FBU Chart.

[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-BU...49/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-BU...49/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/4...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!