From the contested election of a new director to a range of issues raised by the chair & chief executive but amplified by a few questioning shareholders, Fletcher Building Ltd’s annual meeting at Eden Park yesterday had more going for it than the dry speechnotes might indicate.
The Ihumatao protest was vivid – banners at the entry gate, superb singing, calm & well presented questions at the meeting inside by protest leader Pania Newton.
I’ve skipped the Ihumatao issues, which look like being resolved, with Fletcher getting a payout which it will no doubt argue hard to raise.
Election of new director not cut & dried
The election of a new listed company director would normally go through as an annual meeting formality, but not so for Peter Crowley, of Brisbane. At Fletcher Building’s annual meeting yesterday he received only 59.9% support.
Chair Bruce Hassall said the low support reflected a campaign against Mr Crowley, though the company’s existing board supported his election: “An Australian shareholders association advocated a no vote. We will reflect on that, acknowledging we are a New Zealand company with different processes.”
Mr Crowley replaces Tony Carter, who retired after 9 years on the board.
Mr Crowley was managing director & chief executive of ASX-listed GWA Group Ltd from 2003-15, and faced a barrage of criticism at the end of his time there, when sales of its kitchen & bathroom fittings – and the company’s share price – slumped during a residential construction boom. GWA subsidiaries include NZ bathroom & toilet fittings manufacturer Methven Ltd, which it bought in April.
Mr Crowley also spent 18 years in the cement industry, including various chief executive roles at The Rugby Group plc and a variety of managerial roles at Queensland Cement Ltd & its Swiss parent company, Holcim (now LafargeHolcim Ltd). He’s been a director of cement company Adelaide Brighton Ltd, building products manufacturer Rugby Group plc and automotive & plastics group Austrim Nylex Ltd.
He’s on the advisory board of electrical & plumbing supplier The BGW Group and is a non-executive director of Wesley Medical Research Ltd. Mr Crowley holds arts & economics degrees from Queensland University and is a fellow of the Australian Institute of Company Directors.
Mr Hassall said when he announced Mr Crowley’s initial appointment in September: “Peter brings with him a wealth of leadership, commercial & operational experience from leading Australian building product companies that will further enhance the experience of the board.
“Fletcher Building’s strategy includes a significant agenda in Australia, with a turnaround of our existing businesses underway. Peter’s extensive building products & local market knowledge will be an asset to the board & the company as we progress this.”
NZ Shareholders Association chair Tony Mitchell asked for clarification of the new sustainability policy, commenting: “Reducing emissions by 30% by 2030 still, I believe, gets you to only a 2-degree positive.”
Mr Hassall: “We now have a comprehensive sustainability strategy, which we didn’t have before. We are focused on the journey. We are very committed to playing our part.” He added that “It’s much broader than the emissions.”
Chief executive Ross Taylor came to the rescue: “I see this as a very important issue for the globe…. It will be good for the world but actually good for our business.”
He said coal power the company consumes in Australia kept its emissions level up, but Australian was moving away from coal power. As for cement production, Mr Taylor said: “Carbon emissions from any cement we produce here produces 20% less emissions than anything that’s imported.”
The prospect of a settlement of the Ihumatao standoff
Mr Hassall said: “The ball is currently in the hands of the prime minister…. We would expect … fair remuneration under any arrangement.”
Protection against “mediocre products”
A shareholder asked how Fletcher Building protected its customers from mediocre products.
Mr Hassall: “The key way to protect is not to produce mediocre products. Fletcher doesn’t produce timber. Just got to be relentlessly focused. Not just meeting the level but going beyond it.”
Mr Taylor went further, taking a stand: “We will lose work and lose opportunities because we will not put cheap & shoddy products in the marketplace. I don’t know where that feedback’s coming from because we just don’t do that.”
The shareholder: “I’m thinking about tanalising of framing timber. Who knows about boric treatment now? Same about cladding. We all know people who have had homes clad twice.”
Mr Hassall: “Shoddy products is not what we are about.”
NZ International Convention Centre fire
A shareholder asked if this was “another huge costs blowout we can expect”.
Mr Taylor: “We see no change in the provisions we see today, but we’ve got to do this work (to February) on site.
On reviving Fletcher’s bid to take over Steel & Tube
A shareholder noted that the share price of Steel & Tube Holdings Ltd “has now slumped considerably, and I wonder if this is another opportunity to make another takeover bid.”
Mr Hassall: “It was over 12 months ago and it is currently not on our agenda.”
In September 2018, Fletcher Building issued a non-binding indicative offer of $1.70/share for the whole of Steel & Tube. 12 days after Steel & Tube disclosed that offer & its rejection to the market, Fletcher came again with a $1.90/share price tag plus a 5c/share dividend, with imputation credits.
Steel & Tube’s share price, just over $2 in January 2018, slid to $1.18 by 24 August and, since a $1.28 peak on 26 April, has continued its decline – to 79c on 18 November (but up to 82c yesterday).
Fletcher has had its own sharemarket turmoil. The Fletcher share price had been at $10.19 in November 2016, dropped to $8.73 by 17 March 2017, the Friday before the first revelation of the extent of Fletcher’s Building & Interiors Division problems, and had slipped to $6.06 the day Fletcher made its offer to Steel & Tube, 10 September 2017. The Fletcher share price bottomed at $4.32 on 29 August this year, but made it back to $5.35 on Tuesday this week.
Earlier stories, 16 October 2018: Fletcher gets miffy over Steel & Tube time to get advice, pulls what was only ever a “non-binding & indicative offer”
5 October 2018: The price was moving, the confidentiality remains, and still-weak Fletcher insinuates Steel & Tube takeover “compelling”
Mr Taylor said: “We are doing a bit, not a lot though because the programme’s lost impetus.”
However, one wider benefit from Labour’s campaign was that it had placed the focus on affordable housing: “We are now much more focused on affordable housing and I think that’s one positive thing that’s come out of the Government’s initiative.”
Summing up the meeting with a wee surprise
A shareholder who’d nearly fallen off his chair during the boring-long-speech part of the 90-minute annual meeting (a common malady, given the average age of the audience was well after sunset), sprang to life with a closing message: “They turned the company around,” he said of the board & executives.
And for that, the room erupted into slightly better than polite applause.
Related story: The Fletcher Building mood – outlook highly positive
Attribution: Annual meeting.