Fletcher Building (ASX:FBU), a prominent player in the construction industry, is poised to resume trading on the Australian Securities Exchange (ASX) at 10 am today, marking the end of a two-day halt initiated after a rapid 6% drop in shares within just 8 minutes. The company's decision to halt trading came in the wake of mounting concerns and uncertainties, primarily stemming from impending announcements regarding its financial performance and leadership changes.
Scheduled to precede the resumption of trading is the release of Fletcher Building's full-year results and earnings guidance, expected before the market opens. However, anticipations are grim, following a revealing lawyer’s letter on Monday that hinted at potential write-downs, losses, and the departure of CEO Ross Taylor. These revelations have cast a shadow over the company's immediate future, underscoring the challenges it currently faces.
Among the key issues plaguing Fletcher Building are two problematic contracts within New Zealand: the NZ International Convention Centre in Auckland and a car park at Wellington International Airport. The fallout from these contracts has already resulted in total write-downs of $NZ180 million, with the specter of further losses looming large. Compounding these financial woes is the company's acknowledgment that it may not be able to recoup these costs from insurers, further exacerbating its financial predicament.
In addition to its New Zealand woes, Fletcher Building is grappling with ongoing disputes related to leaky pipes it supplied for homes in Western Australia. The company disclosed that approximately 1,500 out of 15,000 houses constructed in Western Australia using its pro-fit polybutylene plumbing pipes had experienced leaks between mid-2017 and mid-2022. This revelation underscores a broader pattern of challenges confronting the company, necessitating a comprehensive reevaluation of its operations and risk management strategies.
Despite the daunting challenges, Fletcher Building is set to host an investor call at 11 am New Zealand time (9 am Sydney time), offering stakeholders an opportunity to gain insights into the company's strategic plans and future outlook. Furthermore, the company intends to release guidance data for the remainder of the current financial year, providing investors with crucial information to navigate the turbulent waters ahead.
With trading set to resume at $3.70 per share, as of Monday's halt, investors and industry observers remain on edge, awaiting further developments from Fletcher Building. The company's ability to navigate through these challenges and chart a course toward sustainable growth will undoubtedly be closely scrutinized in the days and weeks to come.
