Fletcher Building explores potential sale of construction division, appoints advisers

Fletcher Building says it will appoint advisers to potentially divest its construction division, including Higgins. Photo / Alex Cairns

Fletcher Building will test the appetite for a sale of its construction division, which includes Higgins, Brian Perry Civil and its major construction business.

In a market release on Tuesday morning, the building conglomerate stated that, due to inbound interest in the construction division and the strong performance of its businesses, it would appoint financial advisers to potentially divest those businesses.

Fletcher Building said in June that since the announcement of a strategic review of its portfolio in 2024, it had received “ongoing inbound inquiries” about the purchase of its businesses, including construction.

Managing director Andrew Reding said the interest had motivated the conglomerate to test whether there were attractive divestment options.

“No decision has been made to sell at this time, and we will carefully consider the value of any options presented from this process before deciding whether to move ahead.”

Forsyth Barr analyst Rohan Koreman-Smit told BusinessDesk in June that Fletcher’s construction had previously been flagged as possibly non-core by the building giant’s former leadership.

Koreman-Smit said earnings from construction had been reasonably solid compared to the previous 10 years, it was working through its legacy issues and construction could benefit from the New Zealand Government focusing on infrastructure.

“That might prove to be a more attractive set-up for someone to buy that business than some of the others.”

In its results for the six months to December 31, the construction division revenue rose 16% to $814 million, with infrastructure volumes pegged as a key tailwind.

A strong performance by Higgins and Brian Perry Civil contributed to $20m earnings, compared to a $1m loss in the prior comparable period.

At its June investor day, the firm said restructuring and impairment costs would be between $573m and $781m in the year to June 30.

It had already announced $251m of significant items related to its Iplex Australia pipes and the disposal of its Tradelink plumbing business.

Reding has been cutting costs and has restructured the business.

In May, Fletcher Building axed its Australian division as a standalone and created two new divisions: light building products and heavy building materials.

In February, Fletcher announced that it had cut more than 500 jobs, approximately half of which were in Australia.