Fletcher Building’s big sell-off: Will it work?
Monday, 15 June 2026
A steady stream of sales announcements from Fletcher Building signal the company is nearing the end of an era and positioning itself for a new one, analysts say.
It’s been more than a year since the NZX-listed construction giant first announced it was fielding interest in parts of its business from potential buyers.
That news broke as the company struggled with hits from financial losses, higher than expected costs and SkyCity’s decision to sue it for $330 million over delays to the opening of the NZICC in Auckland.
Shortly afterwards, it presented investors with a turnaround plan that included simplifying the company’s portfolio by reducing it to five divisions, and indicated it would be considering strategic portfolio divestments.
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Since then, Fletcher has moved quickly to turn that plan into action and sell off parts of the business.
It kicked off the year with the announcement it had entered into a binding agreement to sell its construction division to French multinational Vinci Construction for at least $315.6m.
That deal was settled late in May, and it signalled the end of the division that was one of the foundation stones of the company founded in 1909 in Dunedin.
In February it sold an industrial property on Felix Street in Auckland to Goodman Property Trust for $53.5m, an $11m gain and a boost for its earnings.
In April it struck a deal to offload its Fletcher Reinforcing and Wire business to Singapore-owned United Industries for $15.7m. But it expected to recognise a loss of between $20m and $23m on the sale.
May saw the company announce the sales of two of its Australian industrial properties. Its Laminex AU business unit will sell its property in Melbourne to Forza Capital for A$53.8m ($65.3m), while its surplus Iplex Australia property in South Australia has been sold for A$20.05m (NZ$24.5m).
And in May the company also sold its 50%-stake in Fiji-based construction business to its joint venture partners, Fijian Holdings Limited and the Fiji National Provident Fund. The sale price was not disclosed, but it was classed as “non-material consideration”.
Next on the block could be its residential and development division. The company said it would undertake a strategic review of the division, which includes Fletcher Living and Vivid Living, in August.
There has been ongoing speculation about a potential sale, but in a recent NZX statement Fletcher said it would not comment further than to say the review was under way and it would update the market when there were material developments.
So will the sales strategy help get the company back on track?
Streamlining to remove headaches
Amova Asset Management head of equities Michael Sherrock said the sales would leave Fletcher more focused on building materials rather than being vertically integrated across the construction chain.
That was in line with the strategy reset the company outlined at its investor day last year, and would help make it a simpler, less risky business, he said.
“They’ve always sold parcels of land or industrial property they don’t have a use for any more, so that's not unusual. The pace of sales is quicker, and that’s different from the past.”
But the sale of the construction division removed a headache the company has had for a long time, he said.
“That’s taking on projects and putting lots of capital at risk if things don't go right, and not many things have gone too well in that space for Fletcher over the last decade or so. It means they can move on from those big risk projects.”
Sherrock said running a residential development business tied up lots of capital, so the company would be looking to be less capital intensive by selling its residential division.
“But it’s likely to be hard to sell that part of the business at the moment because of the economic climate. There's stories out there about interest, but it might be interest in parts of the business, as opposed to the whole business and all the building projects they've got under way.”
With the sale of the construction division and potentially the residential business, in its entirety or in parts, there was a question of how much pull through they would retain for Fletcher building products, he said.
“For shareholders the sales will lead to a much improved balance sheet, although the company will probably hold off paying dividends until they get debt down to the lower end of their target range. But this is a step back towards paying dividends.”
Cutting back on risk
For Forsyth Barr senior analyst Rohan Koreman-Smit, the volatile environment and the fact it was still early on in the turnaround strategy meant there were no markers yet for absolute success.
But the company seemed to be making good progress to date, he said.
“Some would argue that it’s good business to own a company with vertical integration through the construction sector, but it was also a risk for Fletcher as is obvious looking at its last decade of significant items.
“When it comes to the potential sale of the residential division, the question is how do they achieve maximum value for it when there’s so many different parts in there. It might be that they could work through projects and sell them down.”
If the residential division was sold it would leave the business focused on manufacturing and distributing building materials, and Fletcher would no longer be a developer or contractor, he said.
“They'd probably argue that development and contracting is a lower multiple business than manufacturing and distribution. And some investors place very low value on those parts of the business, partly because of historical issues with projects.”
Koreman-Smit said the sales would lower the company’s debt, and should give shareholders confidence that it was getting closer to a point where distributions could be restarted.
The construction and residential businesses had been cash hungry, whereas cash generation from the materials and manufacturing businesses should be more stable, he said.
“While the current environment has an impact, when you don't have costs like recent provisions for the NZICC, or $200m of land purchased a few years ago on forward commitments that you have to settle, underlying operating cash flow should be smoother.”
Plan E, not plan A
But Simplicity KiwiSaver managing director Sam Stubbs, who is a shareholder in Fletcher Building and a customer via Simplicity Living, said Fletchers’ sale strategy was the only strategy it had left.
Over the last five years Fletchers had destroyed $1.7 billion of shareholder funds, and its stock price was down 60%, so it had failed in the growth strategy, he said.
“What they're doing now is effectively the only thing they can do. It is a strategy, but it is plan E not plan A.
“The sell strategy would be fine if it was into a strong market and they were selling valuable assets that were well run, but they're selling into a soft market.”
He wouldn't call Fletcher a distressed seller, but it was a stressed seller of assets and buyers knew it. That meant the company was probably not realising the prices it should for the assets being sold, Stubbs said.
“But the situation has been farcical over the last five years, so the current strategy is better than the previous strategy which was a textbook in disastrous governance.”
It was good to see there were some new directors and a new executive acting on a strategy which had seen the share price go up in the short term, he added.