Wagner family wealth slumps as rival undercuts their company on cement supply deal with Boral

One of Queensland’s most high-profile families have had a shocker of a week with the value of the shares they own in the company they founded tumbling $85 million in two days.

THE market value of Toowoomba-based building products group Wagners Holding has plunged $155 million in two days after it was undercut on a cement supply deal by a rival producer, forcing it to suspend supplies for up to six months.

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The 30 per cent share price slump has also eroded $85 million from the value of the high profile Wagner family who control 55 per cent of the company’s stock.

Cement Australia – a 50-50 venture between Swiss giant Holcim and HeidelbergCement’s Hanson – is understood to be the producer which offered cement to Boral at a lower price than its existing contract with Wagners.

After Boral issued a pricing notice, Wagners on Monday said it would dispute whether the lower price is “bona fide”. In the meantime it will suspend cement supplies to Boral for potentially up for six months at a cost of $20 million.

Wagners have been undercut on a cement supply deal to Boral.

Wagners shares tumbled almost 24 per cent on Tuesday and suffered a further 7.2 per cent slide to an all-time low of $2.31 on Wednesday. The stock was issued at $2.71 when the company floated on the Australian Securities Exchange in late 2017

In two days, Wagners’ market capitalisation has slumped by $155 million to $373 million. The value of shares owned by brothers Denis, John, Neill and Joe Wagner have tumbled by roughly $85 million to $205 million. Several broking firms have downgraded the stock. Macquarie cut its price target by 15 per cent to $1.70 and Morgans by 10 per cent to $3.04. “The key risk to our call is the pricing dispute,” Morgans said in an analyst note.

Neill, John, Denis and Joe Wagner. Picture Annette Dew

Boral accounts for about 45 per cent of Wagners total cement volumes.

Morgans said the offer of lower pricing shows weaker demand conditions for the construction market in Queensland. If the third party is Cement Australia “this would support the negative view that demand conditions in southeast Queensland are weaker than expected in the absence of major infrastructure projects and slowing residential activity.

“From Boral’s perspective, against this weak demand backdrop (demand vs supply), we expect it is incentivised to try and leverage conditions to lower the cost of procuring cement for its downstream operations.”

Wagners CEO Cameron Coleman.

Wagners CEO Cameron Coleman defended the decision to suspend sales to Boral, noting there were several issues with the pricing notice but he could not elaborate due to confidentiality reasons. “The steps we’ve taken are the right steps for the company, shareholders and the long-term future of both,” he said.

With Tom Gillespie