Fewer new house starts, falling house prices, pressures to retain margin gains and opening its vast new Tauranga Gib mill: that’s the climate in which Fletcher Building will present at its investor day on Wednesday.
What’s in store from Fletcher Building investor day?
![Anne Gibson](https://s3.amazonaws.com/arc-authors/nzme/6d57e41b-c4e2-47dd-b3e7-72c15c6314c1.png)
Stewart Vaughan, Hamish McBeath and Marise Hurley at the new Gib factory last October. Photo / Greg Bowker
Fletcher has more than 11 sites that sell new homes in Auckland alone, all at differing price points, allowing it to add products and prices that meet demand. Around 70 new homes were available at the end of January and interest was strong from first-home buyers, the analysts noted.
![Fletcher Residential, headed by Steve Evans, is building homes at the old Winstone Quarry off Mt Eden Rd, Auckland. Photo / Greg Bowker](https://www.nzherald.co.nz/resizer/v2/Z777EYGSKJC7TDDSCOHNPCDHTU.jpg?auth=4a7810cfe951f7437d14323db983ad1d26303ade18c263c864f11e29d7244e9e&width=16&height=9&quality=70&smart=true)
Fletcher Residential, headed by Steve Evans, would normally sell around a third of its annual new homes for under $900,000 “but this is currently running at over 50 per cent”, Swanepoel and Nguyen noted.
However, Fletcher’s off-site manufacturing plant in Auckland is forecast to make a $5m loss in the June 30 year, following last year’s loss.
The company is now cranking up its new Tauranga Gib board factory before full production in a few months.
The Laminex plant at Taupo is to be upgraded and Fletcher’s glass wool insulation plant is to get a new line to treble capacity. That’s due to start by late FY24.
Steel is getting a new distribution site near the Hunua quarry. Construction is expected to be finished by FY26.
New PlaceMakers are due to open in Dunedin and Winton, the analysts said, but volume declines are expected in the distribution division of 10 to 15 per cent, attributable to the retail stores, given PlaceMaker’s exposure to the housing market.
In Australia, residential is anticipated to account for 60 per cent of revenue, commercial 28 per and infrastructure 12 per cent.
An update on Iplex ”exploding pipe” problem is something to look out for, with Fletcher already having increased its provision from A$2m to A$15m ($2.2m-$16.6m) because of it.
“Iplex plastic pipes have leaked in homes, primarily those built by group home builders in Western Australia, which have required repair or replacement of the pipes and, in some cases, damage to the affected homes. Of 15,000 homes in Western Australia using Pro-fit in the period mid-2017 to mid-2022, 1200 are affected by this. We expect an update at the strategy day,” Swanepoel and Nguyen wrote.
Fletcher’s investor presentation will be posted on the NZX and the event is due to run until 11.30am. Presentations will start at 8.30am, with divisional bosses to front those. A question and answer session is part of proceedings. People will be able to dial in via a webcast facility, available for replay from 3.30pm Wednesday.
Fletcher shares are trading on the NZX around $5.23, up 10 per cent annually, giving a market cap of $4.1b.
Anne Gibson has been the Herald’s property editor for 23 years, having won many awards, written books, founded the National Business Review’s property section in 1985 and covered property extensively here and overseas. She joined the Herald in 2000.