Fletcher Building looks to sell off construction division

Tuesday, 22 July 2025

Fletcher Building has received inquiries from potential buyers interested in its construction division.

Fletcher Building has started looking into sale options for its construction division, which includes construction and civil engineering units Higgins, Brian Perry Civil, and Fletcher Construction.

In an announcement on the NZX on Tuesday, the beleaguered construction giant said “inbound interest” in its construction division, and the completion of its strategic review, had led it to begin “exploring potential divestment options”.

In June, the company said it had received inquiries from parties interested in its businesses, including the construction division. It gave no indication of who the potential buyers might be.

Now, it has appointed financial advisers to help with the process.

Fletcher Building chief executive officer Andrew Reding said it was not surprising there was inbound interest in the construction division given the quality and strong recent performance of the businesses, and the role they would play in New Zealand’s growing infrastructure pipeline.

No sale decisions have been made at this point, Fletcher Building’s Andrew Reding says.

It had motivated the company to test whether there were attractive divestment options, he said.

“No decision has been made to sell at this time, and we will carefully consider the value of any options presented from this process before deciding whether to move ahead.”

In its financial results for the first half of the 2025 financial year, construction division revenue was $814 million, up 16% on the previous period.

The division earned a profit of $20m before interest and tax, and with significant items excluded. That compared with a loss of $1m in the previous period.

While Brian Perry Civil’s higher work volumes and Higgins’ strong product sales supported the division’s performance, it was also impacted by legacy outflows driven by the loss-making NZ International Convention Centre project.

At an investor day in June, the company disclosed new restructuring and impairment costs between $300 million and $500m for the 2025 year.

Those costs followed a string of bad news for the company, including the announcement of a $134m first-half after-tax loss earlier this year, and SkyCity’s decision to sue it for $330m over delays to the opening of the NZICC in Auckland.

Fletcher Bulding has absorbed its Australian businesses, including Laminex, into two new trans-Tasman groupings.

But it presented a turnaround plan to investors that included simplifying the company’s portfolio by reducing it to five divisions, and indicated it would be considering strategic portfolio divestments.

Since Reding was appointed chief executive, Fletcher Building has been on a process of restructuring and cost-cutting.

It announced it would be disestablishing its Australian Division and absorbing its businesses into two new trans-Tasman groupings in May. And it sold its Australian plumbing supplies and distribution business, Tradelink, in September.

But following the investor day, Forsyth Barr analysts released a critical report of the company’s governance in recent years, while Simplicity KiwiSaver managing director Sam Stubbs called for two of the Fletcher board directors to resign and board members’ compensation to be reviewed.

Stubbs also said the board needed to seriously look at divesting under-performing divisions, which he added it did say it was doing.