Fletcher Building is reporting sale of its problematic construction division to a large French company for over $300 million

Building industry giant Fletcher Building [FBU] has announced the sale of its problematic construction division about six months after officially putting the division on the block.

In a statement to NZX, the company said it was selling the assets to French company VINCI Construction, part of the VINCI Group, for $315.6 million. The wider international VINCI business operates in more than 100 countries and styles itself as "a global player in concessions, energy services and construction". It has annual revenues of over €70 billion (over NZ$140 billion).

Fletcher's construction business had revenues of over $1.5 billion in the financial year to June 2025, but earnings before interest and tax (EBIT) of just $52 million - and that was before write-offs, of which there have been many for this division, not least on the finally recently completed and opened NZ International Convention Centre (NZICC) in Auckland. The whole of Fletcher Building reported a loss after tax of $419 million for the June 2025 year.

The sale announcement on Tuesday said the stated purchase price for the construction division is subject to a potential increase of up to $18.5 million in aggregate pending the final outcome of a small number of key contracts for the Division currently under negotiation, which would take the headline enterprise value of the transaction to $334.1 million.

Fletcher Building managing director and CEO Andrew Reding said over the past year the company had been clear that its future lies in being a focused building products manufacturer and distributor, supported by a strong balance sheet and disciplined capital allocation.

"The sale of Fletcher Construction is a significant step forward in delivering that strategy, while continuing the work underway to simplify the portfolio, lower debt and improve shareholder returns."

This one has gone and another Fletcher division may soon be on the way too. Towards the end of last year it was reported that Fletcher was seeking initial offers for its residential business before Christmas 2025. Fletcher has about $850 million invested in the residential business so would likely be looking for something around that or better.

But back on the construction sale announced on Tuesday, Fletcher says the transaction is structured as the sale of Fletcher Construction Holdings together with its three New Zealand business units:

• Higgins: an integrated national civil construction business delivering major infrastructure, road maintenance, regional works and bitumen-based roading products.
• Brian Perry Civil: a specialist civil, structures and foundations contractor.
• Fletcher Construction Major Projects: which delivers large, complex infrastructure projects in partnership with public and private-sector clients, including contracts delivered in conjunction with Higgins and Brian Perry Civil.

The purchase price is subject to typical adjustments for working capital and net debt.

Completion of the transaction is subject to regulatory approvals, and is expected to go through by the end of the 2026 calendar year.

Fletcher expects to record additional provisions of between ~$55 million to $65 million for probable future claims relating to legacy construction contracts retained following the divestment.

"This reflects a reassessment of the likelihood and expected cost of resolving these claims. The provision does not include any allowance for potential litigation liability associated with the NZICC project," the announcement says.

Following completion of the sale, Fletcher Construction’s approximately 2,300 employees will transfer with the Division.

Fletcher Building isn't paying dividends at the moment and says it won't do so 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.