Construction giant Fletcher Building [FBU] is reportedly pressing ahead with a sale of its residential business and is seeking initial offers before Christmas.
The Australian newspaper reports that sale documents have been sent to prospective buyers.
Investment bank Jarden, which has been involved in efforts to at least get partners in for the residential business for well over a year, is handling the prospective sale.
Fletcher Building was tight-lipped about the reports in a brief statement on Tuesday, but notably didn't deny them.
"As previously announced, Fletcher Building is undertaking a strategic review of its Residential and Development division. As part of that process, a range of potential outcomes, including possible divestment options, are being assessed," the statement said.
"The Company is talking to a number of interested parties as part of this review. Fletcher Building has no further comment at this time and will update the market and stakeholders if and when there are material developments to report."
Forsyth Barr senior analyst Rohan Koreman-Smit said Fletcher Building had $850 million of invested capital in the residential and development business, so imagined that the company would be looking for that sort of sum "at a minimum" from the sale.
He noted that a recently completed big sale of residential assets in Australia by Lendlease had been sold at a 20% premium to its book value.
And Australian fund manager Allan Gray, which is Fletcher Building's biggest shareholder with just under 19%, has been vocal that it did not want to see assets sold at a "cheap" price.
Fletcher Building stopped paying dividends in 2024 in order to reduce debt levels in the face of a number of problems for the business and a general slowdown in activity. The company lost $227 million in the 2024 financial year and then followed that up with a $419 million loss for the year to June 2025.
The company says it won't pay dividends till it gets its net debt into the lower half of a $400 million to $900 million range. As at June 30, 2025 the net debt stood at $999 million, down from $1.766 billion a year ago.
In terms of the residential and development division in the 2025 financial year, the division earnings before interest and tax (EBIT) were $58 million, down from $100 million.
A total of 666 residential units (including 41 apartment units) were taken to profit in FY25, compared with 886 in FY24 (-220 units), the company said.
In a more recent, quarterly volume update, for the three months to the end of September 2025, the company said it took 88 residential and apartment units to profit in Q1 FY26, compared with 90 in Q1 FY25.
"Overheads continue to be tightly managed to mitigate the impact of historically low sales volumes amid elevated market inventories (currently at 11-year highs). The Division expects potential improvement in sentiment following recent OCR [Official Cash Rate] adjustments," the company said.
5 Comments
Not the greatest time to flog this asset. Though bargain hunters will offer.
Will there be anything left of Fletchers? Seems like they're offloading everything.
High volume, low to no margin, and only as good as their next contract.
They'd have more chance giving it away in a Christmas Cracker.
I’ll give em a dollar for it.
$1bn of debt, a sale of the Res div could nearly clear this. Throw in a possible upturn in construction next year and this appallingly managed dog of a company could yet tentatively wag its tail. Market seems to be cautiously hopeful - SP has modestly increased over recent months. But we've been here before only for yet another disaster to be announced.
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