$3.50
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Was there any mention of cap raise on the call?
More mistakes, so much imcompetence at FBU, cant get simple details right
GENERAL: FBU: Correction to Net Tangible Assets (NTA)
Auckland, 14 February 2024: Fletcher Building wishes to correct the NTA
figure in the NZX Results Sheet attachment released earlier today. The
correct NTA per Quoted Equity Security value for the Current Period is $2.91
(not $3.11 as stated in the earlier attachment due to typographical error).
An amended Results Sheet is attached for completeness.
Outside of COVID, we havent seen this price since 2003.
Waiting for RAWZ to buy, so I can get in....
$ 3.50 was a good place to get in ....first cut is the deepest normally ....so hopefully it wont try to test previous low of $ 3.20 ...
Correction to Net Tangible Assets (NTA) figure in Results Sheet attachment
Auckland, 14 February 2024: Fletcher Building wishes to correct the NTA figure
in the NZX Results Sheet attachment released earlier today. The correct NTA per
Quoted Equity Security value for the Current Period is $2.91 (not $3.11 as stated
in the earlier attachment due to typographical error).
Complete utter incompetence from the Board. Next time can we please have a CEO full time in NZ not retiring back to OZ with a big smile on his face.
As some of you have probably caught on I’ve had my doubts about Taylor being Fletchers saviour from very early days
First red flag was when I heard it was Kate Spargo, who was on UGL and Fletcher boards, tapped him on the shoulder and said go talk to Ralph Norris and he’ll sort something out. So much for the global executive search eh
Kate didn’t last much longer and left about the same time Norris did …but damage done
Depends on how much further damage they still got to book up to fill the bottomless
Aussie problem pit ahead and how many more kaput projects there are hidden out back
to sneak back in for fix up jobs ;)
How large would you all like the reverse dividends to be - boys & girls ? .. you know the sort
where the pennies get thrown back into the tin with no imputation credits, deductions etc etc
and if you're lucky they don't all fly out the door on the next lot of reported red ink :)
Typographical error. Sure was.
It's easy to confuse a 311 with a 2, a 9 and a 1.
Happens all the time down in finance at Fletchers.
No wonder NZ houses leak,construction costs have exploded & roads are full of pot holes.
https://www.infometrics.co.nz/articl...nges-lie-ahead
As I mentioned a few months back,uninvestable ever since it listed in the
80s ? !
Continuing systemic catastrophes
No wonder NZ houses leak,construction costs have exploded & roads are full of pot holes.
https://www.infometrics.co.nz/articl...nges-lie-ahead
As I mentioned a few months back,uninvestable ever since it listed in the
80s ? !
Main and most objective question at the moment ....IS FBU A BUY NOW ? As per morning star it is ...their target remains $ 6 FV
What about experts here ? FBU has gone thru these cycles of boom and bust many times ...so will this bust lead to boom ahead or its final bust ???
It's a good deal for NEW investors at these levels
Those shareholders that have been carrying the can for the last decade probably have more than enough exposure already.
Im pretty sure that the Fletcher workers in the staff share scheme don't want anymore shares.
Hi all.
My latest column published on my Substack, Just the Business examines why Fletcher Building director Barbara Chapman should not be in charge of selecting the company's next chief executive. The headline is:
Ralph Norris' influence over Fletcher Building needs to end
You can find it here: https://justthebusinessjennyruth.sub...-over-fletcher
And apologies I forgot to say on Tuesday that I had published a column, also on Fletcher, on why the board needs to go. You can find that one here: https://justthebusinessjennyruth.sub...cher-buildings
I just heard on the news that the Government is going to rewrite the building regulations to align with international standards and allow other international products into NZ and break the monopoly pricing.
That’s good news if building material prices drop or at least, stop going up.
Issues faced by importers of building materials include the regulatory & compliance regime in NZ (ridiculous when you consider how leaky homes as a consequence of using local manufactured & approved products & materials have cost billions of dollars) and shipping costs as NZ is heck of a long way from everywhere.
Balance Sheet, Returns and Funding
ROFE before significant items for the year to 31 December 2023 was 13.8%. Funds employed increased to $5.1 billion compared to $4.8 billion at 30 June 2023, resulting from: an unwind of onerous contract provisions on the legacy construction projects; and the Group’s continued investment in attractive growth opportunities to deliver at least 15.0% ROFE when mature.
The Group’s leverage ratio (net debt / EBITDA before significant items) at 31 December 2023 was 1.8 times, compared to 1.2 times at 30 June 2023, which principally reflects debt drawdowns associated with legacy cash outflows. Looking ahead, the Group expects to remain at the higher end of its target 1x-2x leverage range through FY24.
The Group’s gearing at 31 December 2023 was 36.4% compared with 27.8% at 30 June 2023.
Total funding available to the Group at 31 December 2023 was $2,873 million, of which $709 million was undrawn and there was an additional $215 million of cash on hand. This provided liquidity to the Group at 31 December 2023 of $0.9 billion. In HY24, the Group executed a New Zealand dollar denominated loan facility with a three-bank syndicate of $400 million, which replaces the $300 million revolving credit facility which was due to mature in October 2024.
The Group also announced in HY24 its first investment grade credit rating of Baa2 assigned by Moody’s Investors Service. The average maturity of the Group’s debt at 31 December 2023 was 2.8 years, with the currency split being 15% Australian dollar; 84% New Zealand dollar; and 1% spread over various other currencies.
The Group currently has 50% of all borrowings with fixed interest rates with an average duration of 2.2 years. Inclusive of floating rate borrowings, the average interest rate on the debt (based on period-end borrowings) was 6.0%.
FBU have over $1b in lease liabilities which some must be leases on their large fleets of trucks, machinery, cranes etc. If you add this to their debt their gearing is closer to 60%
Anyone with more accounting knowledge care to share their wisdom on this area?
here we go all downgrades
goldman sachs cuts price target 20% to A3.70 RATED NEUTRAL
JEFFERIES CUTS 13% TO NZ5.20
probably more to come
Accountant here. Lease liabilities dont really count (in my mind), I mean you are in a contract and "owe the money", but its just part of the monthly expenses and running the business, so not proper debt in my opinion. I exclude them from any analysis. You arent planning on paying them back, other than the monthly tick over... Example on my thinking on this - is a company with 1 year left on a lease (so small liability) better off than a company who has just signed a 10 year lease (massive liability).....
Trick with this, and the new accounting standards, is to make sure you factor these into operating cash flow, as it goes through financial cashflows in the statements now...
just had a couple more massive ones come thru ... all downgrades
macquarie cut 43% to $3.46 nz
morgans cut 30% to $4 nz
not surprised i found there answers quite vague around the big downturn in business last 2 mths
For Bars Review
Fletcher Building's (FBU) 1H24 result and FY24 guidance was disappointing. FBU does have some good NZ businesses with strong market positions which have generated c.NZ$390m EBIT on average over the last decade. However, group performance has been dragged down by issues in Construction and Australia. The question is: are these over? We think it's unlikely in the short-term, with the New Zealand International Convention Centre (NZICC) still to be completed and Iplex pipe issues still unresolved. We acknowledge the perennial underperformance of FBU but the combination of cyclically low activity, significant negative items likely at their peak, and new management retains our interest. Towards the end of 2024 the NZICC should be finishing, we should have more clarity on whether (or not) an Iplex product recall will occur, new management will have set out their vision for the businesses, and the NZ operating backdrop will likely be more constructive (FBU did lift FY24 home sales guidance highlighting improved housing demand). As such we maintain our OUTPERFORM rating on valuation grounds (12 month forward PE of 10x) but acknowledge the market will likely want certainty on NZICC completion costs and Pro-fit (Iplex) pipe issues, as well as lower debt levels to rerate the stock.
What's changed?
- Earnings: We lower our FY24–26 EBIT forecasts -13%/-7%/-6%
- Target price: We lower our target price -9% to NZ$4.80.
Weak 1H24 with no post election bounce
The weaker than expected 1H24 EBIT of NZ$264m was disappointing but likely the result of slower NZ activity persisting past the election (and into the new year). Building Materials (EBIT -34% vs 1H23, EBIT margin 11.1%) and Distribution (EBIT -46% vs 1H23, EBIT margin 4.2%) saw the largest declines, while Australia was more resilient (EBIT -5%) despite continued underperformance from Tradelink (NZ$122m write-down and now being divested). The one bright spot was residential development, where the guidance for home sales was increased to 900 (previous guidance 700–800). No dividend was declared due to high gearing and a cash outflow. FBU provided FY24 EBIT guidance of NZ$540m–$640m with the midpoint reflecting continuation of current trading conditions.
A lot of water to go under the bridge over the next 12 months
Recent challenges with FBU's performance (and communication of those challenges) have lead to Chair Bruce Hassal and CEO Ross Taylor both announcing they will depart the business. The next 12 months will have their challenges: the NZICC needs completing, the Profit pipes saga will drag on (with a product recall a significant risk for FBU), NZ demand could be patchy, the balance sheet needs more careful management (we calculate senior leverage ratio of 2.3x using the midpoint of guidance and FBU's current debt vs. a 3.25x covenant providing c.NZ$700m of debt headroom), and there will be a new management team before year end.
link
link
OUTPERFORM
Fletcher Building's (FBU) 1H24 result and FY24 guidance was disappointing. FBU does have some good NZ businesses with strong market positions which have generated c.NZ$390m EBIT on average over the last decade. However, group performance has been dragged down by issues in Construction and Australia. The question is: are these over? We think it's unlikely in the short-term, with the New Zealand International Convention Centre (NZICC) still to be completed and Iplex pipe issues still unresolved. We acknowledge the perennial underperformance of FBU but the combination of cyclically low activity, significant negative items likely at their peak, and new management retains our interest. Towards the end of 2024 the NZICC should be finishing, we should have more clarity on whether (or not) an Iplex product recall will occur, new management will have set out their vision for the businesses, and the NZ operating backdrop will likely be more constructive (FBU did lift FY24 home sales guidance highlighting improved housing demand). As such we maintain our OUTPERFORM rating on valuation grounds (12 month forward PE of 10x) but acknowledge the market will likely want certainty on NZICC completion costs and Pro-fit (Iplex) pipe issues, as well as lower debt levels to rerate the stock.
$3-50 !! death by a thousand cuts atm.
All these brokers updating their DCF models on FBU. Cracks me up lol
What a disaster. I think this will keep sinking through the lows.
Just impossible to buy right now.
Also love to see the spreadsheet nerds scramble to spit out a new random number go up (but less up)
FBU has broken on the downside ....maybe $ 3.20 on cards ...let's see. when. Bull steps in to stop the rot
$3-41 Slip sliding away !!
Please tell me you're kidding.
Morningstar is the biggest joke of the lot. There's a reason you find their analysis for free everywhere, including all the retail sites... it's complete garbage, but to the upside. So they get punters to buy.
Now that the $3.50 buy wall has been sold into, that's all she wrote for FBU.
The company is an absolute basket case. All hinges on the new leadership.
Guys please get real...From Sam Stubbs."the selling price of houses is one of the highest in the world and where housing affordability is the worst in the OECD.
Read it a few times ....and then again.
NZ inc dependent on the price of milk powder...and house price appreciation....WTF
Am I wrong
One of the reasons for poor performance in many businesses is high cost of doing business. It is going to go up further. On top of that businesses will have to spend for highly priced new technology. Technology companies make huge profits whereas those who use technology cannot generate enough profits to run their businesses. They cannot pass all cost to consumers. Consumers also have a price limit to buy stuff.
Dear Value ...Thankyou.Re other countries...I dont think so...In fact I will venture further.FBU is I believe a symptom of our ....well complacency in us expecting house price appreciation etc ...I understand that basic building products compared to OZ for example are say 30 % higher.In addition I understand that these basic building products etc ..are well the cheapest on the market,Some say this leaky home fiasco will prove to be the biggest man made disaster in NZs history,,,at about 40 billion...Am I wrong mate.
And that there are only 2 providers of building products ..in NZ...like our groceries...Am I wrong
I do have a tendency generalize on occasions...
And that the price of land matters.
Auckland University economics professor Robert MacCulloch said Fletcher Building could be the only monopoly in the world that can't make a buck. Source bussinessdesk.co.nz
Boop boop de do
Marilyn
Can someone post the N Z Herald business article here for all to read re FBU, if FBUs past 15 years is anything to go by then , "why would anyone ever hold FBU's shares " insto, super funds, widows and orphan funds, et al ? !!
We all know that but that is whats wrong of having to buy the index etc, when IMHO one looks at FBU why would one own its shares, talk about wealth destruction over a very long time, yes there are catch up years , but !
14-2-2014 $ 8-75 DOWN to $3-35 yesterday ( but they paid a divi for all of that time ! ).
Have a look at the 10 year graph, the past sometimes is an indication of the future !!
My comment was firmly tongue in cheek as I'm definitely no trader.
But i think both FBU and HGH with their traditional good divs buying on low book value multiples.. there is potential to earn a good income and take a good capital gain when waters are calmer and book value multiples are higher (around 1.5x).
Personally i see no reason to buy both today. If either did a cap raise i would be keen to buy straight after that. And if no cap raise then wait for the chart to turn.
Do it then RAWZ..... Who is up first to catch this knife....
I lost a bit catching SML, so feeling burnt...
I wonder why we investors are always attracted to companies reporting bad news and share prices tanking.
The hope to get a bargain i guess.
We should all be buying stocks that have provided good news and guidance up on previous year, companies like 2CC and FND.asx. Oh wait i own heaps of those already :t_up:
If either did a cap raise i would be keen to buy straight after that. And if no cap raise then wait for the chart to turn "
After cap raise often a good time to buy
SKL has performed well after 50 CPS cap raise (decades ago?) but since sold as I was looking for faster growth companies
Both FBU and TWR updated the market on 14th Feb. FBU of course bad news. TWR was good news (will be at or above upper end of guidance).
FBU has 9 pages of STr posts discussing the results, management AND when to buy.
TWR has 1.5 pages of STr posts..
What we doing folks.?
What about RBD.. market cap now $400m vs FBU $2.8B.
Bad news sell - the ole news media adage is alive!
It was not an advice mate ....please read the context then maybe U will understand better what I was trying to state ...IF one disregards downtrends to initiate buys in any down sliding stock then HOW to go about it was the context ....not anything more
Also mate not all stocks need get into uptrend to initiate buying ...MFT if u had waited then earliest U wud have bought was at $ 67 and not $ 55 like W69 did
Sometimes one need make VALUE call then TA call ...like U doing for OCA .
No strict sense of rules work always ...but TA can be useful if used with intelligence not dogmatism .
For the health and wellbeing of readers on here maybe the Admin should 'suspend' FBU say for 2 weeks.
Reading the FBU comments can cause anxiety as the outrageous mismanagement can reflect on the entire NZX.
Just trying to look at it from a positive point. Let's get this bs company off the radar to give everyone a chance comment on the well managed NZX Companies.
Fly the NZ flag with pride I say.
The underlying business is sound. Ross Taylor inherited the convention center. He was planning on retiring within 5 years when he took over. He is now taking the heat for the convention center debacle.
What he has implemented within Fletchers will be enjoyed by his successor.
https://www.stuff.co.nz/business/350...wrong-fletcher
An insider’s view of what went wrong for Fletcher
An interesting read from an insider
If I am right construction takes place with borrowed money. When cost of money, interest rates go up construction industry will have to face for consequences. On top of that many industries have to make provisions for increased cost and insurance. How about the weakening construction demand? They are also contributing to low margin in the industry. Lot of things have skyrocketed to unsustainable and unaffordable levels. Purchasing power has gone down. I don’t see any turnaround in this sector until 2026. High cost of doing business is my main concern. I may try this for a turnaround opportunity. I am going to keep FHU on my turnaround list.
Interesting that Ross Taylor is employing a 'complexity' defence for the convention centre debacle.
https://www.nzherald.co.nz/business/...NBDTBZZMGOG74/
(Paywalled)
Civil engineering is generally thought to be the least complex branch of engineering; certainly nowhere near as demanding as electronics.
Did he ever have the skills to handle the convention centre issue? And if not, why didn't he bring in smarter people (probably from overseas) to deal with it?
I thought it may be worth sharing the two most recent blog posts from NZ Shareholders Association (published on February 13th and 15th respectively - ie, before and after the announcement made by the company on Feb 14th). We're continuing to state we believe the changes announced during the week should be the beginning of change, not the end.
Feb 13th: It's just a flesh wound... - New Zealand Shareholders' Association (nzshareholders.co.nz)
Feb 15th: Will resignations cap a decade of disaster for shareholders at FBU? - New Zealand Shareholders' Association (nzshareholders.co.nz)
Never followed FBU closely or listened to Taylor until recently. To hear him you would think FBU is the best thing since sliced bread. Smooth talker but is he competent ?
If he is competent, SP wouldn't be underperforming for so many years....$5m salary package....all he does is destroying the shareholders wealth.
Bounce which started on. Friday ....will it continue today ? If yes then till what levels ? Will it try to. fill the. gap of 4.16 to 3.50 ?
Anyone especially TA experts ...levels to watch on. upside ??
Take it as given now that FBU will do a CR (if required) to maintain its investment grade rating.
https://www.nzherald.co.nz/business/...GISVTWFYEHE3M/
paywalled
Global ratings agency Moody’s has put Fletcher Building on notice for a possible investment rating downgrade as its net debt nears $2 billion to pay for project cost blowouts.
Fletcher Building chief financial officer Bevan McKenzie said in a market announcement on Monday morning the company was committed to keeping its stable rating.
“We will work alongside Moody’s during their review period, demonstrating our commitment to the credit metrics which underpin our rating of Baa2″.
A rating below Baa3 was considered non-investment grade, according to the the ratings scale used by Moody’s.
Ive said this before and will say it again...NZ inc has had this obsession with house price appreciation for decades its lunacy.How many folk have listened what Bernard H had to say a few years back.Essentially he said that past and probably current administrations have forbidden any house price correction....am I wrong.
"railing against trend is lost opportunity"...
Have you watched "The big short".
Its a great movie.
Are you familiar what occured in Ireland re the property mkt
Please get back to me...
cheers
If housing was such a bubble like many think ....like u comparing NZ housing with Big short bubble ...then rents would not be growing out of reach of actual users ...that means there is actual demand for housing thus its not a bubble ...expensive and substandard compared to many others but thats different issue ....NOT a bubble imho . House price correction is politically sensitive as it involves majority of population . But with recent changes to investment property tax treatment ...I dont think its a favoured baby of govt anymore ...its a level playing field on tax side ...not in mindset yet also not in ability to leverage side also
Interesting reading the FBU thread on H/C. a few adamant its the poor quality of the pipe which has burst on long runs, nothing to do with the fitting according to them.
Iplex have been around a long time and in NZ in my experience provided reliable products, were very helpful on the phone and had good product literature. I'm unsure why the issue cannot be quickly technically resolved by the experts. Why is the problem localised in Perth and not the rest of Australia where the same pipe is supplied? Reading the link below (supplied by Iplex) it will be interesting to see how the WA government refutes this given most localised failures in plumbing products are caused by poor workmanship. Perhaps the government inspectors are running for cover somewhat?
https://www.iplex.com.au/pro-fit-support/
Taylor is adamant there is no issue with integrity of the pipe.
I hope so,unhappy holder of a few here.But there is alot at stake and it may well be a binary decision against little ole NZ. I would think a pipe ( hopefully temp) recall is well on the cards which would hit the FBU shareprice.I would consider topping up around then ( depending on remediation costs if any)for long-term gains