Fletcher shares gain on industry response to WA pipe leaks
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The news: Shares in Fletcher Building lifted on the ASX after the embattled building products supplier, together with the Western Australian government and home builders, finalised an industry response to address plumbing failures in homes fitted with pipes provided by its subsidiary Iplex Australia.
The numbers: Fletcher shares rose 1.2% to $2.94 by 12:45pm AEDT, having slumped around 30% since January.
The industry response, which was first announced as an in-principle agreement in August, will see Iplex cover 80% of direct costs of repairs by participating builders, with the state government contributing the remaining 20%.
Iplex expects to record a pre-tax provision of around $155 million in its FY25 financial statements, in relation to its obligations under the industry response.
The context: Following the finalisation of the industry response, funding of the agreed work programme is now available to participating builders, Fletcher said.
The industry response offers a programme of works for all WA homes constructed with Iplex's Typlex Pro-Fit pipes and that have experience a plumbing failure.
Builders participating in the scheme will have their direct costs reimbursed by Iplex and the WA government.
WA home builder BGC, which had filed legal proceedings against Iplex regarding the pipes issue, is not currently a participant in the scheme.
Iplex's $155 million provision for FY25 assumes that BGC joins the scheme. However, the direct costs funded by Iplex will be "proportionately lower" should it not join, Fletcher said.
What they said: "The completion of the industry response is a significant step for affected Western Australian homeowners because it provides a practical and immediate response to affected homes, at no cost to the homeowner," said Fletcher's CEO and managing director Andrew Reding.
"We are pleased to be collaborating with builders and the Western Australian government — and we thank them for their partnership in this process."
The source: ASX announcement
