FBU Chart.

[alistar_mid]

brought some today lol at $7.45

on the basis of looking at its graph and thinking well its done a $11 share price before, it can get there again. And the building site at britomart they are doing (as well as the sky city convention centre) inspires me

[percy]

brought some today lol at $7.45

on the basis of looking at its graph and thinking well its done a $11 share price before, it can get there again. And the building site at britomart they are doing (as well as the sky city convention centre) inspires me

I take that was in Austraian dollars?

[Biscuit]

brought some today lol at $7.45

on the basis of looking at its graph and thinking well its done a $11 share price before, it can get there again. And the building site at britomart they are doing (as well as the sky city convention centre) inspires me

Aren't they taking a bit of a hiding on the Sky City work?

[macduffy]

:confused:
brought some today lol at $7.45

on the basis of looking at its graph and thinking well its done a $11 share price before, it can get there again. And the building site at britomart they are doing (as well as the sky city convention centre) inspires me

But are they making or losing money on the project?

:confused:

[percy]

Certainly losing on Justice building in ChCh.

[whatsup]

How about the Waterview tunnel, whats the problem there ?

[troyvdh]

Re Justice building in CHCH..I know a bloke working there.....he says its a complete C.....F......

[percy]

Re Justice building in CHCH..I know a bloke working there.....he says its a complete C.....F......

Best post on ST for months.!!..lol

[minimoke]

Certainly losing on Justice building in ChCh.if i was a holder id be asking about exposure to remedial repairs under EQR

[winner69]

Agree with this from Chris Lee

http://www.chrislee.co.nz/taking-stock

Often said that Adamson is a disaster .....but then FBU been a disaster for a while

Minimoke will endorse Lee's comments on Chch rebuild in same article

[winner69]

Bugger again ..... but entirely expected

And finally that Adamson has got 'fired'

I think everybody is disappointed Sir Ralph -


Fletcher Building Chairman Sir Ralph Norris said: “It is very disappointing to see further losses being reported in our B+I business, particularly when the vast majority of the remaining Fletcher Building business units have performed so well during the year. I know our people in B+I are working incredibly hard to deliver a number of projects for our clients and I would like to acknowledge their efforts.”

https://www.nzx.com/companies/FBU/announcements/304262

[winner69]

No need fora new CEO - esp one being paid an indecent number of zillions like Adamson

Ralph needs to start executing the break up plan

Sum of bits worth more than the parts

[bull....]

Bugger again ..... but entirely expected

And finally that Adamson has got 'fired'

I think everybody is disappointed Sir Ralph -


Fletcher Building Chairman Sir Ralph Norris said: “It is very disappointing to see further losses being reported in our B+I business, particularly when the vast majority of the remaining Fletcher Building business units have performed so well during the year. I know our people in B+I are working incredibly hard to deliver a number of projects for our clients and I would like to acknowledge their efforts.”

https://www.nzx.com/companies/FBU/announcements/304262

not surprised either, the company has been badly run for a while.

New CEO might even find more stuff to write down so may not be the end of it yet.

[sb9]

No need fora new CEO - esp one being paid an indecent number of zillions like Adamson

Ralph needs to start executing the break up plan

Sum of bits worth more than the parts

I put my quotes on other thread named Fletcher Building.

Anyway, is consolidation of units supposed to bring in efficiencies and less duplication in resources? Now if they break it into small pieces, we might be back to square one.

[winner69]

I put my quotes on other thread named Fletcher Building.

Anyway, is consolidation of units supposed to bring in efficiencies and less duplication in resources? Now if they break it into small pieces, we might be back to square one.

Doesn't always work that way sb9. Ever been to Fletcher HQ?

Broken up the market will value each separate company on its merits .....and probably find that the market value of the bits will be significantly higher than the whole.

Another outcome is that each unit than becomes more focused on 'creating wealth'

[percy]

Bugger again ..... but entirely expected

And finally that Adamson has got 'fired'

I think everybody is disappointed Sir Ralph -


Fletcher Building Chairman Sir Ralph Norris said: “It is very disappointing to see further losses being reported in our B+I business, particularly when the vast majority of the remaining Fletcher Building business units have performed so well during the year. I know our people in B+I are working incredibly hard to deliver a number of projects for our clients and I would like to acknowledge their efforts.”

https://www.nzx.com/companies/FBU/announcements/304262

No surprises here.

[BlackPeter]

not surprised either, the company has been badly run for a while.

New CEO might even find more stuff to write down so may not be the end of it yet.

Good point. Better wait with buying until a new broom is happy with his "starting base".

I guess the departing CEO is an excellent example for an outrageously overpaid CEO running down his company. Obviously - an overpaid board appointed him and helped him to do the damage, but still - we pay these people tens of millions for destroying hundreds of millions of shareholder value. At least they should ask them to pay back their salaries and bonuses for damaging the company - shouldn't they?

[bull....]

Good point. Better wait with buying until a new broom is happy with his "starting base".

I guess the departing CEO is an excellent example for an outrageously overpaid CEO running down his company. Obviously - an overpaid board appointed him and helped him to do the damage, but still - we pay these people tens of millions for destroying hundreds of millions of shareholder value. At least they should ask them to pay back their salaries and bonuses for damaging the company - shouldn't they?

yea unless you like gambling on dead cat bounces , im thinking new lows under 6.50 soon

[Beagle]

Systemic issues at FBU...there's a surprise (NOT).
40 foot barge pole material.

[Hoop]

Yuk:p......This sort of news has the makings for a shareprice to test its primary support ($7.50) at opening...Thats a bear for ya.. full of bad news, unpredictable temperment claws and all (yesterdays close $8.09)

[bull....]

you can join a conference call if you want to hear the future is all rosy

https://www.nzx.com/companies/FBU/announcements/304262

[BlackPeter]

One picture says more than 1000 words:

9000

The blue line is the performance of FBU over the last 5 years (Mark's legacy). The brown line is the NZX50. Ah yes - and we had a building boom in NZ over the last 5 years with lots of earthquake related donations to FBU thrown in ...

How can anybody run a building company in boom times that bad? Thanks Mark, great job!

Discl: just being sarcastic - I don't hold ;)

[JoeGrogan]

It's crazy cause just walking around Auckland CBD you can see how many developments Fletcher is involved in. You would think it would translate to the bottom line, is it a case, inter alia, of stretching themselves too far?

[BlackPeter]

It's crazy cause just walking around Auckland CBD you can see how many developments Fletcher is involved in. You would think it would translate to the bottom line, is it a case, inter alia, of stretching themselves too far?

Just plain bad governance and management - have a read of Chris Lees comments in March: http://www.chrislee.co.nz/newsletter/display.php?list=2&year=2017&month=March

He might have to add something to them around now ... ;))

[James108]

Could be good buying opportunities coming up, I don't hold.

At the end of the day Fletcher is the premier construction company in NZ and will be around in 20 years time. Their brand remains undamaged. I would be very suprised if they didnt make it to at least tender design phase for CRL. They will continue to be involved in the biggest jobs in NZ going forward.

Definitely something I would buy at the right price.

[percy]

The history of Fletchers is one of taking on big gambles and losing.
Acquisition after acquisition have been disasters.

[BlackPeter]

Could be good buying opportunities coming up, I don't hold.

At the end of the day Fletcher is the premier construction company in NZ and will be around in 20 years time. Their brand remains undamaged. I would be very suprised if they didnt make it to at least tender design phase for CRL. They will continue to be involved in the biggest jobs in NZ going forward.

Definitely something I would buy at the right price.

2 big 2 fail? Be careful ... while I agree that there might be lots of hidden value in FBU - it is up to the board and management of the day to either unveil or unravel this value. FBU was sitting for the last decades on its laurels (or hands or both ....) and enjoying their nearly monopoly position in NZ but still creating only very average returns despite charging top prices. If some of the younger fitter and bigger building companies world wide discover that NZ is a market with a lazy, tired and inefficient incumbent creaming all the jobs - how hard would it be for them to move into NZ providing high quality work and building materials at world market prices (roughly half of what it costs here)?

I think this company is still salvageable ... but I don't think that their board is so far demonstrating the right attitude, otherwise they would have done the honorable thing a long time ago. Jobs and perks for the boyz ...

[Balance]

Yuk:p......This sort of news has the makings for a shareprice to test its primary support ($7.50) at opening...Thats a bear for ya.. full of bad news, unpredictable temperment claws and all (yesterdays close $8.09)

Market cap yesterday of $5.16 billion plus net debt of $2.04b as at 31 Dec 2016 = enterprise value of $7.2b.

On EBIT of $525m, stock is trading on a EBIT multiple of 13.7 times!

Some more distance to fall, I suspect.

[Hoop]

Could be good buying opportunities coming up, I don't hold.

At the end of the day Fletcher is the premier construction company in NZ and will be around in 20 years time. Their brand remains undamaged. I would be very suprised if they didnt make it to at least tender design phase for CRL. They will continue to be involved in the biggest jobs in NZ going forward.

Definitely something I would buy at the right price.

"...At the end of the day Fletcher is the premier construction company in NZ and will be around in 20 years time...." Don't bet your house on it...History tells a story that the odds aren't that great....Have a look at the NZ Investment 1998 Year book if you have it.....Reading through it you will find half of the companies are gone...
Fletcher Challenge was gone in in the 1998 year book replaced by Fletcher Challenge Building, Fletcher Challenge Energy, Fletcher, Challenge Forests and Fletcher Challenge Paper...20 years on only Fletcher Building remains listed from that 1996 Fletcher Challenge separation...

I would have a guess and predict that FBU could separate in the near future...deja vu ???

[Balance]

"...At the end of the day Fletcher is the premier construction company in NZ and will be around in 20 years time...." Don't bet your house on it...History tells a story that the odds aren't that great....Have a look at the NZ Investment 1998 Year book if you have it.....Reading through it you will find half of the companies are gone...
Fletcher Challenge was gone in in the 1998 year book replaced by Fletcher Challenge Building, Fletcher Challenge Energy, Fletcher, Challenge Forests and Fletcher Challenge Paper...20 years on only Fletcher Building remains listed from that 1996 Fletcher Challenge separation...

I would have a guess and predict that FBU could separate in the near future...deja vu ???

Break-up not necessarily a bad thing - the bad parts are disproportionately dragging down the good parts.

Given a choice, we will all only invest in the good parts.

[bull....]

Break-up not necessarily a bad thing - the bad parts are disproportionately dragging down the good parts.

Given a choice, we will all only invest in the good parts.

list the parts on the NZX

[Balance]

list the parts on the NZX

Which is what happened to the old Fletcher Challenge Group - and the executives & management & boards still completely mismanaged the different parts!

[bull....]

Which is what happened to the old Fletcher Challenge Group - and the executives & management & boards still completely mismanaged the different parts!

For overseas investors to pick up on the cheap lol , its a conspiracy float , manage badly , sell cheap a NZ phenomenon

[Beagle]

http://www.sharechat.co.nz/article/34770395/nzx-to-investigate-fletcher-building-after-company-dumps-ceo-issues-further-profit-warning.html?utm_medium=email&utm_campaign=NZX%20to%20investigate%20Fletcher%20B uilding%20after%20company%20dumps%20CEO%20issues%2 0further%20profit%20warning&utm_content=NZX%20to%20investigate%20Fletcher%20Bu ilding%20after%20company%20dumps%20CEO%20issues%20 further%20profit%20warning+CID_76ed89a17b71170d4a3 ad095d1fd6338&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle34770395nzx-to-investigate-fletcher-building-after-company-dumps-ceo-issues-further-profit-warninghtml

A thorough examination of the quantity and variety of the fleas on this pup is warranted and as for the manner in which this has been governed...oh my goodness !

Maybe FBU could start parallel importing flea powder by the shipload, they could use the first 100 tons on themselves

[bull....]

tried to dial in to conference call engaged non stop must be to many irate investors on line - must be a sell

[sb9]

http://www.sharechat.co.nz/article/34770395/nzx-to-investigate-fletcher-building-after-company-dumps-ceo-issues-further-profit-warning.html?utm_medium=email&utm_campaign=NZX%20to%20investigate%20Fletcher%20B uilding%20after%20company%20dumps%20CEO%20issues%2 0further%20profit%20warning&utm_content=NZX%20to%20investigate%20Fletcher%20Bu ilding%20after%20company%20dumps%20CEO%20issues%20 further%20profit%20warning+CID_76ed89a17b71170d4a3 ad095d1fd6338&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle34770395nzx-to-investigate-fletcher-building-after-company-dumps-ceo-issues-further-profit-warninghtml

A thorough examination of the quantity and variety of the fleas on this pup is warranted and as for the manner in which this has been governed...oh my goodness !

Maybe FBU could start parallel importing flea powder by the shipload, they could use the first 100 tons on themselves

Ahhh...NZX aka the toothless Tiger investigating, can someone pass me a Tui....yawn, won't even bother the outcome out of this...

[Balance]

Exactly. NZX investigating because it is a forgone conclusion that nothing untoward in share price movements happened leading to this announcement.

If NZX is serious, investigate VIL, Snakk and PLX.

[Beagle]

Ahhh...NZX aka the toothless Tiger investigating, can someone pass me a Tui....yawn, won't even bother the outcome out of this...

They might get a slap on the back of the hand with a wet bus ticket, what's the bet the directors are really scared :eek2:

[Arbroath]

tried to dial in to conference call engaged non stop must be to many irate investors on line - must be a sell

I dialled in and for me it was very uninspiring - not enough humility shown after yet another debacle. Vague answers or wouldn't answer quite a few questions. Pretty much a trust us, its all contained (nod to Ben Bernanke!) - next year will be good etc.

[bull....]

I dialled in and for me it was very uninspiring - not enough humility shown after yet another debacle. Vague answers or wouldn't answer quite a few questions. Pretty much a trust us, its all contained (nod to Ben Bernanke!) - next year will be good etc.

agree , got on eventually

[Beagle]

I dialled in and for me it was very uninspiring - not enough humility shown after yet another debacle. Vague answers or wouldn't answer quite a few questions. Pretty much a trust us, its all contained (nod to Ben Bernanke!) - next year will be good etc. Cavalier saying the same thing...taking a cavalier approach with investors capital...really impressive !

[winner69]

My morbid fascination with FBU continues

Updated this chart showing FBU prfoits and share price over the years. Hardly inspiring since it peaked at the top of the last building boom which ended 2007/2008 is it

Todays price is a PE of 17 on this years expected shocker result .... which sort of says that the 'next year will be alright' is sort of priced in. Historically FBU has trade around 13 times earnings ....so even if F18 gets back to $400m (continuing a reasonable earnings trajectory that occurred from 2010 to 2016) a PE of 13 gives $7.45. Thats the price today - spooky eh

But then if punters dont trust FBU anymore than a PE of 13 might be too high = share price with a 6 in front of it

Still reckon sum of the parts higher than the price of the whole

Made heaps of FBU over the years as the 'big trends' seem rather predictable. Wills it on the sidelines for a bit and watch with morbid fascination.

[JeremyALD]

I'm suprised this has only dropped 5% after another massive downgrade. It's still above the SP of 18 months ago. Are people still positive about the future?

[percy]

I'm suprised this has only dropped 5% after another massive downgrade. It's still above the SP of 18 months ago. Are people still positive about the future?

Maybe the market sees Adamsons departure as a sign Ralph Norris is starting to take action.?

[macduffy]

Maybe the market sees Adamsons departure as a sign Ralph Norris is starting to take action.?

Yes, there's a lot of respect for Ralph Norris, despite this big stain on his copybook. Perhaps we expect too much after his successes with ASB, CBA, AIR etc.?

[value_investor]

I'm always watching this share from the sidelines hoping to get in when the market prices it at a bargain to enter. However for me I'm generally just getting more and more shock and awe with how they poorly they operate. Been told that the culture within the organisation is very volatile as well with a lot of unpleasantness.

I don't think I'll be coming into this one anytime soon.

[tim23]

Can I suggest a New Zealander as the next CEO reckon time we stopped importing them!

[winner69]

Can I suggest a New Zealander as the next CEO reckon time we stopped importing them!

Agree full heartedly

And The Warehouse should do the same

[artemis]

Yes, there's a lot of respect for Ralph Norris, despite this big stain on his copybook. Perhaps we expect too much after his successes with ASB, CBA, AIR etc.?

Brian Gaynor said on the wireless this morning that the board had taken a back seat to management. Maybe now, not so much.

http://www.radionz.co.nz/national/programmes/morningreport/audio/201851868/multi-million-dollar-problems-at-fletcher-building

[sb9]

Brian Gaynor said on the wireless this morning that the board had taken a back seat to management. Maybe now, not so much.

http://www.radionz.co.nz/national/programmes/morningreport/audio/201851868/multi-million-dollar-problems-at-fletcher-building

At least they've forfeited the share options Mr Adamson is entitled to...good on the board.

[Balance]

Brian Gaynor said on the wireless this morning that the board had taken a back seat to management. Maybe now, not so much.

http://www.radionz.co.nz/national/programmes/morningreport/audio/201851868/multi-million-dollar-problems-at-fletcher-building

To be fair to Mark Adamson, he had been very frank and straight to the point on this :

https://nz.finance.yahoo.com/news/business-breakdown--fletcher-building-s-adamson-%E2%80%9Cout-of-touch%E2%80%9D--gaynor-204124659.html

http://www.pressreader.com/new-zealand/weekend-herald/20140118/282419872111304

“These comments seem to imply that Adamson imply that the board members are more interested in status than making hard decisions” and that a “hard-nosed” management team is struggling with a “soft board.” That was 3.5 years ago!

Hence the 'old farts' comment in the email by Adamson too? Must uncouth of him but maybe, it also reveals the depth of frustration he harbored dealing with all the old farts?

[horus1]

The board has done avery bad job. The problems must have been known in September when The CEO,s internal memo comment on Deloittes report and there was no disclosure by the board. How werre the main auditors doing internal work, I didn't think that was allowed. Finally the board has noone with construction experience on it'. They all have big reputations but are mainly in the legal 'finance field. Don't touch the company.

[Sideshow Bob]

Don't touch the company.

For the size of the company and the opportunities etc it has had over recent years with the level of construction activity, I have long thought this is the most-undertalked about company on this site (if that is a measure) reflecting a lot of members disinterest in it.

[Balance]

For the size of the company and the opportunities etc it has had over recent years with the level of construction activity, I have long thought this is the most-undertalked about company on this site (if that is a measure) reflecting a lot of members disinterest in it.

But of course.

This forum tends to have a deadly obsession and myopic focus on a lot of chicken **** stock like Snakk, VMob etc.

Snakk - 651,000 views vs FBU - 312,000 views.

What does that tell us?

[Beagle]

For the size of the company and the opportunities etc it has had over recent years with the level of construction activity, I have long thought this is the most-undertalked about company on this site (if that is a measure) reflecting a lot of members disinterest in it.

I organised another Auckland meeting late last summer and there was universal derision towards FBU as far as I could tell, from everyone there. A LOT of people think this is a very bad place to allocate capital.

[peat]

I organised another Auckland meeting late last summer and there was universal derision towards FBU as far as I could tell, from everyone there. A LOT of people think this is a very bad place to allocate capital.

Agree Beagle that it seems to be those stuck in their standard portfolio construction that hold.
After looking at the chart for a long time last night my view is that it must find support now or its goodnight nurse
My chart based view is that if it breaks the channel the sky will cave in.

9006

[macduffy]

Not everyone's down on FBU. Credit Suisse reckons the current problems are temporary and will "wash through". FWIW, they have an Outperform on the company with a 12 month target of $9.40.

[winner69]

Not everyone's down on FBU. Credit Suisse reckons the current problems are temporary and will "wash through". FWIF, they have an Outperform on the company with a 12 month target of $9.40.

Probably a pretty reasonable view. Isn't 'wash through' a nice phrase.

Only real threat to this view is that that while the current issues might wash through something in another of their business will come out and bite them next year. That's the way FBU seems to operate

Could be a good 20% plus gain from here until the next crisis

[macduffy]

I should clarify that, winner. "Wash through" was my shorthand for "the impact of these cost over-runs are expected to pass, as and when the problematic projects are completed".

:blush:

[percy]

And "The Good Fairy" said,"there will be no more problematic projects."...lol.

[Rep]

But of course.

This forum tends to have a deadly obsession and myopic focus on a lot of chicken **** stock like Snakk, VMob etc.

Snakk - 651,000 views vs FBU - 312,000 views.

What does that tell us?

For a company that once was the most valuable stock on the NZX (now fifth in terms of value), which had vertical integration with the supply chain, participated over the last five years in a major construction boom, has tendered and been involved with some of the largest and high profile construction projects during that boom, been heavily involved in the earthquake repair works in Canterbury - it has significantly underperformed the NZX50 index over the last 5 years and has been a serial underperformer over the past 10 years.

10 years ago the stock was sitting at about $12.00 a share and now sits at $7.48. That's a fall in value of 36.3% compared to a rise in the value of the S&P/NZ50 of 86.2% over the same period.
On the 5 year horizon, the stock was sitting at about $6.00 so the improvement to $7.48 of 25.5% is an improvement but not against the rise in the value of the S&P/NZ50 over the same term of 119%.

There's a lot of ma and pa investors out there who should be really grumpy about that result - especially when a good number of folk don't realise that have significant indirect investments with many of them unaware that their kiwisaver funds have probably got a component of their retirement savings locked in FBU stock.

It's not a RAK in terms of terms of the destruction of shareholder value but its a big lumbering, clumsy giant with inertia and not really making a very good return with all of the resources availed to management - especially when there seems to be a lot of folk apparently working there with LTIs and involved with the ESOP, you'd wonder if all of that is actually worth the cost and effort.

One wonders if the governance needs a distinct shakeup given those fairly basic return KPIs.

Disc - not a FBU shareholder

[winner69]

Just imagine what teh NZX50 would have done without a large weighting of this lumbering, clumsy giant in the index.

[Beagle]

Agree Beagle that it seems to be those stuck in their standard portfolio construction that hold.
After looking at the chart for a long time last night my view is that it must find support now or its goodnight nurse
My chart based view is that if it breaks the channel the sky will cave in.

9006

I am curious why the company hasn't be accorded a far more realistic PE multiple for a cyclical company with serious systemic issues.


Not everyone's down on FBU. Credit Suisse reckons the current problems are temporary and will "wash through". FWIF, they have an Outperform on the company with a 12 month target of $9.40.
I find it strange that the brokers generally have consistently given them the benefit of the doubt and accepted what they're told by management at face value.


Just imagine what teh NZX50 would have done without a large weighting of this lumbering, clumsy giant in the index.
Brian Gaynor weigh's in...looks like there's deep systemic issues in the company with lot's of "the establishment" paid in excess of $500,000 !
Such grandiose salaries for such mediocre performance !
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11893764
Disc Have never owned and not likely too in the foreseeable future. With their systemic issues and the fact that we're currently in a building boom I see no reason why this should trade on a PE of more that 8 based on actual earnings for 2017, (forecasts don't count as in regard to FBU they have NO credibility).

I think its clear from Bryan Gaynor's report and actions in regard to former CEO that they are pretty weak. Not sure how anyone could have complete confidence in them going forward. Heads should roll at board level too in my opinion. Shareholders need a strong board and a strong CEO who can take this dinosaur of a company forward.

Excellent post Rep.

[Rep]

Just imagine what teh NZX50 would have done without a large weighting of this lumbering, clumsy giant in the index.

I've opined before that the NZ50 is an index but not an investing strategy that I would use myself - there's too many large and mediocre stocks in there and some stocks that aren't in the index because of the free-float criteria that I might want to consider.

Passive investing using the index means that you invest in companies that I don't think are well managed enough that as an investor that I want to be giving them my money for them to invest on my behalf (You could paraphrase Kerry Packer's quote about tax "... I can tell you you're not spending it that well that we should be donating extra.")

There's nearly 2.8 million kiwisaver members out there and $40 billion tied up in the funds - there's a good component of those funds sitting in shares in the NZ50 as well as others with passive funds and who have actively invested in FBU. They should all be pretty grumpy about what's happening here.

[winner69]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

[RTM]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

I bought for 6.74 in Jan 2106. Need to get a lot closer to that before I would consider buying again.

[hardt]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

Worth a good look, never know if the market is going to pick it up straight away or if it could be months before anything positive happens.

Odd how a contracts profits are realised throughout the lifespan of said contract, when a loss is likely to occur it is to be recognized immediately as an expenditure.

We will call this an extraordinary occurrence and carry on with a bullish future outlook... I was hoping for it to bleed a little more before picking some up.

[Beagle]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

Did you read that opinion piece by Bryan Gaynor mate ? I think there are deep systemic issues within the company. A lot of old dead wood in management being paid $500K plus for very poor performance which will act as a handbrake on all future profitability until its cleaned out properly. Whether a thorough management and board cleansing will ever happen properly is an open question as far as I am concerned. Quite apart from that and as a separate issue I am certain not all the wood rot has been removed with this most recent write-down and profit revision and expect the SKC conference center to be a real drag on earnings going forward. Mark my words, that international conference center will be later than and cost a lot more than they are even currently forecasting. I have no confidence in management's ability to forecast accurately, either in terms of their profitability or in regard to major construction job costings. Relative to the NZX50 this company has been a sick old dinosaur for over a decade. Better prospects by FAR in another construction company I reckon, namely Metroglass. Frankly I think management and the board deserve the derision of investors.

[Balance]

Did you read that opinion piece by Bryan Gaynor mate ? I think there are deep systemic issues within the company. A lot of old dead wood in management being paid $500K plus for very poor performance which will act as a handbrake on all future profitability until its cleaned out properly. Relative to the NZX50 this company has been a sick dog for over a decade. Better prospects in another construction company I reckon, namely metroglass.

Same Brian Gaynor who thought that it was all over for Diligent when Milford sold out?

Anyway, FBU does look to be infected with the dreadful downgrade disease - 2 down and 1 more to go when the new CEO takes over, and clears the deck?

[winner69]

Did you read that opinion piece by Bryan Gaynor mate ? I think there are deep systemic issues within the company. A lot of old dead wood in management being paid $500K plus for very poor performance which will act as a handbrake on all future profitability until its cleaned out properly. Relative to the NZX50 this company has been a sick dog for over a decade. Better prospects in another construction company I reckon, namely metroglass.

Agree with everything you say .....ever been to Fletcher HQ?

But this is about playing the market game - eg sentiment rather than company performance.

Sentiment at low ebb now - will get better (in short term) and price will follow eh


(Wonder if Fletchers regret missing out on acquiring Metro a few years ago .....far too expensive and couldn't match private equity)

[winner69]

I bought for 6.74 in Jan 2106. Need to get a lot closer to that before I would consider buying again.


I bought much cheaper than that in early 2000's .....and sold for $13 something

Been a few profitable up trends for FBU over the years, irrespective of actual market performance

One reason this thread is called FBU Chart

[Beagle]

Same Brian Gaynor who thought that it was all over for Diligent when Milford sold out?

Anyway, FBU does look to be infected with the dreadful downgrade disease - 2 down and 1 more to go when the new CEO takes over, and clears the deck?

Acknowledge he doesn't always get it right, neither does anyone else.
Two more downgrades to come I reckon. The actual result itself which is sure to include further write-down's as you've suggested and the outlook for FY18 is sure to disappoint...but then again what credibility can we attach to any outlook statement this company issues any more ? Only one notch above the credibility of Comvita in my opinion.

[Beagle]

Agree with everything you say .....ever been to Fletcher HQ?

But this is about playing the market game - eg sentiment rather than company performance.

Sentiment at low ebb now - will get better (in short term) and price will follow eh


(Wonder if Fletchers regret missing out on acquiring Metro a few years ago .....far too expensive and couldn't match private equity)

No haven't been to Fletcher HQ. I think sentiment gets worse from here mate with further write-offs. Metroglass looks very encouraging on the chart...better for Winner to back winners than losers I reckon but good luck if you're determined to back this overweight, handicapped old nag.

[Beagle]

Same Marcus Curley that thought AIR was only worth $2.10 in late May 2017. You're in safe hands Winner, he's a very bright guy.

No if's and no but's, hold no mutts ! Anyway mate...that's my full 3 cents worth on it, if you're determined to have a punt I wish you good luck !

[winner69]

No haven't been to Fletcher HQ. I think sentiment gets worse from here mate with further write-offs. Metroglass looks very encouraging on the chart...better for Winner to back winners than losers I reckon but good luck if you're determined to back this overweight, handicapped old nag.

Agree again -already have some Metro

Remember best time to buy Metro was when they were in the doldrums after downgrades of sorts. Have they overcome their problems with the new factory - maybe systemic

[biker]

From the Website.
Tie this in with Gaynors article and statements from the sacked CEO and make your own judgement.


Board & Management
Fletcher Building is led by an experienced and expert management team, that is passionate about our customers, our people, the business and the communities we work in. They are guided by the Directors of the Board, who bring a wealth of experience and understanding, ensuring all decisions are reached with rigor and sound long term strategic thinking.

Francisco Irazusta Acting CEO
Bevan McKenzie Chief Financial Officer
Sir Ralph Norris Independent Chairman
Antony Carter Independent Director
Bruce Hassall Independent Director
Alan Jackson Independent Director
John Judge Independent Director
Kathryn Spargo Independent Director
Cecilia Tarrant Independent Director
Steve Vamos Independent Director
Charles Bolt Company Secretary

[JoeGrogan]

Agree again -already have some Metro

Remember best time to buy Metro was when they were in the doldrums after downgrades of sorts. Have they overcome their problems with the new factory - maybe systemic

FBU, MPG, and STU have all downgraded in the past year, it seems as though none of the construction sector can take advantage of a boom. What happens when it comes to a stop?

[Beagle]

FBU, MPG, and STU have all downgraded in the past year, it seems as though none of the construction sector can take advantage of a boom. What happens when it comes to a stop?

Maybe they have time to overhaul their job costing systems LOL.
Interestingly just as an anecdote with these cyclical's including Metroglass and AIR that a simple 100 day MA TA strategy seems to work very well and for example in the case of FBU would have got punters out at $10.40 in February 2017. 100 day MA still well over $8 and says stay out at present.
100 day MA would have got punters out of MPG at $2.05 recently and back in around $1.40 very recently and currently says stay in. AIR would have got people out around $2.80 before the big dipper late last year and back in around $2.05 and enjoying all of the recent rise.
Conclusion: 100 day MA appears to be a VERY useful TA tool for cyclical's. Ignore that tool at your peril as I learned from personal experience with AIR in 2016.

[whatsup]

From the Website.
Tie this in with Gaynors article and statements from the sacked CEO and make your own judgement.


Board & Management
Fletcher Building is led by an experienced and expert management team, that is passionate about our customers, our people, the business and the communities we work in. They are guided by the Directors of the Board, who bring a wealth of experience and understanding, ensuring all decisions are reached with rigor and sound long term strategic thinking.

Francisco Irazusta Acting CEO
Bevan McKenzie Chief Financial Officer
Sir Ralph Norris Independent Chairman
Antony Carter Independent Director
Bruce Hassall Independent Director
Alan Jackson Independent Director
John Judge Independent Director
Kathryn Spargo Independent Director
Cecilia Tarrant Independent Director
Steve Vamos Independent Director
Charles Bolt Company Secretary

Biker , could you please post their professions, how many of them are engineers and if so what types of engineers?

[brend]

FBU, MPG, and STU have all downgraded in the past year, it seems as though none of the construction sector can take advantage of a boom. What happens when it comes to a stop?

sometimes a construction boom can be as dangerous as a recession. i.e cost over runs, project delays, high pressure on salaries and wages

[Beagle]

sometimes a construction boom can be as dangerous as a recession. i.e cost over runs, project delays, high pressure on salaries and wages
Excellent point ! Nice to hear from you. Keep posting mate, you usually post some good gems of info.

[whatsup]

sometimes a construction boom can be as dangerous as a recession. i.e cost over runs, project delays, high pressure on salaries and wages

Yeh, bit of a pass the parcel in some regards imo.

[hardt]

From the Website.
Tie this in with Gaynors article and statements from the sacked CEO and make your own judgement.


Board & Management
Fletcher Building is led by an experienced and expert management team, that is passionate about our customers, our people, the business and the communities we work in. They are guided by the Directors of the Board, who bring a wealth of experience and understanding, ensuring all decisions are reached with rigor and sound long term strategic thinking.

Francisco Irazusta Acting CEO
Bevan McKenzie Chief Financial Officer
Sir Ralph Norris Independent Chairman
Antony Carter Independent Director
Bruce Hassall Independent Director
Alan Jackson Independent Director
John Judge Independent Director
Kathryn Spargo Independent Director
Cecilia Tarrant Independent Director
Steve Vamos Independent Director
Charles Bolt Company Secretary

Average lifespan of management in FBU leaves little to be desired...

9022

[macduffy]

Interesting that all senior executives were appointed during Mark Adamson's tenure. So much for the "dead wood" theory!

[winner69]

Interesting that all senior executives were appointed during Mark Adamson's tenure. So much for the "dead wood" theory!

And a few of them had funny accents as well .....you know our way is better than the kiwi way

[BlackPeter]

Interesting that all senior executives were appointed during Mark Adamson's tenure. So much for the "dead wood" theory!

check out "Peter's principle" - being recently appointed does not protect people from being incompetent.

However - wasn't it Mark Adamson complaining about too much dead wood? Well, He hired the people and he should know :p

[Scrunch]

Acknowledge he doesn't always get it right, neither does anyone else.
Two more downgrades to come I reckon. The actual result itself which is sure to include further write-down's as you've suggested and the outlook for FY18 is sure to disappoint...but then again what credibility can we attach to any outlook statement this company issues any more ? Only one notch above the credibility of Comvita in my opinion.

RE FY18 - maybe, but the accounting around project loss recognition feels a bit like banks provisioning for potential bad debt. You sometimes get yo-yo cycles of what turned out to be over-provisioning then releasing these provisions back to the P&L directly (or through a minimal need to increase provisioning). This could help FBU's FY18 if management have been told - this is your last chance to tell me the maximum possible cost of delivering this project... If (a big IF) these estimates are now on the high side, there could be releases of this "cost" as "profit" as the projects complete in FY18.

Disc - pure speculation based on seeing other companies taking a "bath" year to clear future years of negative abnormals.

Then again its hard to argue against it being a dog with fleas. Those with a science background would say this is the best explanation using the Occam's Razor principle (the simpler explanation is usually the best).

[Baa_Baa]

check out "Peter's principle" - being recently appointed does not protect people from being incompetent.

However - wasn't it Mark Adamson complaining about too much dead wood? Well, He hired the people and he should know :p

You both imply he means dead wood in his chosen management team, but his negative rhetoric has been towards the Board. It's never as simple as it seems. He fought the Board for years and years and finally lost. The market is such that the lowest tender wins, despite the consequences. It is an endemic industry failing. Shareholders should be thankful that FBU has a balance sheet that can see this through. Many others would be made bankrupt. Ask yourself whether you'd be more upset had they not won the top line cashflow or whether they foundered on the profit? Either way the cynical shareholders would pillory the management team, then the Directors. Easy to comentate from the sidelines and a position of ignorance.

[BlackPeter]

You both imply he means dead wood in his chosen management team, but his negative rhetoric has been towards the Board. It's never as simple as it seems. He fought the Board for years and years and finally lost. The market is such that the lowest tender wins, despite the consequences. It is an endemic industry failing. Shareholders should be thankful that FBU has a balance sheet that can see this through. Many others would be made bankrupt. Ask yourself whether you'd be more upset had they not won the top line cashflow or whether they foundered on the profit? Either way the cynical shareholders would pillory the management team, then the Directors.

Well, actually endemic is frequently used for diseases ... and this might be in this case a good choice of words. Yes, ... NZ has a very protected and highly inefficient building sector with FBU being the bigger of the duopolists sharing the spoils. Building materials here are lower quality but much more expensive than in any other developed country in the world - and the biggest building supplier can't use this protected status in a building boom to shine, and is growing in the last 5 years only 30% while the NZX50 is growing by 120%. Less than mediocre growth in a boom period and the lack of any credible forecasts - this is not how I recognise quality management (and the board has nothing to do with this), but each to their own.

Agree however that the board is responsible as well - they hired the man and paid him tens of millions (over the 5 years) to allow him to destroy hundreds of millions of shareholder value - and they have been sitting on their hands and enjoying their as well exorbitant fees. Not unusual to see a poor performing board coming together with poor performing management.


Easy to comentate from the sidelines and a position of ignorance.

You are right - you should take at some stage the medicine you prescribe. Feels you didn't do a lot of research on FBU. Lots of information in the past handful of pages (i.e. no need to repeat) and much more if you compare the building sector here with international organisations.

Discl: don't hold and rarely did (some "sprints" in cyclical ups ... I do not like bad governance or management.

[winner69]

Share price looking much better today - some positive momentum building

I reckon we'll look back in a few months time and say yes 750/760 was the bottom - just like 210/215 was for Trilogy

Not into candles but they must be signalling a reversal - Some sort of hammer maybe.

Not too late to get in Beagle

[peat]

Not into candles but they must be signalling a reversal - Some sort of hammer maybe.


I havent seen a hammer , todays candle (not shown) could be considered bullish simply by virtue of its colour and strength,

The fall bounce fall did create a bullish gartley pattern on the hourly view (shown) and this is now playing out with $7.70 a target at which point I'd estimate some resistance will come into play

9023

[winner69]

Share price going well today .... Good one .....no worries

[Balance]

I havent seen a hammer , todays candle (not shown) could be considered bullish simply by virtue of its colour and strength,

The fall bounce fall did create a bullish gartley pattern on the hourly view (shown) and this is now playing out with $7.70 a target at which point I'd estimate some resistance will come into play



Through $7.70 reasonably easily so where is next stop?

[Beagle]

http://www.sharechat.co.nz/article/344ebc4d/shareholders-assn-challenges-fletcher-board-to-seek-re-election.html?utm_medium=email&utm_campaign=Shareholders%20Assn%20challenges%20Fl etcher%20board%20to%20seek%20re-election&utm_content=Shareholders%20Assn%20challenges%20Fle tcher%20board%20to%20seek%20re-election+CID_b80c1d8ef4a74d5097de4fbd8682165a&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle344ebc4dshareh olders-assn-challenges-fletcher-board-to-seek-re-electionhtml

Must read. NZSA has very serious concerns regarding management and governance. Some big name directors reputations are being affected here and so they should be !
Beagle's theory. Deep systemic issues do not get resolved overnight or within one year...expect more drama's to unfold in the years ahead as they try and turn the ship around with weak, undersized and ineffective rudders. This won't sink but like the Titanic but she's carrying a lot of water at present and plenty of old dead wood...and all it appears the directors want to do is rearrange the deck chairs, throw a few broken one's overboard and replace the captain whereas a total overhaul of the ships systems, engineering and hull structure is what's needed as well as a full review of all the ships staff and management of every department. Every single staff member should be made to reapply for their job including the directors and an independent panel of outside experts bought in to totally overhaul this company in my opinion.
Shareholders have seen appallingly bad returns compared to the NZX50 over the last decade and many many heads need to roll !
No way this company goes into my portfolio at any price !

[flyer]

yes, surprised with shareprice holding up, alot of more bad news to come I think.

[peat]

Through $7.70 reasonably easily so where is next stop?
I dont really speak on an hourly basis. and any resistance is a band with some implied variation around that. so I wouldnt yet say it is through.

[winner69]

Shareholders Assc on the case

The latest writedown came to light when Adamson was on holiday .....hmmm

http://www.sharechat.co.nz/article/344ebc4d/shareholders-assn-challenges-fletcher-board-to-seek-re-election.html?utm_medium=email&utm_campaign=Shareholders%20Assn%20challenges%20Fl etcher%20board%20to%20seek%20re-election&utm_content=Shareholders%20Assn%20challenges%20Fle tcher%20board%20to%20seek%20re-election+CID_b80c1d8ef4a74d5097de4fbd8682165a&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle344ebc4dshareh olders-assn-challenges-fletcher-board-to-seek-re-electionhtml

[Beagle]

Hmmm....wonder if that holiday was of his own volition or a "please step aside while we look into things"...join the dots ! but I for one think the directors need to take a far more dogged approach to solving problems than simply firing the CEO.

[winner69]

Hmmm....wonder if that holiday was of his own volition or a please step aside while directors look into things...join the dots ! but I for one think the directors need to take a far more dogged approach to solving problems than simply firing the CEO.

Big names not doing their reputation much good

Your mate Tony must be gutted eh

[Beagle]

Big names not doing their reputation much good

Your mate Tony must be gutted eh

Yeap I reckon he is licking his reputation wounds with this one now...just about run out of saliva...wouldn't be surprised at all to see him resign to be honest. Brought up the FBU under-performance thing at the 2016 AIR AGM with him...it was a real conversation stopper back then so I think I'll leave well alone at this year's AIR annual meeting, bound to be a REALLY, REALLY awkward subject now ! Might just go and shake Johnny's hand and welcome him on board and make a B line for the salmon sandwiches this year.

[Balance]

Shareholders Assc on the case

The latest writedown came to light when Adamson was on holiday .....hmmm

http://www.sharechat.co.nz/article/344ebc4d/shareholders-assn-challenges-fletcher-board-to-seek-re-election.html?utm_medium=email&utm_campaign=Shareholders%20Assn%20challenges%20Fl etcher%20board%20to%20seek%20re-election&utm_content=Shareholders%20Assn%20challenges%20Fle tcher%20board%20to%20seek%20re-election+CID_b80c1d8ef4a74d5097de4fbd8682165a&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle344ebc4dshareh olders-assn-challenges-fletcher-board-to-seek-re-electionhtml

The more aggro out there, the better.

Ralph Norris is an old hand however in handling crisis's - he was roundly condemned for being on the board of Air NZ when the airline went broke and had to be rescued by the government.

Instead of turning tail, he actually took on the job of CEO/MD of Air NZ.

Too old and not hungry enough now however to see him take the CEO job at FBU but expect him to take a very active role in repositioning the group.

[winner69]

Norris remuneration in 2016 was $426k as Chairman

The other 6 non exec directors took home $1.3 million between them

Golly gosh - a lot if dosh sitting around doing not much by the sounds of it.

Maybe they should return at least half of it ......or give it to some charity

His and Adamsons outrageous salary along with what his mates were earning is scandalous - no wonder the poor of the world are getting outraged with exec salaries

[Beagle]

The more aggro out there, the better.

Ralph Norris is an old hand however in handling crisis's - he was roundly condemned for being on the board of Air NZ when the airline went broke and had to be rescued by the government.

Instead of turning tail, he actually took on the job of CEO/MD of Air NZ.

Too old and not hungry enough now however to see him take the CEO job at FBU but expect him to take a very active role in repositioning the group.

With respect I disagree. I think he's past his prime and I think some big name reputations are and will be getting badly besmirched here. Take years to fix the problems assuming anyone or the board are capable of doing it. Ever tried to fix up an old villa rotten to the core with wood rot ?...takes a lot longer than you think !

[Balance]

Norris remuneration in 2016 was $426k as Chairman

The other 6 non exec directors took home $1.3 million between them

Golly gosh - a lot if dosh sitting around doing not much by the sounds of it.

Maybe they should return at least half of it ......or give it to some charity

His and Adamsons outrageous salary along with what his mates were earning is scandalous - no wonder the poor of the world are getting outraged with exec salaries

As long as the sp is going up, nobody cared a monkey?

Adamson made his comments about his differences with the board way back in 2013 - but since the sp was heading north, nobody really made a big fuss.

Hue and cry now

[Balance]

With respect I disagree. I think he's past his prime and I think some big name reputations are and will be getting badly besmirched here. Take years to fix the problems assuming anyone or the board are capable of doing it. Ever tried to fix up an old villa rotten to the core with wood rot ?...takes a lot longer than you think !

Seen Fletcher go through its dramas several times in the last few decades - the 1990s saw the group divest off a lot of non-core assets (Natural Gas Corp, Wrightson, St Lukes Group, Rural Bank etc etc) when it got into financial difficulties. The 2000s when it was broken up and sold, leaving just FBU and FFS. Each time, the company and group were considered past its use by date.

What is so different now? The issues with the huge losses revolve around the building and construction group - I do not see the villa rotten to the core. The roof needs fixing and that has now been recognized. There is some water damage to the interiors for sure but the company is still going to make $525m EBIT - hardly the end of the world!

[JeremyALD]

On July 10 the SP was $7.81. A week later they slashed profit forcasts by over 10% and raised a range of other other issues, yet the SP is $7.77 some few days later? I don't get share markets sometimes. Investors must be happy Mr CEO has been removed?

[Baa_Baa]

Seen Fletcher go through its dramas several times in the last few decades - the 1990s saw the group divest off a lot of non-core assets (Natural Gas Corp, Wrightson, St Lukes Group, Rural Bank etc etc) when it got into financial difficulties. The 2000s when it was broken up and sold, leaving just FBU and FFS. Each time, the company and group were considered past its use by date.

What is so different now? The issues with the huge losses revolve around the building and construction group - I do not see the villa rotten to the core. The roof needs fixing and that has now been recognized. There is some water damage to the interiors for sure but the company is still going to make $525m EBIT - hardly the end of the world!

Touché, firing everyone from the top down is a common theme from some, when things don't go to plan. Not helpful imo, strong balance sheet, lots of profitable sub-companies. They just have to sort out out to win profitable business in B&I in a systemically flawed industry. Hmm now there's a challenge.

[macduffy]

On July 10 the SP was $7.81. A week later they slashed profit forcasts by over 10% and raised a range of other other issues, yet the SP is $7.77 some few days later? I don't get share markets sometimes. Investors must be happy Mr CEO has been removed?

Well, that's what makes a market. Some investors see a rotten villa, others see a sound building in need of some repairs!

;)

[value_investor]

At such a low PE perhaps, the market has overreacted by selling even more shares and a few people have bought in. The expectation perhaps that the share is under priced.

Personally, I wouldn't invest in a company that gives out guidance of 720m at the start of the financial year and then delivers around 525m. If it even delivers 525m next month that is. Each to their own.

[Balance]

On July 10 the SP was $7.81. A week later they slashed profit forcasts by over 10% and raised a range of other other issues, yet the SP is $7.77 some few days later? I don't get share markets sometimes. Investors must be happy Mr CEO has been removed?

Sp was actually $8.10 when the profit downgrade was announced - it went down 9% to just below $7.40 on the day.

Of course investors MUST be happy that the CEO was removed! If he was not removed, there would have been a hue and cry about accountability, responsibility etc etc etc?

The focus has rightly shifted to what the hell the highly paid directors have been doing.

[Balance]

At such a low PE perhaps, the market has overreacted by selling even more shares and a few people have bought in. The expectation perhaps that the share is under priced.

Personally, I wouldn't invest in a company that gives out guidance of 720m at the start of the financial year and then delivers around 525m. If it even delivers 525m next month that is. Each to their own.

Low PE? Not at all!

FBU is currently trading on an enterprise multiple of 14.7 times!

Market is expecting some tough action to come out of the Board - including a break up and sell off of some parts?

[Beagle]

Low PE? Not at all!

FBU is currently trading on an enterprise multiple of 14.7 times!

Market is expecting some tough action to come out of the Board - including a break up and sell off of some parts?

The issue as I see it mate is what we have here is a pure cyclical company with serious management issues and a board asleep at the wheel. There's also concerns over a bloated management structure and jobs for the boys at all sorts of level's within the company. Its horribly inefficient, poorly structures, has been poorly managed and governance has been weak.
My starting point with pure cyclical's is a PE of no more than 10. If they are growing across the cycles, (like AIR is within a framework of growing demand forecast IATA growth 5%) and are efficient and well managed you can ascribe a PE north of 10 but in FBU's case at the peak of the building cycle and with known systemic issues I see fair value at a PE$ well south of 10.
Takes two to make a market...this would be a very, very good short against a long position in Metroglass in my opinion.
I don't think the board are up to it to be frank. Ralph Norris made a hash of him time at AIR. Tony Cater must be deeply embarrassed by this protracted fiasco.

[Balance]

The issue as I see it mate is what we have here is a pure cyclical company with serious management issues and a board asleep at the wheel. There's also concerns over a bloated management structure and jobs for the boys at all sorts of level's within the company. Its horribly inefficient, poorly structures, has been poorly managed and governance has been weak.
My starting point with pure cyclical's is a PE of no more than 10. If they are growing across the cycles, (like AIR is within a framework of growing demand forecast IATA growth 5%) and are efficient and well managed you can ascribe a PE north of 10 but in FBU's case at the peak of the building cycle and with known systemic issues I see fair value at a PE$ well south of 10.
Takes two to make a market...this would be a very, very good short against a long position in Metroglass in my opinion.
I don't think the board are up to it to be frank. Ralph Norris made a hash of him time at AIR. Tony Cater must be deeply embarrassed by this protracted fiasco.

As Carter should be - he has been on the board for 7 years and serves on the remuneration committee of FBU! One of the old farts Adamson was referring to?

Cannot disagree with you more regarding Norris's time at Air NZ :

http://www.stuff.co.nz/business/better-business/10068628/Sir-Ralph-Norris-shares-his-road-to-success

Share price put on 245% from the time he took on the CEO job at Air NZ to when he handed the job over to Bob Fyfe.

Wish there are more 'hashes' like that!

[Beagle]

Coming off a very low base. Ancient history now anyway, fact is he has presided over a serious fiasco with FBU. Maybe if it was on a suitable PE of about 7 but the market believes everything will be okay in FY18, we'll see.

[Balance]

Coming off a very low base. Ancient history now anyway, fact is he has presided over a serious fiasco with FBU. Maybe if it was on a suitable PE of about 7 but the market believes everything will be okay in FY18, we'll see.

Air NZ could have continued to go backwards and need further injections of capital - so easy with hindsight, isn't it though that Air NZ was always going to recover from a very low base.

No question he has chaired a fiasco with FBU but don't forget, he was only appointed in 2014 and Adamson was riding very high then after turning around Laminex (Ling's big mistake) and restructuring FBU into 'profitable' units. One unit blew up but the other units are still pumping through the profits.

So net net, I am happy to back Norris's track record. Firing a CEO is not a simple matter and not to be taken lightly - some seem to think that it is a simple case of giving him a termination letter the first time FBU's profit went backwards. On that basis, half the CEOs in NZ listed companies would be gone!

[Beagle]

Always a pleasure chatting with you mate. It'll be interesting to see how this unfolds. NZSA certainly have valid and very serious concerns in my opinion.

[Balance]

Always a pleasure chatting with you mate. It'll be interesting to see how this unfolds. NZSA certainly have valid and very serious concerns in my opinion.

That they have - and all power to them to bring focus to what FBU must do to restore shareholders' confidence and build shareholders' wealth.

I agree 100% that Adamson was allowed too much rein and was paid far too much for what he delivered.

Wish NZSA will do something really really useful though and highlight the destruction of and massive transfer of wealth with backdoor listings and with companies like PGC and TGH. They are far too quiet on such obvious targets for shareholders' activism.

[Mauler]

That they have - and all power to them to bring focus to what FBU must do to restore shareholders' confidence and build shareholders' wealth.

I agree 100% that Adamson was allowed too much rein and was paid far too much for what he delivered.

Wish NZSA will do something really really useful though and highlight the destruction of and massive transfer of wealth with backdoor listings and with companies like PGC and TGH. They are far too quiet on such obvious targets for shareholders' activism.

So what does all this mean for upcoming dividends does everyone think?

[BlackPeter]

That they have - and all power to them to bring focus to what FBU must do to restore shareholders' confidence and build shareholders' wealth.

I agree 100% that Adamson was allowed too much rein and was paid far too much for what he delivered.

Wish NZSA will do something really really useful though and highlight the destruction of and massive transfer of wealth with backdoor listings and with companies like PGC and TGH. They are far too quiet on such obvious targets for shareholders' activism.

There is lots of work for the NZSA and so little resource to do it.

Are you a member? If not - join them and help them. At this stage - while they basically represent and support the interests of all NZ shareholders (must be 2 million plus including indirect shareholders through Kiwisaver and similar) they have less than 1500 members (i.e. less than 0.1% of all shareholders), this small number is paying with their fees and voluntary work to further the interests of all NZ shareholders.

You can join and support their good work here: https://www.nzshareholders.co.nz

Discl: NZSA member.

[Balance]

There is lots of work for the NZSA and so little resource to do it.

Are you a member? If not - join them and help them. At this stage - while they basically represent and support the interests of all NZ shareholders (must be 2 million plus including indirect shareholders through Kiwisaver and similar) they have less than 1500 members (i.e. less than 0.1% of all shareholders), this small number is paying with their fees and voluntary work to further the interests of all NZ shareholders.

You can join and support their good work here: https://www.nzshareholders.co.nz

Discl: NZSA member.

Good on you, BlackPeter.

I do my bit behind the scenes and can only write that some in the media does a pretty good job of highlighting some issues when it is brought to their attention.

[winner69]

Carters directors fee at FBU weren't that much different than what he got as Chairman of AIR

In relative terms easy money eh

[Balance]

Carters directors fee at FBU weren't that much different than what he got as Chairman of AIR

In relative terms easy money eh

It was certainly good money, not sure about easy - irony being that the money probably means bugger all to him.

Now he will have to show he is not one of the 'old farts' and actually earn his fees?

With people like him, reputation matters.

I met Kerry Hoggard once after his humiliating ouster from Fletcher Group chairmanship - he was just not the same person after that. Sad and in so many ways, tragic.

Carter and Norris will be taking some really tough action at Fletcher, I reckon.

$10.00, here we come :D

[macduffy]

An interesting article by Brian Gaynor on FBU's pending CEO selection.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11896583&ref=rss

[winner69]

It was certainly good money, not sure about easy - irony being that the money probably means bugger all to him.

Now he will have to show he is not one of the 'old farts' and actually earn his fees?

With people like him, reputation matters.

I met Kerry Hoggard once after his humiliating ouster from Fletcher Group chairmanship - he was just not the same person after that. Sad and in so many ways, tragic.

Carter and Norris will be taking some really tough action at Fletcher, I reckon.

$10.00, here we come :D

$10.00, here we come

Like it mate - only a matter of time eh

[winner69]

An interesting article by Brian Gaynor on FBU's pending CEO selection.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11896583&ref=rss

Thanks mate

Hopefully the new CEO won't have a funny accent

[Balance]

$10.00, here we come

Like it mate - only a matter of time eh


Made very good money the last two times that Fletcher Group imploded.

Consider this a reset opportunity?

[Balance]

Sp heading towards $8.00 and all the negative talk and discussions have disappeared from this site?

Pity.

[JeremyALD]

Sp heading towards $8.00 and all the negative talk and discussions have disappeared from this site?

Pity.

I don't understand the current SP jump and wouldn't be buying at this level so what's to talk about? FBU is a serial underperformer and apart from firing their CEO and a 2nd profit downgrade which people hope are the last what really gives you confidence?

MPG is looking better value IMO

[sb9]

Sp heading towards $8.00 and all the negative talk and discussions have disappeared from this site?

Pity.

Big boys must be looking after each others interests.

[Valiant]

Long time listener, first time...

In regards the JESP Project, they had their blessing last week and a colleague who attended noted the large amount of work yet to be completed. I would expect the late penalties to continue clocking up for the next couple of months, as they have for most of this year.

For shareholder's sake, I hope they have factored this into their recent profit downgrade, as these penalties are not crumbs.

[Balance]

$10.00, here we come

Like it mate - only a matter of time eh


Matey, powering through the $8.00 barrier reasonably effortlessly.

Next restructuring announcement will take it above $9.

[winner69]

Matey, powering through the $8.00 barrier reasonably effortlessly.

Next restructuring announcement will take it above $9.

Totally agree mate

Surely we not the only two who saw the opportunity

Mr P was always an advocate that the up trends in the FBU share price were pretty reliable once they started. I reckon this is the case again. Been a pretty good strategy in the past.

[Kay]

Totally agree mate

Surely we not the only two who saw the opportunity

Mr P was always an advocate that the up trends in the FBU share price were pretty reliable once they started. I reckon this is the case again. Been a pretty good strategy in the past.


Personally...anyone out there who is not expecting further downgrades or dismal forecasts from Fletchers construction division should be glueing their hands in their pockets!

A construction project that is losing serious amounts money on day x will have lost a significant amount more by day y. They seem to have several of these. And ongoing. surely enough to wipe a large construction company. Fletcher are lucky they can be bailed out by their building products division.

[BlackPeter]

Personally...anyone out there who is not expecting further downgrades or dismal forecasts from Fletchers construction division should be glueing their hands in their pockets!

A construction project that is losing serious amounts money on day x will have lost a significant amount more by day y. They seem to have several of these. And ongoing. surely enough to wipe a large construction company. Fletcher are lucky they can be bailed out by their building products division.

Absolutely agree. If things go really well for FBU than they will have only one more downgrade after their new CEO steps on the deck and tidied the closets. Expecting them to float from here (before that) with all the old wood unchanged in place is like expecting a pig to fly ...

[winner69]

Watching the squiggly line no the chart closely .....that's thevway to go

Sentiment drives price in short term rather than fundamentals

[Balance]

Absolutely agree. If things go really well for FBU than they will have only one more downgrade after their new CEO steps on the deck and tidied the closets. Expecting them to float from here (before that) with all the old wood unchanged in place is like expecting a pig to fly ...

Market is fully expecting a new CEO to do another clean-up - that's a given.

What the market is split on and that's where the money is going to be made (or lost) is whether the directors are up to the job of restructuring FBU.

History says they will.

[tobo]

I see in the paper that they pulled out of bidding for a big corrections project

[sb9]

I see in the paper that they pulled out of bidding for a big corrections project

Makes it more ironic how the sp is over $8 mark.....

[emveha]

Makes it more ironic how the sp is over $8 mark.....

Not for long imho, seeing the result.

[winner69]

Underlying profit of $525m - dead on guidance (at least the last one)

[silverblizzard888]

Looks like its up to market expectations and price is up early on, looks like many can't resist a reasonable dividend

[peat]

dead on guidance

dog?? ;+)

[winner69]

dog?? ;+)

Suppose dead not a good word to use ....should have said spot on ....but then Spot was a dog as well.



spent many hours looking for Spot in Where's Spot

[Beagle]

Suppose dead not a good word to use ....should have said spot on ....but then Spot was a dog as well.



spent many hours looking for Spot in Where's Spot

Speaking of dog's I reckon shareholders are barking up the wrong tree to think the systemic issues within this complex company can be solved quickly.
Maybe one day it will be a great company again but I have very little patience when it comes to incompetent management and weak boards.
Its performance against the NZX50 over the last decade makes for a VERY sad comparison and to be frank I see nothing at this stage that would suggest that serious relative underperformance won't continue. Certainly the company is trading at a very demanding multiple for what is a cyclical building supplies and construction company with a highly chequered track record. The potential for ongoing disappointing performance is very high in my opinion.
Disc: Don't own and definitely not looking to buy at anything like the current price. http://www.sharechat.co.nz/article/7af82050/fletcher-chair-norris-hints-at-board-refresh-after-year-of-nil-return-to-shareholders.html?utm_medium=email&utm_campaign=Fletcher%20chair%20Norris%20hints%20a t%20board%20refresh%20after%20year%20of%20nil%20re turn%20to%20shareholders&utm_content=Fletcher%20chair%20Norris%20hints%20at %20board%20refresh%20after%20year%20of%20nil%20ret urn%20to%20shareholders+CID_a4facfb72820ee12b8c95d 8c3f794ff3&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle7af82050fletch er-chair-norris-hints-at-board-refresh-after-year-of-nil-return-to-shareholdershtml
In addition - behind the paywall article in NBR yesterday claiming FBU had pulled out of the tendering process for a major new prison project and that directors must now sign off on all future construction projects, Wow, there's confidence in the new CEO (NOT !)

[bull....]

dog?? ;+)

dog with fleas

[steveb]

just read in the Herald that adamson is to recieve a $2.9m exit package! Surely its time for the board to resign or be committed!

[tim23]

Market doesn't think so - $8.50 next stop?[QdUOTE=bull....;678699]dog with fleas[/QUOTE]

[Jay]

Heard Sir Ralph say Adamson got no more than he was contractually liable for - or words to that affect, still, who approved the contract in the 1st place, though probably not expecting their CEO to write those kind of emails and even further, not expecting them to get to the public domain.

Disc: Not holding/ or recently held

[winner69]

Matey, powering through the $8.00 barrier reasonably effortlessly.

Next restructuring announcement will take it above $9.

Still in target to $9 eh mate

Good gains from $7.40/$7.50 (>10%) in less than a month ...with more to come

Besides that building division the rest of the business doing very well with significant earnings increases. Looking forward we could even see a share price well over $10 this time next year

[RTM]

http://www.nzherald.co.nz/index.cfm?objectid=11906166&ref=twitter

Pleased I am out...although....surprised by SP movement recently.

[Rep]

Another FBU construction project running behind...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11906349

"Last year, Precinct chief executive Scott Pritchard said all the retail centre was scheduled to be open by next October and the office tower by mid-2019.

Fletcher Construction is Commercial Bay's head contractor and chairman Sir Ralph Norris this week told a post-result media briefing at Penrose that all was well with the Commercial Bay contract.

Precinct's results presentation yesterday said the centre's delayed opening dates would not mean it loses money.

"Based on site progress to date, the revised opening plan is expected to mitigate risk from construction delays and help ensure a successful opening. We retain a positive working relationship with our main contractor and remain comfortable with the provisions of the fixed price construction contract," Precinct said of Fletcher.

A Precinct spokeswoman explained the situation further.

"Precinct has taken the decision to delay the opening of the retail centre following advice received from independent experts that the likely completion of the construction for the retail component of Commercial Bay will now be in Q1 2019 rather than Q4 2018," she said.

Shane Solly of Harbour Asset Management, which owns Precinct shares, expressed disappointment in the delay, indicating a pre-Christmas mall opening was what had been expected.

"The slight delay to Commercial Bay development was a small blemish on what was a solid result from Precinct," Solly said.

A Fletcher spokeswoman said yesterday: "The project is running to the programme agreed with the client."

Sources close to the project said extensions to the programme were provided to Fletcher under its contract, because of external circumstances which were outside the builder's control. Those extensions meant the building time line came too close to December for Precinct to be able to fit out its new shops in time for Christmas.


If Precinct aren't going to lose money due to the delays and FBU are allowed an extension, I'm wondering who does pay.... Auckland Transport?

[emveha]

Screw the shareholders. http://www.nzherald.co.nz/best-of-business-analysis/news/article.cfm?c_id=1501241&objectid=11906880

[artemis]

Headline in NBR - Infrastructure industry on the brink of not having any bids for some contracts - More clients passing on more risk to the construction industry.

Behind the paywall so I didn't read, but expect recent FBU overruns will have spooked some interested parties, probably including Fletchers. Still, fewer (or no) contenders mean more possible to build in a bigger margin for risk.

[moka]

I see from ASB that Morningstar have ceased coverage on FBU this month.

Latest recommendation report
Valuation: $7.10 Last updated: 07/08/17
Ceased Coverage on Fletcher Building
As foreshadowed in our note on July 17, 2017, we cease coverage on Fletcher Building. We periodically adjust our coverage as necessary based on stock outlook, client demand, and investor interest, and may reinitiate coverage in the future.

[BlackPeter]

Brian Gaynor's view on the state of the building industry (not just) in NZ:

http://breakingviewsnz.blogspot.co.nz/2017/09/brian-gaynor-building-industry-that-got.html

Worthwhile reading:

[percy]

BP,thanks for the link.

What's the bet only 80,000 will get built for the same money.?

[BlackPeter]

BP,thanks for the link.

What's the bet only 80,000 will get built for the same money.?

You that optimistic ;) ?

[percy]

You that optimistic ;) ?

"Let's do this.",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,?.................. ..............lol.

[winner69]

From The Australian - With respect to Fletcher Building, it is understood that investment bankers — likely to be those from its house banker Credit Suisse — are believed to be around the market concocting break-up scenarios for the company ..... Fletcher is known to have been eager to sell its Australian operations that it acquired through its acquisition of the Crane Group some time ago, but the understanding is that the operations have not attracted any buyers

[Beagle]

http://www.sharechat.co.nz/article/05344a29/fletcher-confirms-kpmg-hired-to-run-the-rule-over-major-projects.html?utm_medium=email&utm_campaign=Fletcher%20confirms%20KPMG%20hired%20 to%20run%20the%20rule%20over%20major%20projects&utm_content=Fletcher%20confirms%20KPMG%20hired%20t o%20run%20the%20rule%20over%20major%20projects+CID _7d280ff3e14b482103fb41282fc20003&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle05344a29fletch er-confirms-kpmg-hired-to-run-the-rule-over-major-projectshtml

Its surprising with all those high priced executives paid many hundreds of thousands of dollars and the fact that this company is in the business of construction that they can't build a rigorous development quoting model for various different forms of projects and need to hire outside consultants.

[RTM]

http://www.sharechat.co.nz/article/05344a29/fletcher-confirms-kpmg-hired-to-run-the-rule-over-major-projects.html?utm_medium=email&utm_campaign=Fletcher%20confirms%20KPMG%20hired%20 to%20run%20the%20rule%20over%20major%20projects&utm_content=Fletcher%20confirms%20KPMG%20hired%20t o%20run%20the%20rule%20over%20major%20projects+CID _7d280ff3e14b482103fb41282fc20003&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle05344a29fletch er-confirms-kpmg-hired-to-run-the-rule-over-major-projectshtml

Its surprising with all those high priced executives paid many hundreds of thousands of dollars and the fact that this company is in the business of construction that they can't build a rigorous development quoting model for various different forms of projects and need to hire outside consultants.

Yes. Exactly. You would have thought that this would have had to be a core competency for an industry such as this.
That's why I am completely out. At a modest profit. Phew.

[forest]

Its surprising with all those high priced executives paid many hundreds of thousands of dollars and the fact that this company is in the business of construction that they can't build a rigorous development quoting model for various different forms of projects and need to hire outside consultants.[/QUOTE]

Your right, this is FBU job. They should be the specialist in quoting projects specially as a lot of the materials will be supplied by FBU themselves.

[Beagle]

Yes. Exactly. You would have thought that this would have had to be a core competency for an industry such as this.
That's why I am completely out. At a modest profit. Phew.


Forest
Your right, this is FBU job. They should be the specialist in quoting projects specially as a lot of the materials will be supplied by FBU themselves
And to think that the company has had decades of experience to try and get this right and to then get it so badly wrong on several large projects, WOW... you really do have to wonder about the competency of the executive team don't you ! But wait...there's more !...I see the board have finally now realised they need more directors with construction experience...doh...you think ? lol
How anyone could say they have confidence in the senior management team and board is totally beyond my comprehension !
Disc: Never been a shareholder and unlikely to ever be one.

[RTM]

isc: Never been a shareholder and unlikely to ever be one.

Bought at $6.74 Jan 2016
Not complaining, but hoped to hold for the longer term. Will keep on radar.

[winner69]

Even the workers are unhappy

Shareholders should be ashamed their employees can’t even have a decent wage (living) .....but that’s not how capitalism works ....but then I’m told capitalism is dead.

Go the workers - your capitalised interest in the company is more than the shareholders anyway

https://www.stuff.co.nz/business/98143090/fletcher-building-workers-to-picket-outside-the-companys-headquarters

[macduffy]

Sounds more like an old-fashioned union v company wage increase "negotiation", to me.
;)

[Balance]

https://www.nzx.com/companies/FBU/announcements/309070

Downgrades come in threes - looks like it is coming true for FBU?

[horus1]

This is a disaster for them if it is a downgrde.

[steveb]

And an announcement on the new CEO you almost feel sorry for the poor sod,it's some poisoned chalice they will be handing him/her!

[winner69]

https://www.nzx.com/companies/FBU/announcements/309070

Downgrades come in threes - looks like it is coming true for FBU?

sometimes they come in fours ...and even fives

be a good meeting tomorrow eh .....ralph wont be a happy chappy

[stoploss]

If you talk to anyone in the building industry , they seem to have plenty of stories around the losses on CHCH building contracts ...not to mention the Auck convention centre ...... going to take some time to turn this ship around ....

[minimoke]

I haven't seen anything about their exposure to EQC remediation repairs. There are a few of those around as well

[Beagle]

https://www.nzx.com/companies/FBU/announcements/309070

Downgrades come in threes - looks like it is coming true for FBU?

Yeap but I expect tomorrow's downgrade to FY18 to be just the first of three for this year. Should be an interesting meeting tomorrow, "almost" worth owning a few shares to attend and would do if I thought they were worth anything more than $5.

[value_investor]

Potential reasons (most likely to least)
- Profit downgrade due to over zealous or optimistic forecasting
- Shifts at the top or a culling of staff through restructure
- Negotiating with the unions going nowhere or resulting in FBU increasing wages
- wrongdoings or fraud

I wouldn't put it past FBU at this point for any of those four happening. I'll be watching this one for interest sake..

[Kay]

"The Company is reviewing the financial performance of its Building + Interiors (B+I) business unit, which is being informed by the independent KPMG review of the two largest B+I projects,"

Convention Center and Commercial Bay?

I doubt a Convention Center downgrade would surprise many

But I wonder if Commercial Bay is about to be added to the list of naughty projects...

[sb9]

"The Company is reviewing the financial performance of its Building + Interiors (B+I) business unit, which is being informed by the independent KPMG review of the two largest B+I projects,"

Convention Center and Commercial Bay?

I doubt a Convention Center downgrade would surprise many

But I wonder if Commercial Bay is about to be added to the list of naughty projects...

Yeah signs are pretty ominous, expect some fireworks and war at ASM being held this morning at Akl War Memorial Museum Event Centre.

[sb9]

https://nzx.com/companies/FBU/announcements/309157

Here are all docs, had a quick look through, yes another downgrade, they come in 3s, right?

And new CEO announced Ross Taylor (not cricketer), think he's an Aussie...

[winner69]

Think it says F18 underlying earnings about the same as last years $525m ...maybe more

Not a total disaster

[Rep]

Think it says F18 underlying earnings about the same as last years $525m ...maybe more

Not a total disaster

It won't be provided that they actually achieve the bottom of the range of guidance - KPMG have presumably run the ruler over two large projects (NZICC and maybe Commercial Bay) and the Board won't want to miss the bottom of the earnings range but there will be 'diamond crushing' levels of pressure on management down to make that minimum and not take another downgrade lest all credibility is lost.

[RTM]

Think it says F18 underlying earnings about the same as last years $525m ...maybe more

Not a total disaster

Maybe not. Nevertheless, pleased to be out.

[Beagle]

It won't be provided that they actually achieve the bottom of the range of guidance - KPMG have presumably run the ruler over two large projects (NZICC and maybe Commercial Bay) and the Board won't want to miss the bottom of the earnings range but there will be 'diamond crushing' levels of pressure on management down to make that minimum and not take another downgrade lest all credibility is lost.

I think their credibility is already in tatters. To make losses like they have in the midst of a building boom really takes your breath away as does hiring in outside consultants to show them how to quote on construction jobs...
The big winner here is SKC, looks like they are getting that fancy new international convention center built for around $200m less than cost price !

[Kay]

Well its a disaster if you consider the Building and Interiors division in isolation - and I assume with the large projects continuing through FY19 more losses are to come in a years time?

But I guess Fletcher are a bigger animal than just commercial construction - assuming the demand for their building products continues over the next few years.

All too risky for me - but I will enjoy watching it play out

[Beagle]

http://www.4-traders.com/FLETCHER-BUILDING-LIMITED-6492649/financials/

As at yesterday average analyst forecast for FY18 was EBIT of $717m. This compared to estimated EBIT as announced this morning of $540m so it could be a very interesting day for the SP. Drilling down into this a bit we see average analysts forecast for interest is $97m so assuming this remains constant on the company's revised forecast we see $540m - $97m interest = net profit before tax of $443m or just $319m after 28% tax. On 696m issued shares this gives EPS for FY18 of 46 cps.

Choose your own PE for a cyclical construction company treading at the peak of the cycle with ongoing systemic issues and questionable management capabilities.
Personally I see no valid reason to apply a PE of more than 10 given I expect ongoing issues in the B & I division beyond FY18 and the company has a very bloated and basically inept management structure. Fair value to me is obviously no more than $4.60 and a major divergence to where the market sees it so I will continue to watch this fiasco unfold from the sidelines. Good luck to anyone brave enough to hold this.

I think there's so much dead wood in this company its a truly sad reflection upon the lack of effective governance. I would suggest many dozens of heads need to roll starting with most of the board. I guess shareholders will be hoping the new CEO has the wherewithal to make vast and sweeping changes within the company and to clean out vast amounts of dead wood therein. If it was me I'd start by making every single person in the company reapply for their job and make their own case why they should be retained. The clean-out needs to be brutal if shareholders are ever to get acceptable returns on their capital.

[axe]

If this is the performance a the peak of the cycle what can we expect if the industry slows down?


http://www.4-traders.com/FLETCHER-BUILDING-LIMITED-6492649/financials/

As at yesterday average analyst forecast for FY18 was EBIT of $717m. This compared to estimated EBIT as announced this morning of $540m so it could be a very interesting day for the SP. Drilling down into this a bit we see average analysts forecast for interest is $97m so assuming this remains constant on the company's revised forecast we see $540m - $97m interest = net profit before tax of $443m or just $319m after 28% tax. On 696m issued shares this gives EPS for FY18 of 46 cps.

Choose your own PE for a cyclical construction company treading at the peak of the cycle with ongoing systemic issues and questionable management capabilities.
Personally I see no valid reason to apply a PE of more than 10 given I expect ongoing issues in the B & I division beyond FY18 and the company has a very bloated and basically inept management structure. Fair value to me is obviously no more than $4.60 and a major divergence to where the market sees it so I will continue to watch this fiasco unfold from the sidelines. Good luck to anyone brave enough to hold this.

I think there's so much dead wood in this company its a truly sad reflection upon the lack of effective governance. I would suggest many dozens of heads need to roll starting with most of the board.

[Beagle]

If this is the performance a the peak of the cycle what can we expect if the industry slows down?
Exactly. Analysts are expecting flat earnings over FY19 and FY20 as the company continues through the peak of the cycle and I'm expecting ongoing issues in the B & I division in those years. Who knows after that ?
For what its worth I am by no means the only one wanting to see wholesale changes at board level. In fact 8% of members of the shareholders association who are shareholders in FBU want the entire board dumped ! http://www.sharechat.co.nz/article/47edac2a/norris-offers-apology-as-fletcher-building-forecasts-2018-b-i-loss-of-160m-further-provisions.html?utm_medium=email&utm_campaign=Norris%20offers%20apology%20as%20Flet cher%20Building%20forecasts%202018%20BI%20loss%20o f%20160M%20further%20provisions&utm_content=Norris%20offers%20apology%20as%20Fletc her%20Building%20forecasts%202018%20BI%20loss%20of %20160M%20further%20provisions+CID_7b48eba3c1f4525 d3e0aea7b99be990c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle47edac2anorris-offers-apology-as-fletcher-building-forecasts-2018-b-i-loss-of-160m-further-provisionshtml

Really, I think a simple apology by Norris is not enough. His performance in leadership of the board simply hasn't been good enough and he should resign.

[JeremyALD]

It still marvels me that the SP has stood fairly strong despite numerous and significant downgrades.

Yet on the other side MPG SP has been slaughtered with smaller and in my opinion somewhat more justified downgrades.

[suse]

I dont have any shares in FBU, but an elderly friend of mine likes to dabble in a few shares (minimal money) and she was talking about getting some a few months ago and I said no, I dont think you should right now - I'm glad she listened. I absolutely think Norris should be offering his resignation.

[minimoke]

That Taylor could " return (a) loss-making businesses to profitability" is a OK but not overly inspiring.

The warning signs are still there. Norris says ""Importantly he is a leader focused on people and culture, safety performance, client and customer satisfaction and sustainability, which are the foundations of any successful company."

FBU need to look at changing their soft skill foundations as its obviously not working. For example - I am sure Sky City are a satisfied client but has this made FBU profitable? Unlikely. This CEO better know numbers and be able to change quickly when those numbers don't look good.

[Beagle]

That Taylor could " return (a) loss-making businesses to profitability" is a OK but not overly inspiring.

The warning signs are still there. Norris says ""Importantly he is a leader focused on people and culture, safety performance, client and customer satisfaction and sustainability, which are the foundations of any successful company."

FBU need to look at changing their soft skill foundations as its obviously not working. For example - I am sure Sky City are a satisfied client but has this made FBU profitable? Unlikely. This CEO better know numbers and be able to change quickly when those numbers don't look good.

Where is the focus on maximizing shareholder returns or doesn't he think its necessary to actually be responsible to you know...the people who actually own the business for goodness sake. I'd be furious if I were a shareholder, furious enough to go to the annual meeting wearing a Viking helmet !

[Raz]

Where is the focus on maximizing shareholder returns or doesn't he think its necessary to actually be responsible to you know...the people who actually own the business for goodness sake. I'd be furious if I were a shareholder, furious enough to go to the annual meeting wearing a Viking helmet !

This company leaves me at a total loss, how can this all come to pass in 2017... seriously!

[winner69]

Where is the focus on maximizing shareholder returns or doesn't he think its necessary to actually be responsible to you know...the people who actually own the business for goodness sake. I'd be furious if I were a shareholder, furious enough to go to the annual meeting wearing a Viking helmet !

Maybe cause capitalism is dead or something

maximising shareholder returns as a core value / foundation is so so yesterday

[Beagle]

This company leaves me at a total loss, how can this all come to pass in 2017... seriously!

Beggars belief doesn't it ! Thankfully nobody has a gun pointed at our head forcing us to be a shareholder otherwise I'd probably tell them to just shoot me lol
Fortunately it appears sharetrader forum members are a pretty savvy bunch of investors as there was widespread derision towards FBU clearly evident at our last annual get together in Feb 2017.


Maybe cause capitalism is dead or something

maximising shareholder returns as a core value / foundation is so so yesterday

Jacinda thinks so !

[Balance]

That Taylor could " return (a) loss-making businesses to profitability" is a OK but not overly inspiring.

The warning signs are still there. Norris says ""Importantly he is a leader focused on people and culture, safety performance, client and customer satisfaction and sustainability, which are the foundations of any successful company."

FBU need to look at changing their soft skill foundations as its obviously not working. For example - I am sure Sky City are a satisfied client but has this made FBU profitable? Unlikely. This CEO better know numbers and be able to change quickly when those numbers don't look good.

When you cannot dazzle them with performance, dazzle them with platitudes and bull****?

[JeremyALD]

Only 2% down now and I wouldn't be surprised to see this up end of day.

I don't understand how shareholders are so forgiving to FBU. It bounced straight back after their last downgrade too.

[Beagle]

Only 2% down now and I wouldn't be surprised to see this up end of day.

I don't understand how shareholders are so forgiving to FBU. It bounced straight back after their last downgrade too.

Quite right mate and I don't think any of us on here understand it either. Analysts probably ignoring losses from B&I division YET again and coming up with "normalized" profit after tax of $434m which gives 62.4 cps and then hoping the new CEO can wring some efficiency out of this dinosaur, (let's be honest there's almost limitless area's in this company to find extra efficiency) so must be 75 cps earnings in the years ahead so the stock is cheap...or some such other entirely fictional work of their collective imaginations
Still what do we know, just amateurs... but then again we don't have a vested interest to generate brokerage income do we :)

[peat]

Quite right mate and I don't think any of us on here understand it either. Analysts probably ignoring losses from B&I division YET again and coming up with "normalized" profit after tax of $434m which gives 62.4 cps and then hoping the new CEO can wring some efficiency out of this dinosaur, (let's be honest there's almost limitless area's in this company to find extra efficiency) so must be 75 cps earnings in the years ahead so the stock is cheap...or some such other entirely fictional work of their collective imaginations
Still what do we know, just amateurs... but then again we don't have a vested interest to generate brokerage income do we :)

Too many funds and institutions already in and would rather support than bail??

FNZ put out a review this morning with a $9.20 target!

But that said we are at a very important level being a 78% fib retracement of the big movement that took place from 6.70 to 11 ish during 2016. So I see it technically as very critical that it holds this level otherwise <snap>

[minimoke]

Only 2% down now and I wouldn't be surprised to see this up end of day.

I don't understand how shareholders are so forgiving to FBU. It bounced straight back after their last downgrade too.
I remember reading somewhere (so dont quote me!) that the sum of the parts is worth more than the whole. So maybe some hope that if there is a carve off greater value will be achieved.

[Beagle]

Too many funds and institutions already in and would rather support than bail??

FNZ put out a review this morning with a $9.20 target!

But that said we are at a very important level being a 78% fib retracement of the big movement that took place from 6.70 to 11 ish during 2016. So I see it technically as very critical that it holds this level otherwise <snap>

Wow in post #1683 I made the case that they are only worth exactly half that.
Here's the thing, they have a pack mentality, clearly exhibiting management struicture built around survival of the pack, (pigs eating from a trough anyone ?) and have clearly taken lessons from this https://www.asme.org/career-education/articles/leadership-skills/leadership-lessons-from-a-dog-sled-team
This hound however knows it is all supposed to be about the speed or progress across the snow...management at FBU seem to think the goal is all about how long they can keep their snouts in the trough.

[bullfrog]

I remember reading somewhere (so dont quote me!) that the sum of the parts is worth more than the whole. So maybe some hope that if there is a carve off greater value will be achieved.

With over 20,000 staff over 34 business units, the SP may reflect an expectation that some BU may be sold off.

Also, I’d be interested in the company’s philosophy in running so many BU. I suspect that they may have been looking for economies of scale, with centralised billing, finance, admin, etc, but without very strong competent leadership, this could be a disaster. I’ve had some dealings with Fletchers and found invoices have had to be returned 3 times before they were correct. I was told invoicing was generated by an office in a land far far away/different time zone/alternative universe (choose one) from the work site. Nightmare for progress payments, variations, adjustments etc etc.

So I believe a limited breakup is a real possibility, shame MPG (and others in sector) will be tarred by same brush.

[value_investor]

The bull market sentiment overrides everything. I would have expected this to be down 5-7% after an announcement like this but I guess rationality has been thrown out the window.

I am surprised that management has been able to operate like this, isn't this type of thing bordering on negligence? Especially if management have been aware the whole time and suppressing the information from its investors. This is the third downgrade since March, surely the market conditions haven't changed that much since..

Buyer beware..

[Beagle]

The bull market sentiment overrides everything. I would have expected this to be down 5-7% after an announcement like this but I guess rationality has been thrown out the window.

I am surprised that management has been able to operate like this, isn't this type of thing bordering on negligence? Especially if management have been aware the whole time and suppressing the information from its investors. This is the third downgrade since March, surely the market conditions haven't changed that much since..

Buyer beware..

I agree with you and have deep concerns regarding the lack of transparency and veracity around timing of downgrade information supplied to shareholders. Prima facie this is actionable and a breech of the continuous disclosure obligations of the company in my opinion. The board are primarily responsible for this and senior management are certainly on the face of it culpable. The 20% token pay cut that Norris took is absolutely pathetic in my view. If the company can't find a better Chairman immediately then the least he should do is refund all his directors fees for last year's fiasco and work on for free until the B & I division is profitable. In my view his credibility is in tatters as the board clearly did not provide sufficient oversight of the previous CEO. Company currently trades on a forward PE of 16.70 and this for a cyclical building company at the peak of the cycle. Good luck to holders if they think this is still a good investable proposition. I would not touch this with a 40 foot barge pole for a significant number of reasons including the fact that I expect ongoing losses in the B & I division in future years and I do not trust management or the board. Tony Carter should do himself a favor and also resign.

[peat]

I guess rationality has been thrown out the window.



My system even gives FBU a green candle today.

9256

because it closed higher than it opened



.

[gbogo]

large local broker research note reduces price target to $9.50 from $9.20.

[JeremyALD]

large local broker research note reduces price target to $9.50 from $9.20.

Isn't that an increase?

[macduffy]

Must be my turn to slap FBU!

The thought occurs that, just as increased profitability is often used as a justification for increased directors' fees, perhaps profit/profit downgrades should also prompt reductions in fees. How about minus 15-20% every time a downgrade issues? If this leads to some directors' resignations, so much the better!

Yeah, right.

[horus1]

its $8.50 not $9.50

[Beagle]

http://www.sharechat.co.nz/article/4df5b763/market-close-nz-shares-down-on-fletcher-s-weakness-exporters-a2-and-comvita-book-gains.html?utm_medium=email&utm_campaign=MARKET%20CLOSE%20NZ%20shares%20down%2 0on%20Fletchers%20weakness%20exporters%20A2%20and% 20Comvita%20book%20gains&utm_content=MARKET%20CLOSE%20NZ%20shares%20down%20 on%20Fletchers%20weakness%20exporters%20A2%20and%2 0Comvita%20book%20gains+CID_420d64a18e5c0b30802cf6 d1686c05b0&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle4df5b763market-close-nz-shares-down-on-fletcher-s-weakness-exporters-a2-and-comvita-book-gainshtml

It would seem that collectively investors are starting to take a dimmer view regarding FBU and not before time in my opinion. I maintain my view that the flea infestation with this pup is very severe and its unlikely there's enough flea powder and applicants to apply it to rectify the problems anytime soon. Expect ongoing disappointments.

[minimoke]

Was that the Humes Pipeline factory that went up in smoke yesterday?

[winner69]

Was that the Humes Pipeline factory that went up in smoke yesterday?

Yes it was

[Yoda]

Maybe we are at the bottom, ? Oversold ? Hopefully change of guard will make a difference......

[Peitro]

I remember reading somewhere (so dont quote me!) that the sum of the parts is worth more than the whole. So maybe some hope that if there is a carve off greater value will be achieved.

Right on the money here, deep set rot, but hasn’t reached all arms of the business

[minimoke]

Right on the money here, deep set rot, but hasn’t reached all arms of the businessSometimes I think I have a little share fairy wafting over me. A few years back I was about to pull the trigger on a PRC buy but I dallied. Just as well.

When I posted the above I was thinking I really need a construction Co in my portfolio and FBU, on that basis appeared to have potential. I got distracted with other stocks (ATM and SML etc) but was just thinking the other day with this "crash" and cash burning a hole in my pocket now might be a good time to pick up at a discount. Just as well I didn't give it any extra thought.

[Peitro]

Dodged the direct holding, but simplicity has me holding indirectly

[minimoke]

Dodged the direct holding, but simplicity has me holding indirectly
Which is why I prefer to pick and choose my own shares. If they go down I only have myself to blame. Much better than paying someone else to depreciate your assets for you.. My money in Kiwisaver an exception - figure the risk is well offset by employer and tax payer top ups.

Fingers cross for an FBU split - we could do with a few IPO's

[bull....]

looking good :scared: