NZ's Fletcher Building set for worst day in 12 years amid pipe leak claims

Fletcher Building

16/10/2023 04:10

Oct 16 (Reuters) - New Zealand-listed shares of Fletcher
Building  FBU.NZ  slumped 14% in resumed trade on Monday even
after the firm denied claims that plumbing failures reported in
several homes in Australia were due to a manufacturing defect in
the pipes it produced.
    ASX-listed shares  FBU.AX  slumped nearly 10% and were the
top losers in the ASX 200 benchmark index  .AXJO . Shares of
Fletcher were on a trading halt in both exchanges since last
Thursday to allow the company to respond to the claims.     
    The construction materials maker said in August nearly 1,500
of 15,000 houses constructed using its pro-fit polybutylene
plumbing pipes had experienced leaks between mid-2017 and
mid-2022.
    The Buckeridge Group of Companies (BGC), which along with
smaller peer Delstrat built about 90% of the currently affected
homes in Perth, said pipe defects lead to the leakage and
accused Fletcher of staving off a product safety recall.
    Fletcher denied the claims on Friday, citing that the
significant plumbing failures were only evident in Perth despite
the same quantity of pipe being sold nationally, which points to
region-specific installation practices as the cause of the
failures.
    Shares dropped as much as 14.1% to NZ$4.190 on Monday -
their lowest level in nearly three years. The stock was last
down 12.1% and set for its worst day since Oct. 12, 2011, if
losses hold. 
    "Both Fletcher and BGC are motivated parties and the process
to resolution will likely be volatile and drawn out, in our
view," analysts at JP Morgan wrote in a note.
    
       
    

 (Reporting by Himanshi Akhand in Bengaluru; Editing by Sherry
Jacob-Phillips)
 ((Himanshi.Akhand@thomsonreuters.com;))