The news: Fletcher Building has agreed to sell its Australian plumbing supplies and distribution business Tradelink to Metal Manufactures.
The numbers: The troubled building materials supplier will receive $170 million for Tradelink, including $160 million in cash payable at closing in late September and $10 million in cash deferred as separation milestones are met, plus stranded costs and separation costs totaling $30 million.
The Company expects to record a non-cash impairment charge of US$32.5 million in its 2024 financial year accounts, as well as a further cash loss of NZ$54 million (US$49.2 million) from the derecognition of the foreign currency translation reserve following completion of the transaction.
The context: The divestment followed a comprehensive strategic review in February.
Fletcher in May cut its FY2024 earnings forecast amid a weakening market, prompting a downgrade of its credit rating and lower earnings estimates from analysts. The NZX and ASX-listed company has seen several senior management departures in recent months as it faces shareholder discontent over weak share price performance and a half-year loss. In June, the company also sold half of its construction business in Fiji to two local partners.
What they said: “The sale will enable us to focus our efforts on the performance and growth of Fletcher Building’s core businesses,” said acting CEO Nick Traber.
