Fletcher Building shares tumble on fresh regulatory trouble
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The news: Fletcher Building faces fresh regulatory trouble after the New Zealand Commerce Commission (NZCC) said it would initiate legal proceedings over volume rebates, sending its shares lower.
The numbers: The embattled building products supplier this week reported a worse-than-expected full-year net loss of NZD227 million ($207 million).
Fletcher shares were down more than 6% at $2.79 in early trading on the ASX, and have now lost more than a third of their value so for this year.
The context: Fletcher said it was notified by the NZCC of the outcome of its investigation into the historical use of volume rebates by subsidiary Winstone Wallboards.
The NZ market regulator believes the volume rebates (discontinued in 2022) breached the NZ Commerce Act and intends to file legal proceedings, which could involve civil pecuniary penalties.
Fletcher said it disagreed with the commission’s conclusion, given that, during the recent Building Products Market Study, merchants told the commission and Winstone Wallboards they intend to defend the proceedings vigorously.
In a separate statement, Fletcher said it was aware of media reports that Western Australian home builder BGC intends to file legal proceedings against subsidiary Iplex Pipelines Australia in relation to the Iplex Pro-Fit Pipes issues that have plagued homeowners, but said Iplex had not yet received any formal proceedings.
The announcements follow a hefty full-year net loss amid a slowing market, which earlier this year prompted a downgrade of Fletcher’s credit rating. The NZX and ASX-listed company has seen several top management departures this year, as it faces shareholder discontent over weak share price performance and continuing losses.
The sources: ASX announcement, ASX announcement
