Fletcher Building Share Price Fell 8.95% Today

Fletcher Building Ltd [ASX:FBU] dropped 8.95% today, and is currently trading at $6.51.

Why did the FBU share price drop?

Fletcher Building announced a trading halt on 8 February, which was later extended to 13 February.

Trading recommenced today following an announcement that the company is expecting further losses of $486 million in its Buildings + Interiors division.

The company is projecting a loss of $660 million for FY18, which saw the share price drop sharply. Fletcher Building has also stated that it will not be declaring a half-yearly dividend for 2018.

Ross Taylor, the Fletcher Building CEO, said:

The provisions we have announced today are informed by a considerable amount of further project analysis, and while we continue to target agreed completion dates across the portfolio, we have factored in significant cost and timeline contingencies.

…We have strong and predictable cash flows across the Fletcher Building group. While the B+I provisions are large, they are phased over a number of years and do not impact our ability to trade with our customers or suppliers or pay our bills.

While our broader construction businesses continue to benefit from favourable market conditions and strong growth, the B+I market sector remains characterised by high contract risk and low margins. Unless these dynamics change we will no longer work in this sector.’

In addition, Fletcher Building chairman Sir Ralph Norris has announced that he intends to step down by October. He told The Australian Financial Review:

The situation here is a complex one and it’s not a situation where there’s a single point of failure

One of the significant issues is the information flows through to the board were not as fulsome as they possible could have been.

The AFR reports that Norris decided to step down as shareholders were looking for someone to take accountability for the company’s losses.

What’s next for Fletcher Building?

The company is focused on finishing remaining Buildings + Interiors projects.

In order to do so, FBU is focusing on project delivery, ceasing all bidding on construction projects in New Zealand. This will allow resources to be put towards the completion of their current book.

Fletcher Building has stated that the company is strong enough to recover from the losses and remain well capitalised, but that remains to be seen.

Regards,

Kris Sayce,
Publisher, Money Morning       

Danielle Rawlings,
For Money Morning                                                                

PS: Our analyst Vern Gowdie believes that Australia is primed to fall into a recession as soon as this year! If you’re interested in learning about what you could do now to protect your wealth, you can download our free report The Aussie Recession Survival Guide’ here.


Kris is never one to pull punches when discussing market developments and economic events that can affect your wealth. He’ll take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money. Kris is also the editor of Microcap Trader — where he reveals the best opportunities he’s discovered in the markets. If you’d like to more about Kris’ financial world view and investing philosophy then join him on Google+. It's where he shares investment insight, commentary and ideas that he can't always fit into his regular Money Morning essays.
Kris Sayce is the Publisher and Investment Director of Australia’s biggest circulation daily financial email, Money Morning Australia.Kris is a fully accredited advisor in shares, options, warrants and foreign-exchange investments. Kris has close to twenty years’ experience in analysing stocks. He began his career in the biggest wasp’s nest in the financial world — the city of London — as a finance broker back in 1995.
It’s there where he got his ‘baptism of fire’ into the financial markets, specialising in small-cap stock analysis on London’s Alternative Investment Market. This covered everything from Kazakhstani gold miners to toy train companies.After moving to Australia, Kris spent several years at a leading Australian wealth-management company. However he began to realise the finance and brokerage industry was more interested in lining its own pockets with fat fees, commissions and perks —rather than genuinely helping out the private investors they were supposed to be ‘working’ for. So in 2005 Kris started writing for Port Phillip Publishing — a company which was more attuned to his investment outlook. Initially he began writing for the Daily Reckoning Australia— but eventually, took over Money Morning. It’s now read by over 55,000 subscribers each day. Kris will take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money! Whether you agree with him or not, you’ll find his common-sense, thought-provoking arguments well worth a read. To have his investment insights delivered straight to your inbox each day, take out a free subscription to Money Morning here. Kris is also the editor of Tactical Wealth and Microcap Trader where he reveals the best opportunities he’s discovered in the markets that you could profit from. If you’d like to learn about the latest opportunity Kris has uncovered, take a 30-day trial of Tactical Wealth here or Microcap Trader here. Official websites and financial e-letters Kris writes for:


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