{"id":241890,"date":"2026-01-20T03:53:08","date_gmt":"2026-01-20T03:53:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/241890\/"},"modified":"2026-01-20T03:53:08","modified_gmt":"2026-01-20T03:53:08","slug":"fletcher-building-construction-sale-to-vinci-what-it-means-for-dividends-and-debt","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/241890\/","title":{"rendered":"Fletcher Building construction sale to Vinci: What it means for dividends and debt"},"content":{"rendered":"

\u201cThe sale of Fletcher Construction<\/a> is a significant step forward in delivering that strategy, while continuing the work underway to simplify the portfolio, lower debt and improve shareholder returns,\u201d he said.<\/p>\n

Vinci Construction is a global leader in construction and part of the wider Vinci Group, with a presence in about 100 countries through 1300 business units.<\/p>\n

The final price for the New Zealand business could rise to $334.1m, with up to $18.5m in additional payments dependent on the outcome of several key contracts currently under negotiation, Fletcher Building said.<\/p>\n

However, Fletcher Building said it expected to take additional provisions of $55m-$65m for legacy construction claims that remain with the group, excluding any potential New Zealand International Convention Centre (NZICC) litigation.<\/p>\n

Grant Swanepoel \u2013 director of equity research at Jarden \u2013 said the sale was not unexpected but dividend payments were still some way off.<\/p>\n

\u201cThe cash only comes in in the [June 30] financial year 2027 anyway, and it will require a decent recovery into calendar year 2027 to be confident that they will get a dividend in 2027,\u201d he said.<\/p>\n

Post-sale, the company would be better placed to start paying dividends in the next 18 months or so, he said.<\/p>\n

Swanepoel said Fletcher Building had shown over the past 15 years that it had not been able to manage construction contract risk very well.<\/p>\n

\u201cIt [the sale] is something that we called for a couple of years ago, and it\u2019s finally come to fruition.\u201d<\/p>\n

Going back some years, Fletcher Building had decided on a \u201crevenue over risk\u201d policy and had taken on too much of the latter, he said.<\/p>\n

\u201cAs an investor, I would rather be invested in GIB board, quarries and cement \u2013 stuff that is low risk, higher margin and a great business model.\u201d<\/p>\n

The construction division made $52 million in earnings before interest and tax, excluding significant items, last financial year.<\/p>\n

NZICC is one of a string of projects that have cost the company dearly.<\/p>\n

Last June, a settlement was reached with the New Zealand Transport Agency (NZTA) on the P\u016bhoi to Warkworth motorway project, which was delayed.<\/p>\n

\"TheThe completed Warkworth to Puhoi expressway. (Image: Supplied)<\/p>\n

Salt Funds managing director Matt Goodson said the sale would go a long way toward restoring Fletcher Building\u2019s balance sheet before what is expected to be a better economy this year.<\/p>\n

Construction, he said, is generally regarded as a \u201clower multiple\u201d business.<\/p>\n

\u201cThe price, when you look at the retentions for potential contract blowouts, looks to be roughly in line with where the market\u2019s valuing it,\u201d he said.<\/p>\n

It was not clear if there would be any preferred arrangements between Vinci and Fletcher Building as a supplier of building products.<\/p>\n

Goodson said the sum involved would take Fletcher Building\u2019s debt back to almost within its targeted regions.<\/p>\n

\u201cAnd if we get a reasonable recovery in the economy then hopefully they can return to dividend paying.\u201d<\/p>\n

Fletcher Building had previously viewed construction as a path to market for all the products they produce.<\/p>\n

\u201cBut obviously they had a series of disastrous contracts which have created all sorts of trouble for them,\u201d Goodson said.<\/p>\n

\u201cBut that risk has now been taken off the table.\u201d<\/p>\n

Fletcher Building\u2019s share price has been firming since June last year, when it traded at $3 a share, based on expectations of an improved economy, trading today at $3.81.<\/p>\n

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n

Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cThe sale of Fletcher Construction is a significant step forward in delivering that strategy, while continuing the work…\n","protected":false},"author":2,"featured_media":23226,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[141938,2172,95,1863,674,12683,138,1656,1568,44547,5399,36354,67276,3930,2082,11775,13313,702,17768,1132,111,139,69,31472,1653,1133,5659,61,21419,13852,6923,1533],"class_list":["post-241890","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-141938","tag-analysts","tag-and","tag-back","tag-building","tag-buildings","tag-business","tag-company","tag-construction","tag-corporate","tag-debt","tag-dividend","tag-dividends","tag-fletcher","tag-for","tag-french","tag-giant","tag-it","tag-means","tag-million","tag-new-zealand","tag-newzealand","tag-nz","tag-path","tag-payments","tag-sale","tag-say","tag-to","tag-towards","tag-vinci","tag-what","tag-will"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/241890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=241890"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/241890\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/23226"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=241890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=241890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=241890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}