New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Fletcher Building (FBU) reported 1H25 EBIT down -37%, reflecting a cyclically weak operating backdrop but slightly exceeding our and market expectations.</li><li>This has been a long cycle—35 months after FBU's pre-GFC peak, its share price had rallied 50%+ from its lows; we are now 44 months into this cycle.</li><li>Like then, interest rates are being cut and forward indicators are improving, suggesting the downturn may be nearing an end. </li></ul>

Fletcher Building (FBU) reported 1H25 EBIT down -37%, reflecting a cyclically weak operating backdrop but slightly exceeding our and market expectations.This has been a long cycle—35 months after FBU's pre-GFC peak, its share price had rallied 50%+ from its lows; we are now 44 months into this cycle.Like then, interest rates are being cut and forward indicators are improving, suggesting the downturn may be nearing an end. 

Fletcher Building - 1H25 Result—Light at the End of a Long Tunnel

<ul><li>Fletcher Building (FBU) will report its 1H25 result on Wednesday, 19 February.</li><li>We expect EBIT to decline -38% to NZ$162m, driven by broad-based volume declines and competitive margin pressure.</li><li>While forward indicators have improved, data and anecdotal evidence suggest construction activity was still rebasing in the December 2024 quarter, making the first half of 2025 likely to remain challenging. </li></ul>

Fletcher Building (FBU) will report its 1H25 result on Wednesday, 19 February.We expect EBIT to decline -38% to NZ$162m, driven by broad-based volume declines and competitive margin pressure.While forward indicators have improved, data and anecdotal evidence suggest construction activity was still rebasing in the December 2024 quarter, making the first half of 2025 likely to remain challenging. 

Fletcher Building - 1H25 Preview—Where to Next?

<ul><li>Fletcher Building (FBU) announced that the joint industry response (JIR) for its Pro-Fit pipe leak issues in Western Australia has been finalised.</li><li>The key terms from the agreement are unchanged from the announcement in August.</li><li>While the finalisation of the JIR does not fully sterilise the issue, with litigious risk and potential cost overrun the key risks from here, this is an important step for FBU to draw a line in the sand on this issue. </li></ul>

Fletcher Building (FBU) announced that the joint industry response (JIR) for its Pro-Fit pipe leak issues in Western Australia has been finalised.The key terms from the agreement are unchanged from the announcement in August.While the finalisation of the JIR does not fully sterilise the issue, with litigious risk and potential cost overrun the key risks from here, this is an important step for FBU to draw a line in the sand on this issue. 

Fletcher Building - WA Pipes Joint Industry Response Finalised

Investment Strategist, Transparently.AI

Mark Jolley

Investment Strategist

AI detection of accounting fraud and manipulation

Transparently.AI

Fraud and manipulation of their numbers see companies lose USD1 trillion+ per year for their stakeholders. Transparently.AI has developed an AI system that determines:

1. The likelihood that a company is committing fraud/serious manipulation of their books;
2. Whether it is serious enough to result in total corporate failure;
3. Estimated $ losses to stakeholders;
4. How that manipulation/fraud evolves through time; and
5. Detailed analytics on the forms of manipulation/fraud (e.g. which parts of the accounts, what tricks of the trade, questions for analysts to ask management, where/how to investigate further, etc.).

This is effectively automating the analysis of forensic accountants, activist short sellers, credit analysts, etc to do work that would typically take weeks per company, and instead run it in seconds and for thousands of companies simultaneously.

Critically, this solution frequently alerts users to the presence of serious manipulation risk up to 2-3 years in advance of the wider market and short sellers becoming aware of problems.

Forensic Accounting

<ul>
<li>Embattled Kiwi building materials giant announced emergency fundraise in September</li>
<li>Accounting quality has deteriorated significantly in recent years, AI tool shows</li>
<li>Share price is a quarter of its 2007 peak, company leadership is in flux</li>
</ul>


Embattled Kiwi building materials giant announced emergency fundraise in September
Accounting quality has deteriorated significantly in recent years, AI tool shows
Share price is a quarter of its 2007 peak, company leadership is in flux


<ul><li>Fletcher Building (FBU) is raising NZ$700m of equity to lower its elevated debt position. We calculate the raise is high-teens dilutive, adding +37% to shares on issue.</li><li>While the raise is unsurprising, given elevated gearing, volatile trading conditions, and an incoming management team, it has come sooner than we expected.</li><li>The new CEO is a week away from beginning his tenure, and the company just told investors that it was comfortable with its balance sheet at its FY24 result in late August. </li></ul>

Fletcher Building (FBU) is raising NZ$700m of equity to lower its elevated debt position. We calculate the raise is high-teens dilutive, adding +37% to shares on issue.While the raise is unsurprising, given elevated gearing, volatile trading conditions, and an incoming management team, it has come sooner than we expected.The new CEO is a week away from beginning his tenure, and the company just told investors that it was comfortable with its balance sheet at its FY24 result in late August. 

New Zealand

Fletcher Building Limited manufactures, distributes, and sells materials for the building industry including wood fiber-based products, cement and aggregates, plasterboard, laminates, lumber, and aluminium extrusion. The Company operates primarily in New Zealand and Australia.

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Fletcher Building (FBU NZ)

Fletcher Building - 1H25 Result—Light at the End of a Long Tunnel

Fletcher Building (FBU) reported 1H25 EBIT down -37%, reflecting a cyclically weak operating backdrop but slightly exceeding our and market...

Forsyth Barr

Fletcher Building - 1H25 Preview—Where to Next?

Fletcher Building (FBU) will report its 1H25 result on Wednesday, 19 February. We expect EBIT to decline -38% to NZ$162m, driven by broad-based...

Forsyth Barr

Fletcher Building - WA Pipes Joint Industry Response Finalised

Fletcher Building (FBU) announced that the joint industry response (JIR) for its Pro-Fit pipe leak issues in Western Australia has been finalised.

Forsyth Barr

Fletcher Building: Plugging the Leaks

Fletcher Building's accounting quality has deteriorated significantly in recent years, according to an AI tool that analyzes company balance sheets...

Mark Jolley

Fletcher Building - Repaying the Bank

Fletcher Building (FBU) is raising NZ$700m of equity to lower its elevated debt position. We calculate the raise is high-teens dilutive, adding...

Forsyth Barr

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