Fletcher Building’s investor day is likely to disappoint those awaiting asset sale details

Fletcher’s engineering business, including road construction and maintenance unit Higgins, may be of interest to buyers.

Anticipation may be building ahead of the Fletcher Building investor day on June 24, but those hoping for a list of businesses it will place up for sale could be disappointed.

Sources say the briefing to investors will offer little detail about any units that the business may be prepared to part with.

Management is likely to reinforce that the New Zealand building market, where Fletcher dominates, is unlikely to experience a recovery any time soon; it’s more likely to be in the 2027 financial year rather than 2026 as some had expected.

Fletcher Building announced a strategic review last year after its former chairman and chief executive departed following a worse-than-expected loss, and larger-than-expected project writedowns and asset impairments.

Andrew Reding last year was named the new chief executive and director Peter Crowley was in February announced as chairman.

Mr Crowley is known to have been a strong advocate for a reorganisation and potential break-up of the company.

Last week, the Australian and New Zealand-listed building materials supplier and property developer said that as a result of its strategic review, it had received ongoing inbound inquiries from parties interested in its business, including its construction division.

It said that no decision had been made to sell any of its businesses.

One business which had earlier been tipped to be identified as not core to Fletcher Building was its Australian insulation business.

Fletcher this month told the market it had received offers for parts of its business – including construction – but said it had not made any decision on whether to sell.

In terms of offers from external parties for its construction unit, some believe that one part of the business which could be of interest to suitors is parts of its civil engineering business, including road construction and maintenance unit Higgins that it purchased in 2016 for $NZ315m.

There have been suggestions that it may have some appeal to an offshore group like France’s Vinci ahead of a multibillion-dollar road construction pipeline planned in New Zealand by the government.

Vinci already operates in the New Zealand market, having bought HEB construction in 2015, and has exposure to energy infrastructure work across the Tasman with its Omexom business that provides engineering and construction maintenance services to utility, commercial, resources, industrial and infrastructure sectors.

But most think that any buyer would not match the same price that Fletcher paid for the business after its weaker performance, and the group would not likely sell for a discounted price.

For the six months to December, the construction unit generated $NZ20m of earnings before interest and tax after a loss in the previous corresponding period.

Civil construction has been considered a key part of the Fletcher Building DNA over the years, and some think it would be a big call to offload the unit known for its close ties to the NZ government, for which it carries out work.

After embarking on a steeply discounted $NZ700m equity raising last year at $NZ2.70 a share – a 17 per cent discount – Fletcher’s share price has rallied since the start of the year when it was worth about $2.57.

It is now worth about $2.99, as the market bets a New Zealand recovery is on the way following a number of interest rate cuts.

Fletcher’s management has been cutting costs and streamlining the operational structure, which previously involved 24 business entities.

Its most lucrative business units are considered to be its insulation, Golden Bay Cement and Placemakers building products supplier in New Zealand, while its Laminex business in Australia would be attractive to buyers.

It also owns $1bn of development land in New Zealand.