Fletcher Building outlines recovery plan after $419m loss

Wednesday, 22 October 2025

Fletcher Building still has more work to do to reignite shareholder confidence, despite the efforts its board and management have made to change the company’s fortunes.

The beleaguered construction giant held its annual general meeting on Wednesday, and shareholders were given updates on trading results, legacy issues, litigation and its strategy.

It came just a week after the release of its volume data for the first quarter of the 2026 financial year showed further declines in trading volumes and ongoing pressure on margins, and revealed the company would make another $100 million in cost cuts.

In August, the company reported revenue fell 9% annually to $7 billion over the 2025 year, while earnings, interest and tax before significant items was down $125m to $384m. It had a net loss of $419m, and that followed a $227m loss over the 2024 year.

At the AGM Fletcher Building chairman Peter Crowley, who was up for re-election, acknowledged the company had not delivered the results shareholders deserved, and said it was clear action needed to be taken.

He said the 2025 results were “disappointing to all of us”, but “decisive action has been taken to reset the business”.

Time for change

That included improving the capability of the board and senior executive team with a host of new appointments, restructuring the business from six divisions to five, making $230m of cost reductions over the 2025 year, reducing debt, and implementing a clear strategy.

“We have the building blocks in place,” he said, before emphasising the company’s medium-term focus remained on manufacturing and distribution of building products and materials.

The first quarter saw challenging trading conditions, and that impacted on the quarterly results, he said.

“The primary driver was continued weak demand and heightened competitive activity, particularly in the New Zealand market.”

But despite the headwinds, substantial progress had been made on strengthening the balance sheet, with net debt reduced from $1.77b to $999m, and on resolving legacy issues that had plagued the company in recent years, Crowley said.

The New Zealand International Convention Centre was “effectively” completed and due to be handed over to SkyCity shortly, although there were legal claims relating to the centre, he said.

SkyCity is suing Fletcher for $330m for late delivery of the centre, while Fletcher is suing roofing sub-contractors over the 2019 fire.

“We intend to vigorously defend ourselves against SkyCity’s legal proceedings and we are confident in our position,” he said. “Our court proceedings against the roofing sub-contractors on the convention centre are nearly complete, with judgment expected in the second half of this financial year.”

Meanwhile, the Western Australia leaky pipes remediation was tracking well and costs were consistent with estimates, and claims relating to the Puhoi to Warkworth motorway project had been settled and closed.

Action despite challenging conditions

Fletcher Building chief executive Andrew Reding said market conditions were anticipated to remain challenging throughout the remainder of this financial year.

The company was not standing still waiting for market conditions to improve, and had acted decisively to reshape the business over the past 12 months, he said.

It was progressing a number of potential sales, including its construction division, and the review of its residential and development division.

“But there is still a lot more work to do. We remain committed to rebuilding to an acceptable return on invested capital, and over the medium term, we will embed the new operating model and continue to simplify our business portfolio.

“Once balance sheet targets are met, we will reset our dividend policy, in order to deliver sustainable and growing returns to shareholders.”

The response of shareholders, who were voting on the election of several board members and the adoption of the executive remuneration report, was subdued.

Many shareholders’ questions referenced Fletcher’s low share price, and there were questions about competition, quality assurance, and transparency of executive reporting and recruitment.

Simplifying an “octopus” structure

Alan Best, from the NZ Shareholders’ Association, asked about provisions for significant items, and whether the company had a handle on claims.

Crowley said the company was in the middle of a big turnaround and was being reorganised, and there were costs that came with that, including $120m for appropriate IT systems.

The significant items, which included $180m for the Western Australian pipes problem and a $58m loss on the sale of TradeLink, were big, big numbers, he said.

“But we are coming out of that process of working out what we want this business to be in the future, and positioning the business for a better future.”

Best also commented on the complexity of the Fletcher business structure, describing it as like an octopus, but said the board’s move to simplify the structure was the right one.

Shareholder Stephen Mayne commended the board for putting the remuneration report up for vote, but asked if protest voting on resolutions as happened last year was likely.

Crowley said nearly 100% of postal and proxy votes were in support of the resolutions, and that showed there was shareholder support for the board and the direction it was taking.

Several other shareholders said they were pleased the new board and management team, made up of members who had experience in the construction industry.