AM

Main and most objective question at the moment ....IS FBU A BUY NOW ? As per morning star it is ...their target remains $ 6 FV

What about experts here ? FBU has gone thru these cycles of boom and bust many times ...so will this bust lead to boom ahead or its final bust ???

ill be waiting for all the analyst's to update there valuations and tell there clients. esp the aussie ones

alokdhir

15-02-2024, 08:50 AM

ill be waiting for all the analyst's to update there valuations and tell there clients. esp the aussie ones

Morningstar which is the most conservative of all analysts I have ever seen has already updated its reco after this bad news out ...they still say FV $ 6 ...being super conservative makes that pretty solid reco ...imho

winner69

15-02-2024, 08:54 AM

Main and most objective question at the moment ....IS FBU A BUY NOW ? As per morning star it is ...their target remains $ 6 FV

What about experts here ? FBU has gone thru these cycles of boom and bust many times ...so will this bust lead to boom ahead or its final bust ???

It’s a BUY mate

Dropped a line to Matt to give it a go …..needs to pick up the bargains before the next construction boom starts

alokdhir

15-02-2024, 08:56 AM

It’s a BUY mate

Dropped a line to Matt to give it a go …..needs to pick up the bargains before the next construction boom starts

Thanks mate for your very objective answer to my simple question ....very refreshing to note your objectivity too ....:t_up:

Jenny Ruth

15-02-2024, 09:00 AM

Hi all.
My latest column published on my Substack, Just the Business examines why Fletcher Building director Barbara Chapman should not be in charge of selecting the company's next chief executive. The headline is:
Ralph Norris' influence over Fletcher Building needs to end
You can find it here: https://justthebusinessjennyruth.substack.com/p/ralph-norris-influence-over-fletcher
And apologies I forgot to say on Tuesday that I had published a column, also on Fletcher, on why the board needs to go. You can find that one here: https://justthebusinessjennyruth.substack.com/p/time-to-go-for-fletcher-buildings

Toddy

15-02-2024, 09:16 AM

winner69

15-02-2024, 09:18 AM

Balance

15-02-2024, 09:30 AM

I just heard on the news that the Government is going to rewrite the building regulations to align with international standards and allow other international products into NZ and break the monopoly pricing.

That’s good news if building material prices drop or at least, stop going up.

Issues faced by importers of building materials include the regulatory & compliance regime in NZ (ridiculous when you consider how leaky homes as a consequence of using local manufactured & approved products & materials have cost billions of dollars) and shipping costs as NZ is heck of a long way from everywhere.

Rawz

15-02-2024, 09:38 AM

Balance Sheet, Returns and Funding

ROFE before significant items for the year to 31 December 2023 was 13.8%. Funds employed increased to $5.1 billion compared to $4.8 billion at 30 June 2023, resulting from: an unwind of onerous contract provisions on the legacy construction projects; and the Group’s continued investment in attractive growth opportunities to deliver at least 15.0% ROFE when mature.

The Group’s leverage ratio (net debt / EBITDA before significant items) at 31 December 2023 was 1.8 times, compared to 1.2 times at 30 June 2023, which principally reflects debt drawdowns associated with legacy cash outflows. Looking ahead, the Group expects to remain at the higher end of its target 1x-2x leverage range through FY24.

The Group’s gearing at 31 December 2023 was 36.4% compared with 27.8% at 30 June 2023.

Total funding available to the Group at 31 December 2023 was $2,873 million, of which $709 million was undrawn and there was an additional $215 million of cash on hand. This provided liquidity to the Group at 31 December 2023 of $0.9 billion. In HY24, the Group executed a New Zealand dollar denominated loan facility with a three-bank syndicate of $400 million, which replaces the $300 million revolving credit facility which was due to mature in October 2024.

The Group also announced in HY24 its first investment grade credit rating of Baa2 assigned by Moody’s Investors Service. The average maturity of the Group’s debt at 31 December 2023 was 2.8 years, with the currency split being 15% Australian dollar; 84% New Zealand dollar; and 1% spread over various other currencies.

The Group currently has 50% of all borrowings with fixed interest rates with an average duration of 2.2 years. Inclusive of floating rate borrowings, the average interest rate on the debt (based on period-end borrowings) was 6.0%.

Rawz

15-02-2024, 09:56 AM

FBU have over $1b in lease liabilities which some must be leases on their large fleets of trucks, machinery, cranes etc. If you add this to their debt their gearing is closer to 60%

Anyone with more accounting knowledge care to share their wisdom on this area?

bull....

15-02-2024, 10:27 AM

winner69

15-02-2024, 10:43 AM

Rawz

15-02-2024, 11:14 AM

I'll look later but lots if PlaceMaker etc stores with expensive leases would be large chunk if it I reckon

Ah yes of course

bull....

15-02-2024, 11:31 AM

here we go all downgrades

goldman sachs cuts price target 20% to A3.70 RATED NEUTRAL
JEFFERIES CUTS 13% TO NZ5.20

probably more to come

Leemsip

15-02-2024, 11:55 AM

Accountant here. Lease liabilities dont really count (in my mind), I mean you are in a contract and "owe the money", but its just part of the monthly expenses and running the business, so not proper debt in my opinion. I exclude them from any analysis. You arent planning on paying them back, other than the monthly tick over... Example on my thinking on this - is a company with 1 year left on a lease (so small liability) better off than a company who has just signed a 10 year lease (massive liability).....

Trick with this, and the new accounting standards, is to make sure you factor these into operating cash flow, as it goes through financial cashflows in the statements now...

whatsup

15-02-2024, 12:50 PM

here we go all downgrades

goldman sachs cuts price target 20% to a3.70 rated neutral
jefferies cuts 13% to nz5.20

probably more to come

$3.55 atm, $3.55 atm !

bull....

15-02-2024, 01:34 PM

just had a couple more massive ones come thru ... all downgrades

macquarie cut 43% to $3.46 nz
morgans cut 30% to $4 nz

not surprised i found there answers quite vague around the big downturn in business last 2 mths

Balance

15-02-2024, 01:36 PM

just had a couple more massive ones come thru ... all downgrades

macquarie cut 43% to $3.46 nz
morgans cut 30% to $4 nz

FBU has made a fool of the analysts with their previous forecasts and valuations - they are not going to be in forgiving mood!

bull....

15-02-2024, 01:37 PM

FBU has made a fool of the analysts with their previous forecasts and valuations - they are not going to be in forgiving mood!

yes a number of analysts were pissed with there communication of business conditions only end of last yr

Greekwatchdog

15-02-2024, 01:39 PM

For Bars Review

Fletcher Building's (FBU) 1H24 result and FY24 guidance was disappointing. FBU does have some good NZ businesses with strong market positions which have generated c.NZ$390m EBIT on average over the last decade. However, group performance has been dragged down by issues in Construction and Australia. The question is: are these over? We think it's unlikely in the short-term, with the New Zealand International Convention Centre (NZICC) still to be completed and Iplex pipe issues still unresolved. We acknowledge the perennial underperformance of FBU but the combination of cyclically low activity, significant negative items likely at their peak, and new management retains our interest. Towards the end of 2024 the NZICC should be finishing, we should have more clarity on whether (or not) an Iplex product recall will occur, new management will have set out their vision for the businesses, and the NZ operating backdrop will likely be more constructive (FBU did lift FY24 home sales guidance highlighting improved housing demand). As such we maintain our OUTPERFORM rating on valuation grounds (12 month forward PE of 10x) but acknowledge the market will likely want certainty on NZICC completion costs and Pro-fit (Iplex) pipe issues, as well as lower debt levels to rerate the stock.

What's changed?

Earnings: We lower our FY24–26 EBIT forecasts -13%/-7%/-6%
Target price: We lower our target price -9% to NZ$4.80.

Weak 1H24 with no post election bounce
The weaker than expected 1H24 EBIT of NZ$264m was disappointing but likely the result of slower NZ activity persisting past the election (and into the new year). Building Materials (EBIT -34% vs 1H23, EBIT margin 11.1%) and Distribution (EBIT -46% vs 1H23, EBIT margin 4.2%) saw the largest declines, while Australia was more resilient (EBIT -5%) despite continued underperformance from Tradelink (NZ$122m write-down and now being divested). The one bright spot was residential development, where the guidance for home sales was increased to 900 (previous guidance 700–800). No dividend was declared due to high gearing and a cash outflow. FBU provided FY24 EBIT guidance of NZ$540m–$640m with the midpoint reflecting continuation of current trading conditions.

A lot of water to go under the bridge over the next 12 months
Recent challenges with FBU's performance (and communication of those challenges) have lead to Chair Bruce Hassal and CEO Ross Taylor both announcing they will depart the business. The next 12 months will have their challenges: the NZICC needs completing, the Profit pipes saga will drag on (with a product recall a significant risk for FBU), NZ demand could be patchy, the balance sheet needs more careful management (we calculate senior leverage ratio of 2.3x using the midpoint of guidance and FBU's current debt vs. a 3.25x covenant providing c.NZ$700m of debt headroom), and there will be a new management team before year end.

link

link
OUTPERFORM

Fletcher Building's (FBU) 1H24 result and FY24 guidance was disappointing. FBU does have some good NZ businesses with strong market positions which have generated c.NZ$390m EBIT on average over the last decade. However, group performance has been dragged down by issues in Construction and Australia. The question is: are these over? We think it's unlikely in the short-term, with the New Zealand International Convention Centre (NZICC) still to be completed and Iplex pipe issues still unresolved. We acknowledge the perennial underperformance of FBU but the combination of cyclically low activity, significant negative items likely at their peak, and new management retains our interest. Towards the end of 2024 the NZICC should be finishing, we should have more clarity on whether (or not) an Iplex product recall will occur, new management will have set out their vision for the businesses, and the NZ operating backdrop will likely be more constructive (FBU did lift FY24 home sales guidance highlighting improved housing demand). As such we maintain our OUTPERFORM rating on valuation grounds (12 month forward PE of 10x) but acknowledge the market will likely want certainty on NZICC completion costs and Pro-fit (Iplex) pipe issues, as well as lower debt levels to rerate the stock.

whatsup

15-02-2024, 01:43 PM

$3-50 !! death by a thousand cuts atm.

Rawz

15-02-2024, 02:04 PM

All these brokers updating their DCF models on FBU. Cracks me up lol

winner69

15-02-2024, 02:12 PM

All these brokers updating their DCF models on FBU. Cracks me up lol

Another round of guesses about the future …….even then probably need to change/lower some assumptions to make the spreadsheet spit out a number that isn’t too outrageous v current price

Leemsip

15-02-2024, 02:44 PM

What a disaster. I think this will keep sinking through the lows.
Just impossible to buy right now.

Also love to see the spreadsheet nerds scramble to spit out a new random number go up (but less up)

alokdhir

15-02-2024, 04:11 PM

FBU has broken on the downside ....maybe $ 3.20 on cards ...let's see. when. Bull steps in to stop the rot

Master98

15-02-2024, 04:31 PM

FBU has broken on the downside ....maybe $ 3.20 on cards ...let's see. when. Bull steps in to stop the rot
will down to NTA value $2.91 and under, this company just has no creditability, more troubles and problems coming, avoid!

whatsup

15-02-2024, 04:41 PM

$3-41 Slip sliding away !!

Entrep

15-02-2024, 05:23 PM

Morningstar which is the most conservative of all analysts I have ever seen has already updated its reco after this bad news out ...they still say FV $ 6 ...being super conservative makes that pretty solid reco ...imho

Please tell me you're kidding.

Morningstar is the biggest joke of the lot. There's a reason you find their analysis for free everywhere, including all the retail sites... it's complete garbage, but to the upside. So they get punters to buy.

Now that the $3.50 buy wall has been sold into, that's all she wrote for FBU.

The company is an absolute basket case. All hinges on the new leadership.

bull....

15-02-2024, 05:51 PM

FBU has broken on the downside ....maybe $ 3.20 on cards ...let's see. when. Bull steps in to stop the rot

i agree with the forsyth analyst

market will likely want certainty on NZICC completion costs and Pro-fit (Iplex) pipe issues, as well as lower debt levels to rerate the stock.

doesnt mean wont be a short term bounce some day , but when lol ?

troyvdh

15-02-2024, 05:51 PM

Guys please get real...From Sam Stubbs."the selling price of houses is one of the highest in the world and where housing affordability is the worst in the OECD.
Read it a few times ....and then again.
NZ inc dependent on the price of milk powder...and house price appreciation....WTF
Am I wrong