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Speaker 1: Now things have unfortunately gone from bad to worse for

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Speaker 1: Fletcher Building. The company announced a net loss of nearly

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Speaker 1: four hundred and twenty million dollars for the year, worse

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Speaker 1: than last year's two hundred and twenty seven million dollar loss.

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Speaker 1: No dividend will be paid. The company today announced it's

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Speaker 1: looking to indicate it rather, it's looking to sell off

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Speaker 1: both its construction but also its residential and development operations.

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Speaker 1: Andrew Reading is the Fletcher Building managing director and CEO.

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Speaker 1: Hey Andrew, Hi, how are you? Yeah, I'm very well.

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Speaker 1: Thank you.

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Speaker 2: Tough year, Yes, the markets have not been kind.

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Speaker 1: How tough?

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Speaker 2: Ah, this would be the worst we've seen since the GFC,

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Speaker 2: and that's in Australia and New Zealand. It's highly unusual

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Speaker 2: when you get both your residential infrastructure and commercial market

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Speaker 2: segments all crashing down at the same time, and that's

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Speaker 2: happened in both of the geographies.

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Speaker 1: As bad as bad as the GFC, or worse then

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Speaker 1: worse than Okay, what because I'm trying to get a

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Speaker 1: handle on how bad this thing is that we have

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Speaker 1: come through, or hopefully I come through. How far back

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Speaker 1: in your mind do you have to go to find

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Speaker 1: a comparable tough period.

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Speaker 2: Oh you're taking me back to the recessions of the

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Speaker 2: late eighties. I mean it is really tough. Yeah, and

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Speaker 2: I don't think we appreciate quite how hard the man

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Speaker 2: on the street is doing it at the moment.

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Speaker 1: Do you think so?

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Speaker 2: Yeah, I agreed. Yeah. What makes you think then, ah, well,

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Speaker 2: you don't see people walking around with smiling and spending

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Speaker 2: a lot of money these days though, I think I

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Speaker 2: think people are scrubbling for every penny they can get.

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Speaker 2: And I think let's go back to the interest rate

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Speaker 2: drops we saw at the end of last year that

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Speaker 2: created a bit of a lift in foot traffic, for

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Speaker 2: example through our residential and development division, a bit of

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Speaker 2: a lift, but then come earlier this year, that's all

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Speaker 2: just fizzled out.

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Speaker 1: Yeah, I think you might be right.

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Speaker 2: Now.

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Speaker 1: Look, how are you going with the sale of Flucher Construction.

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Speaker 2: So we're in a process and we've had some approaches

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Speaker 2: from interested parties and we're just working our way through

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Speaker 2: discussing with them how serious their interest is. And there's

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Speaker 2: a larger number of them than we'd originally expected. But yes,

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Speaker 2: it's going, it's going along.

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Speaker 1: And are you serious about selling residential and development or

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Speaker 1: just kind of kicking the tires on it.

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Speaker 2: So we haven't made that decision yet. So we're doing

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Speaker 2: a strategic review of it, which is about finding out

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Speaker 2: what options we have with the division. So that may

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Speaker 2: result in some divestment options, or it may not.

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Speaker 1: If you do go ahead with it, well what does

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Speaker 1: it leave you guys, as you're basically an Australia based

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Speaker 1: business and here you're just doing retail or products.

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Speaker 2: Oh no, no, no. So if you look at our

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Speaker 2: strategic review, we've said that the our medium term intention

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Speaker 2: is to be a building materials and distribution companying materials

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Speaker 2: and manufacturing distribution company, and we have significant operations in

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Speaker 2: both Australia and New Zealand.

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Speaker 1: Yeah, okay, I mean that is that's a mess of

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Speaker 1: there's a mess of downscaling, isn't it.

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Speaker 2: We would be smaller, more nimble, and one would expect

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Speaker 2: more profitable.

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Speaker 1: Do you think is this an admission then that the

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Speaker 1: growth that Fletcher just grew far too fast and got

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Speaker 1: too ambitious.

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Speaker 2: I think that we have historically made some inappropriate acquisitions

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Speaker 2: which may have been done just to get bigger, and

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Speaker 2: then we have made some other management decisions which have

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Speaker 2: resulted in too much corporate cost. And I think we

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Speaker 2: made the mistake of trying to grow through the construction division,

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Speaker 2: which always counted with its a significant element of risk.

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Speaker 1: How's it going with the Convention Center? Is it due

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Speaker 1: to be open? Is it we still on track for

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Speaker 1: February next year?

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Speaker 2: Yes? Yes, no, so we're into the final commissioning phase

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Speaker 2: at the moment. Construction work is complete, we're just going

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Speaker 2: through all the paperwork and commissioning at the moment, so

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Speaker 2: we're looking forwards to handing over what will be an

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Speaker 2: iconic building to SkyCity.

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Speaker 1: Yeah, Andrew. If this year is tough and as tough

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Speaker 1: as you say, and I suspect I totally actually believe

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Speaker 1: that you're right, then that that would suggest this is

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Speaker 1: not something we're going to come out of super fast. Right,

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Speaker 1: So next year is probably going to be tough too.

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Speaker 2: Yes, I think it will be. All the signs we've

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Speaker 2: got at the moment are that the patchingess that we've

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Speaker 2: been experiencing in the second half of trailing of financial

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Speaker 2: year twenty five is continuing into financial year twenty six. Yeah,

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Speaker 2: and Australia may be showing signs of lifting a bit earlier,

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Speaker 2: but it's still very very difficult to see when that

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Speaker 2: will actually any of those precursors will come through and.

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Speaker 1: Just cor great activity in the market. Is this just

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Speaker 1: a Fletcher story. Is this a construction story or is

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Speaker 1: this an economy story.

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Speaker 2: I think it's a construction and an economy story. And

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Speaker 2: I think it's driven by the interest rates we've had

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Speaker 2: over the past few years and the change in net

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Speaker 2: migration rates probably so that that used to create qualort

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Speaker 2: of demand in the housing market.

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Speaker 1: Which is the same courses. Yeah, which has dropped off.

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Speaker 1: But then Andrew, that's to say it will survived to

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Speaker 1: twenty five. Now let's get through to twenty six. But geez,

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Speaker 1: we may have to wait until what like late twenty

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Speaker 1: six twenty seven until we start to really feel good.

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Speaker 2: Yes, I mean, look, there will be a significant amount

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Speaker 2: of work coming out in the infrastructure space in New

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Speaker 2: Zealand and Australia. But the trouble with that is that

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Speaker 2: you get that by the time people have done the

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Speaker 2: design and actually got shovels into the ground, you're talking

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Speaker 2: about twelve eighteen months away, and then for that's become

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Speaker 2: serious activities six months post that so we think financial

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Speaker 2: year twenty six flat and then we might start to

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Speaker 2: season benefit and financial year twenty seven.

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Speaker 1: You're killing me, okay, but yeah, it's better to know.

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Speaker 1: I suppose get the medicine upfront. Andrew, When does it

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Speaker 1: get better for Fletcher? What do you have to put

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Speaker 1: behind you the sale of the construction, the core cases,

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Speaker 1: get the get into a better state with the economy.

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Speaker 1: What else?

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Speaker 2: Well, we've got the legacy, most of our legacy projects

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Speaker 2: behind this now, so that's that's that's one tick. We

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Speaker 2: have been downsizing the corporate center here, so we're getting

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Speaker 2: structural costs down to the business. So that's another tick.

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Speaker 2: We've been devolving empowerment to the business units, so making

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Speaker 2: them take on more more responsibility and accountability, but making

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Speaker 2: them quicker to react to the things they see in

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Speaker 2: the marketplace. So all of those things coming together, if

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Speaker 2: we got a lift in the market, would see a

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Speaker 2: significant lift in improvement.

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Speaker 1: Andrew, it's good to talk to you, groom. But good

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Speaker 1: Andrew Ridding, Managing director and group CEO of Flitcher Building.

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