WELLINGTON: Fletcher Building Ltd, New Zealand’s largest supplier of construction materials, has agreed to an industry response to fix plumbing failures in some Western Australian (WA) homes.
The joint response with the state government and other industry stakeholders will open the way for affected homeowners to have plumbing and associated damage repaired, Auckland-based Fletcher said.
The company will incur a A$155mil (US$105mil) provision in its results for the year through June 2025.
Fletcher shares are headed for their biggest one-day gain since November 2020 on the apparent resolution to an issue that has hung over the company since October last year.
It is a rare bright spot in a tough year that has seen its chairman and chief executive officer (CEO) step down and ongoing delays in key projects that led to a heavy full-year loss.
“We welcome this in-principle agreement with the Western Australian government and the many builders involved to address the plumbing failures,” acting CEO Nick Traber said.
“It is in all parties’ interests, as a first priority, to stand up a comprehensive response which remediates the plumbing issues in a timely and pragmatic way.”
The stock rose 10.5% to NZ$3.17 in Wellington.
The squabble kicked off in October last year when Perth-based builder BGC Australia released the results of an investigation claiming plumbing failures that occurred between 2017 and 2022 were the result of problems with ProFit piping supplied by Fletcher unit Iplex.
Fletcher denied there was any manufacturing issues with its product and countered by claiming installation was the more likely cause.
BGC this month brought legal action against Iplex, and a class action has also been lodged on behalf of home owners.
Fletcher yesterday said the industry response has been entered into “on a no liability, no admissions basis” and participants have agreed they will not bring actions against each other in relation to the plumbing failures.
BGC was not currently part of the response.
Iplex will cover 80% of the direct costs that builders incur in providing the work programme under the response plan, with the state government contributing 20% up to a cap of A$30mil. Iplex’s contribution was not capped.
Fletcher estimated its share of costs is about A$120mil with a further A$20mil cost of providing leak detectors to all relevant homes, plus A$15mil of administrative costs.
It estimates about 15,000 homes have the particular ProFit pipes installed with Typlex resin. — Bloomberg
